Who Says Bush Doesn't Care?

Lots of you think of GW Bush like this but…

George Bush The Hero

Troubled Asset Relief Program (TARP) Treasury Secretary under BUSH Hank Paulson and Fed Chair Ben Bernanke sold Congress on the $700 billion insurance plan to save shadow banks. Phase 2 was carried out under OBAMA & his Treasury Secretary  Geithner

From screamers - Tea Party Patriots on the Right to Rachel Madow on the left the TARP gets bashed. Even Democrats run & hide when the TARP is brought up.

Yes it was a bait and switch by Paulson, yes it kept the shadows in business, And yes some fat cat CEO’s got fatter because of it (lots of blame to retiring Senator  Dem. Chris Dodd on the last point).

The Bottom LineSimply a second great depression was averted. Lehman collapsed and if the other dozen or so major investment firms had fallen along with AIG, GE, GM (also add any other worldwide companies that had over leveraged positions) it would have started the dominos of panic and we’d be seeing unemployment at way over double what it is today. Imagine a dozen firms all bigger than Lehman’s going belly up and the other mega banks failing throughout the world. Add media hype. Result Great Depression #2

Story on this from Politico’s Ben SmithTARP A Success None Dare Mention

FYI on TARP – From Wikipedia “as of April 12, 2010, is down to $89 billion, which is 42% less than the taxpayers’ cost of the Savings and loan crisis of the late 1980s.”

Postscript – 33 Hero Democrats in May of 2010 voted to break up those too big to fail shadow banks. 61 Republican & Democrat caved into the shadow financial institutions and their lobbyist.

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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!

Index Percentage Volume
Dow -0.17% flat
NASDQ +0.18% up
S&P -0.07% down
Russell 2000 +0.47% -

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Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for September - ”The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.

Term for the DayHigh Frequency Trades - From Investopedia – “High frequency trading is an automated trading platform used by large investment bankshedge funds and institutional investors which utilizes powerful computers to transact a large number of orders at extremely high speeds. These high frequency trading platforms allow traders to execute millions of orders and scan multiple markets and exchanges in a matter of seconds, thus giving the institutions that use the platforms a huge advantage in the open market.”

US Markets – Ended up flat in what passes now for moderate/average volume. Much less than in the past because retail investors have been exiting stock and trading is dominated by HFT’s.

Brokerages, Mutual Funds & Platforms that cater to individual or small groups of investors/traders are seeing profits diminish as retail investors continue to leave stocks.

Holding onto gains is usually a bullish sign after a major rally day. But there was a divergence in the normal relationship between the dollar and stocks that have been moving in almost 100% different directions since July. The dollar took another big hit and stocks instead of moving higher were flat. (more below)

Gold like Silver last week broke out to new highs. Mea Culpa – Investors411 talked many times about buying GLD on dips but never did.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell ANOTHER HUGE -1.01% yesterday.  Dollar at 81.08 and has a another major support level at just below $80. For stocks =Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a  -1.21% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. Two relatively minor down days in a row. Right now longer term chart pattern still = Bullish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to +45.56 yesterday. Back to = NEUTRAL

Reading Tea Leaves

We may have missed at least a short term selling or shorting opportunity. We had the MO at +61 & the Dow climbed another +60 points in to the the AM. (just short of the +100 criteria) Investor411 has only one small long position in EWS, so I took no action in the 411 account.

The Baby Bull is still alive. But…

There has been a key divergence. The dollar is in meltdown vs. other currencies. From yesterday on the dollar  “one ugly bearish chart” This dollar meltdown should have been good news for stocks. Stocks should have rallied. But they stayed flat & the MO dropped 16 points. Sometimes it takes a day for stocks to react, but, for right now, overbought stocks went nowhere despite good news in a falling dollar.

This could signal at least a short term top.

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 positions –  EWS (Singapore).

EEM (the major ETF for emerging markets) is overextended from 50 DMA. So are other breakout countries. It would be natural to see some sort of consolidation.

Along with the Baby Bull the upgrade to CAUTIOUSLY BULLISH is not yet firmly in place. We still could fall back to neutral.

Here’s the test – The MO falls to about zero or +20 and stocks rally from that point.

I’d be willing to invest/risk a bit more then. Yes its not -60 on the MO – a better entry point, but emerging markets & a falling dollar are pulling US equities along for the ride. A consolidation after a run is not to be feared. Also time to start looking at YOUR stock list

Long Term OutlookCAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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