An Endorsement

“The stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression.”Frank Rich - New Yorker magazine - “Obama’s Original Sin”


The single most important and vocal person in the white house over the last three years who fought for this accountability is Elizabeth Warren. Phenomenal editorial Warren vs. The Banks

Warren is the ONLY candidate out there that this web site endorses for political office.


Another Hero

Dylan Ratigan

  • 10 years financial reporter/editor Bloomberg LP
  • 5 years with #1 financial network
  • Creator and host of CNBC’s “Fast Money.”
  • Co host “Closing Bell.”

He left that high paying job to fight for what he believes in – accountability. His new show is on MSNBC (4:00 to 5:00 EST)  Here’s a LINK to an August 9th on air Meltdown over the Meltdown.  The emotion is real, but its what he says that matters.

You have to love the title of his upcoming book – “Greedy Bastards.” Radio Free Dylan often carries some outstanding editorials like this one “Why No Handcuffs?” Some major points Dylan often hammer’s home and Investors411 shares.

  • The $600 trillion swaps market is still an unregulated, hidden in shadows exchange. – It is the Credit Default Swaps that Warren Buffett termed financial WMD’s. The reason so many investment institutions were vulnerable/over leveraged in 2008
  • How to you build a viable economic system when the backbone financial systems are hidden in the shadows and too big to fail?
  • His four solutions to fixing the system LINK - Another LINK

[For Heroes Part 1 see November 10th Investors411]

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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

Index Percentage Volume
Do up 1 to 2% up
NASDQ
up
S&P 500
up
Russell 2000
-

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Market Analysis

Focus on TechnicalsFundamentalsHFT’s

Shorter Term Outlook.

day/days/week/week+

  • There simply is no other explanation to yesterday massive swings than HFT were having a field day juicing and then sucking up profits from stocks. No fundamental news out there merited a 340 point Dow rally from the low, then a 140 point fall into the close.
  • Europe played kick the can down the road over Greece defaulting on its loans. The real story is can European banks, which are up to their necks in Credit Default Swaps on Greece and other PIIGS, stay solvent.
  • Trend - Kicking the can down the road is mana from heaven for HFT who can use every news items to execute short squeezes, pump and dumps or catching institutional traders with losing long positions

Investors411 Technical Forecasting Tools.

  • The PCR fell  to 1.05 (Roughly - above 1.25 is getting Bullish and below 0.80 is getting Bearish. 1.00 = same amount of puts and calls)(last two years the highest for PCR is @1.50 and lowest @0.60 - anything approach these levels shows change likely For more information on PCR LINK)  We built a lot of Put positions over the last 3 days but it has been steadily decreasing. The  1.05 close yesterday is Neutral, but the inventory/backlog of Puts makes the callBullish/Neutral.
  • Investors411 uses the PCR to measure the path of least resistance for HFT dominated stock market. HFT’s love leverage and if there are more puts then calls, there is simply a supply glut on one side that forces a move to the other. See above.

The McClellan Oscillator

  • (MO) rose to +28.59 (Rough estimates =-30 somewhat oversold, -60 oversold, -90 OMG oversold)( +30 somewhat overbought, +60 overbought and +90 OMG overbought) Just one point away from mildly overbought. But still = Neutral

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Reading The Tea Leaves

HFT pushed stocks 140 points higher than they closed at. What happened? – The algorithms HFT’s use all clicked in and recognized a rapid overbought position. If we had ended the day 140 points higher our MO would have been near +50 (many other indexes that measure oversold/overbought would have shown the same) They pumped the market higher and then dumped into the close and took their nano second and multi second trade profits.

HFT’s are going to pull your chain on any event/rumor as long as they exist - Get used to it - HFT’s are here to stay.

Today, we have bullish/Neutral PCR, and an almost somewhat oversold MO = Neutral. So we’re NEUTRAL right now with just a touch of bullish mixed in.

Translation - US Stocks have no major bias higher or lower. Just a wee bit of the bull. This doesn’t mean HFT’s can not do a mega roller coaster on stocks, especially if there is meaningful fundamentals.

