Republicans

Republicans debated last night for the first time. I’ll spare you any debate analysis - Mitt Romney is by far the odds on favorite.

Mitt’s a smart guy and a good politician.

As a resident of Massachusetts who uses the biggest pork highway project in world history (The $16 billion dollar Big Dig) – every time I pick up people from the airport I thank former MA governor Romney and you for blessing all the cost overruns that made our piece of pork possible. It cut’s my trip time to the airport in half. When the tunnels are not dropping 5 ton tiles on cars every resident of Massachusetts thanks you for your money.

Mitt’s an Investment Banker, and a good one (Former CEO of Bain Capital) For readers of Investors411 that makes him a vampire squid. Mitt made a Mittload of cash just like  movie character Gordon Gekko did – leveraged buyouts. Bain would take over companies, borrow on those assets, cut jobs, sell off the parts, and leave a bankruptcy behind after moving on.

Since economic growth and jobs the singe most important crisis immediate facing Americans I’m going to find it difficult to support a smart vampire squid when the shadow squids almost sucked the economic life out of the USA in 2008. Supporting Mitt is like asking the late Dr Jack Kevorkian to deliver your baby instead of a pediatrician

Here’s the money quote from Steven Colbert

“Mitt Romney knows just how to trim the fat. He rescued businesses like Dade Behring, Stage Stories, American Pad and Paper, and GS Industries, then his company sold them for a profit of $578 million after which all of those firms declared bankruptcy. Which sounds bad, but don’t worry,

almost no one worked there anymore.”


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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 +0.01% Down
NASDQ -0.15% Down
S&P 500 +0.07% Down
Russell 2000 -0.30% -

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Technicals, Fundamentals & Analysis

  • Last Friday’s big move down was held onto by an oversold market = downside move confirmed = more downside to come.
  • Clear trend over time reinforced yesterday (see major indexes above) – Russell 2000 (small cap stocks & NASDQ (often called a proxy for technology) are underperforming the other major indexes. -This is one reason why Investors uses TZA to short – You choose the index that is doing the worst.
  • China’s economic data comes in as expected for last quarter. This is good news and Asian markets rallied (China’s market up just over 1%) One camp is worried about Chinese inflation growing and spreading here the other is not. Later is much stronger case.
  • The McClellan Oscillator (MO) chart rose slightly  to -64.29US Stocks are oversold. (anything below -60 = oversold) Another “snapback” oversold rally is possible.  The last oversold rally was a dead cat bounce UUP -a tracking ETF for the US dollar fell a significant +0.51%, yet this failed to move stocks highera bearish sign.

  • Reading The Tea Leaves - Short term – We got some good/expected news out of China ( I wouldn’t trust these figures – but Wall Street won’t openly question them) and markets are oversold –  so another dead cat bounce is probable. The overriding uncertainty of no quantitative easing and political gridlock over the debt ceiling should trump any extended rally. So let’s stay with the same dead cat bounce pattern of lower highs and lows till it breaks down.
  • Reading The Tea Leaves - Longer Term -  See May 20th blog for forecast for this summer.”

The Dead Cat Bounce

Actually we are where the red cat is and should start up today

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Paul’s Corner

Hello world, it’s June 14 and pre market futures are up

Let’s RUMBLE!

Well it would be nice if I had the confidence to jump back into this market at the first signs of life, but since  I failed market forecasting in 7th grade the market really needs  to convince me, a few more days in cash won‘t hurt. The few merger announcements Monday morning kicked off the market, but more downgrading of Greece halted a perfectly good day of fun.

“Drill here, drill now” is the favorite mantra of the politicians who are trying to scare the American public into accepting oil platforms in their back yard, yet oil prices would suggest things ain’t as bad as some say. There is almost a $20 difference between WTI (US Oil) and North Sea Brent pricing. NSB is higher due to production problems of Libya, but US/Canadian production at the moment is at excess capacity and they are running out of storage space in Cushing Ok. Between the Alberta Tar Sands, the Bakken field and the new production coming from the Eagleford field in Texas we should have a decent domestic cushion for some time. IMO, lower crude prices do suggest caution in placing your grand children’s inheritance into the drillers and oil field support at the moment. The Eng-O&G Exploration group was at the bottom of the list yesterday (153 out of 154) and it’s chart is starting to look ugly.

My favorite high demand search once again gave the drug companies top billing, and Utilities 2nd so there is nothing suggesting lift off is about to happen.

Health-Drugs (8.00%, 8 securities)

  • Akorn  Inc. (AKRX)
  • Cephalon  Inc. (CEPH)
  • Elan Corporation PLC (ELN)
  • Forest Laboratories  Inc. (FRX)
  • Johnson & Johnson (JNJ)
  • Questcor Pharmaceuticals  In (QCOR)
  • Valeant Pharmaceuticals Inte (VRX)
  • Watson Pharmaceuticals Inc. (WPI)

Shoes and Apparel Foot Wear came in 4th and 5th probably due to the Timberland buyout.

Later today in the comments section, I’ll list a few growth stocks that seem to be ignoring the market. Check back during coffee break or lunch to see what HGSI software has found in the pile of rubble.

So what’s the market going to do today, futures are up this morning, is this a new morning in America? Let’s load up Quote Tracker………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions because I‘m sure not going to.


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Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLYAnnaly Capital Mgt. Ultra high dividend stock.

TZA - 3 times short small cap stocks Bought 1/2 position in TZA (3x short small cap stocks) at 38.65 on Tuesday   Added another 1/2 position to TZA at 39.75 at/near open Wednesday.  Bought another 1/2 TZA position at 39.75 Thursday.

Sold 1/2 position at 41.50 yesterday (see yesterday’s comments section of blog) for almost +8% gain. May sell more early.

Will add another full or 1/2 TZA positions on any modest market rally – This will be announced in comments section of blog

BAC – Bank of America – This bank is sinking and if you short stocks I don’t think its too late to join in on the trend. Short the rally.

Investors411 has recommended also using TZA or SDS as a hedge/insurance against losses in NLY and especially if you own other dividend stocks (see past month blogs on dividend stocks.)  This way you protect prices of dividend stocks against falling and still collect the dividend.

Repeat Strategy remains

  • Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
  • Sell long positions into any rally -

Disclosure - I own NLY, & TZA - I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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