Emperor of the World

The last Fed Chair Alan Greenspan used to be thought of as the most powerful man in the world. Now our current Fed chair Ben Bernanke is looked at by many as having inherited the title. This is especially true because this Fed, who meets this week, is far more active in trying to solve the problems created by the “free market or deregulated” Greenspan ruled Fed.

Furious debate rages in almost every economic circle over what our Fed is doing and its impact on the world. Every government and their central bank is trying to manipulate their way out of the Great Recession without causing a Great Depression. Our’s is still the biggest economy in the world so Bernanke has the most power.

The problem facing Bernanke is having NO regulations does not work in economics. (Most rational people know this, greed based ideologues would disagree) Even the high priest of deregulation Alan Greenspan has admitted this.

If there are no cops on the street, and no basic rules to follow then greed runs wild.  You develop casino capitalism where no risk is too great, if government/taxpayers bail you out.

On the other hand (the last 4 words are the four most used words by many non ideological  economist) if you over regulate economics you can negatively impact growth. Will our Fed and other entities worldwide be able to fix the damage with just the right amount of regulations and execute a soft economic landing?

Bernanke and the FED are the most powerful economic group in the world. Investors411 has tried to give you a front row seat in the how the Fed impacts everything from stocks to world wide inflation to commodity prices to a falling dollar and even more.

So far there has been NO Great Depression, and the Bernanke Fed deserves credit for that, but will the Fed be able to engineer  a soft landing? What happens when the training wheels come off?


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KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index Percentage Volume
Dow +0.92% down
NASDQ -1.04% down
S&P 500 +0.58% down
Russell 2000 +0.79% -

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

  • Were Back – The old pattern of up days on lower volume – Basically as Investors 411 has repeated for many many moons, its the Fed liquidity (quantitate easing) providing the stimulus and investors are staying home  (out of selling) and enjoying the ride.
  • Repeat from yesterday.- Monday’s have historically been the best day of the week as earnings season continues.
  • Repeat from yesterday – We have what may be a shift of leadership into major US companies and the too big to fail financials that enjoy government and Fed support.
  • If yesterday was a rally day (markets up  about 1% or greater) then today is the confirmation day. Do stocks hold onto most of the previous day’s gains. If so rally confirmed and bulls are happy.
  • Obviously, still endorsing the concept that the Fed’s POMO [schedule] is and will be the key factor in keeping a long term rally going. (see Investors411 for past months).
  • Worldwide Inflation (not USA) is the clear and present danger. Problem in #2 emerging market India
  • Appropriate piece via Seeking Alpha from The Inflation Trader
  • Obama’s State of the Union is the big political news today and may contain something to drive markets higher.

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Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar after going much higher and lower ended up falling a small -0.27%.  The two week dramatic fall of the dollar continues. For stocks this is = Bullish
  • McClellan Index – (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.]  MO fell to -7.39. What may be a bearish sigh (a series of lower highs and lows) has started to develop on chart. = Neutral

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Reading The Tea Leaves

From yesterday – The dollar is falling like a stone and that’s good for American exporting companies. There are still growing worldwide inflation fears in part brought on by our Fed’s quantitive easing. (see Friday’s Investors411)

“Don’t fight the Fed” is an old Wall Street axiom. The falling dollar and the special “gifts” to shadow financials are the results pushing stocks higher.

The raising of interest rates in India may take a bite out of stocks today.

What to watch today

UUP -The dollar tracking ETF. Perhaps a reversal today, but clear two week bearish trend. This is good for stocks. However hard to see US stocks take a big hit while dollar is falling.

Dow Index – Dow stocks historically do about 1/2 what Small caps and techs do in a rally.  They have done better for for a month+. Dow at new 2 year+ high.

AAPL - Strong day yesterday. The general for tech stocks bounced off its 50 DMA and for now has issued an all clear signal. Up a massive 3.28%. Very interesting that most of the smaller cap stocks in tech did NOT also have big gains. = Big cap stocks rule

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Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. (oldest held positions listed first)(see comments section where all trades are first announced)

  • DDM - (2x Dow stocks) Bought at 57.40. Will place 5% trailing stop on this position today.
  • REMX - (rare earth metals)(1/2 position) Gained 1.58% yesterday will place another 3% trailing stop on this ETF today.

Under consideration -

DDM - (2x DOW) The trend to big cap stocks is apparent. A buy ,but a bit overbought right now

UCO -(2x oil prices) All commodities, are under pressure from inflation worries in emerging markets. UCO broke support level in big way. Waiting for it to settle.

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

FAS (3x financials) & UYG (ETF that does 2x financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#3)

The Positions, Strategy and Overview sections of the blog are being revised. The changes should be finished over weekend. After this is done if time allows we’ll try a YSL #4

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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