Longer Term Outlook

month, months

  • Repeat Same old mantra - May 20th forecast still stands. The May 20th summer forecast has come to pass and now we wait to see the Fed’s next move. Add to this Europe is a whole lot worse than previously thought back in May. For the Fed to act significantly – inject more liquidity - I’m afraid we need to see stocks do worse for that to happen,

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Paul’s Corner

Fortes Fortuna Adjuvant - this can be translated as “fortune favors the strong.”

The title borrowed from Dave Steckler’s Blog last evening and we will look at the semis by using Relative Strength to determine the best semi.

Before we get into the semis here is a comment from Dave’s blog last evening which explained the jump in the market Wednesday:

The S&P 500 Index gained 1.35% and the Nasdaq Composite rose 1.60%.  The rally came on hopes for progress in resolving the Greek debt crisis.  Oil and precious metals prices fell and the U.S. dollar retreated from its recent gains. It’s always nice to see a 100+ point up day but keep in mind the Dow was up 280 points a half-hour before the close.

So while a few YSL 5 stocks had a great day, let’s not hold our breath too long hoping this is the start of the big long awaited rally.

Dave Stecklers Blog is always worth reading and his latest blog has  a great discussion on Relative Strength and how it’s used to research the market and in this issue he also looks at the semis.

Dave Stecklers Blog  LINK

As we found out several days ago, the semis are starting to draw attention. YSL 4 member SPRD appeared several times last week on the “Best of Woodard and Brown” screen on HGSI. The semi group index jumped to the top of the HGSI Industry Group sort on Monday Sept 12.

Industry Group Sort  LINK

There are 112 semis in the Semiconductor Industry Group which is too many to follow. I made up a user group of the top 10 stocks in the group,  the reason these were the first out of the “gate” so at the moment we can assume these are the stocks to follow.

AMD, ARMH, CAVM, LLTC, MXIM, MCHP, NVDA, SMTC, SPRD, TXN

To determine the strongest stocks within this group, we used the “Ian Slow” Relative Strength chart on HGSI. It measures the 6 month RS  with the most emphasis on the closet 3 months. Here is the RS chart of these 10 stocks based on the Wednesday close Sept 14.

Relative Strength Chart LINK

As you can see SPRD is top dog with ARMH and MXIM not far behind. Briefly looking at the charts, these three look ok. SPRD has had a nice run and will probably give us a few buy the dip opportunities.

Some of  you may be wondering why Dave and I are posting on Semis and Relative Strength at the same time. Do I read Dave’s blog for my ideas? No, but I will admit he has some brilliant discussion at times and worth ripping off. Dave and I both use HGSI for our research and of late HGSI has shown the semis are on the move. HGSI  has a valuable Relative Strength function that let’s you dig out what’s going on and we both see a change in the semis worth investigating.

But but but, Cramer just came out suggesting the semis, so why do “I” need HGSI? I just need to follow Cramer! Well that Mad Money man does have some interesting ideas and he surely follows the market and presents it in an interesting way. But do you have the time to sit down and watch each evening to catch the latest trend? Do you even get home at 6 PM in time to see each show?   Using HGSI each evening one can fully evaluate the market moves of the day, see what’s coming on or going away and come up with a list of stocks worth spending your kids inheritance on all in a matter of minutes. So with HGSI you get time management and great stock research.

If you didn’t see it here is a link to Cramer’s video on semis, it‘s quite good. See which semis he recommends.

Cramers semi video link: LINK

So do we jump into the semis?  Your guess is as good as mine, probably yes, but when considering the PIIGS problem across the pond?

The usual worthless disclaimer applies.  You buy any of these dogs and lose your house don’t whine to me, whine to Barr.

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Current Positions

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

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

Our forecasting tool are Neutral (see above) - You rather enter oversold markets and exit overbought markets.

Positions

NLY - Annaly Capital Mgt. Ultra high dividend stock –a @14% dividend

pot of gold

GLD – (Long Gold ETF) Bought at 167.05 - Sold 1/2 for 180.4 Current price 177.21. Stop/sell order on GLD at 167.05. Now looking to buy small dip in price.

DisclaimerI buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

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Long Term Outlook

(for US stocks only – not our economy)

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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