Nation Building Quagmire

Ronald Reagan was right

Once again Frank Rich’s Sunday NYT editorial is outside the American corporate media news box. It deserves your attention and is, in part, the basis for the points below. LINK

  • We, getting out butts kicked in the war on terror – The call for a 3rd unilateral surge of troops (see Oct 25th post) is  a major example of failure – you don’t call for more troops when you are winning.
  • The debacle or “unjust” war/nation-building in Iraq is the underlying cause of the trouble in Afghanistan. – While we fiddled with Iraq – Afghanistan, Pakistan and Iran all burned. This was predicted over and again since the Iraq war started by Investors411 and others.
  • Pakistan (2 to 3 times larger than Iraq+Afghanistan and a nuke power) is deteriorating rapidly – All polls show the #1 party in the polls is now the Muslim religious party who campaign slogan is “Go America Go”
  • Systemic failure of the military/pentagon to foresee the Hasan/Ft. Hood disaster.

Solutions fromthe far right and the military

  • Of course right wing solutions blather fear and religious leaders like Pat Robertson are calling Islam “Not a religion, but a violent political system bent on the overthrow of the governments of the world.” Every Islamic terrorist is using Robertson’s (or some right wing American like him) quote to turn moderates into terrorist recruits.
  • This right wing view is diametrically opposed to US military/General McChritstal’s call for 40,000+ more troops in Afghanistan   “The key to success – a strong personal relationships forged between security forces and local populations.” A worthy goal, but is it doable, what are the costs, and like Iraq will it just make things worse.

Iraq/Afghanisatan

  • Maliki, our guy in Iraq, is one of the founding fathers of the Darwa party. The Darwa party is responsible for killing almost 250 American marines in a bombing in Lebanon. Reagan was smart and he got our troops out of the Lebanon quagmire
  • The two major religious leaders in Iraq – Sistani refuses to ever speak to Americans & Sadr hates us worse than Pat Robertson hates Islam. They hate our occupation.
  • Our invasion of Iraq has created the biggest refugee crisis in the world according to the UN. 4.2 million people have been displaces when the Shia just about destroyed the Sunni’s in Iraq. Sunni’s were responsible for most of the violence. LINK
  • Maliki/current government along with Hezbollah and Hamas was the first to recognize (insert most negative adjective(s) you can think of here) Admadinejad election in Iran
  • Iraq’s economy is rich with oil & Afghan’s rich with Opium. To create/nation build in Afghan means creating a whole new economy. Far more costly than Iraq.
  • Our guy, Karzi, in Afghan, is corrupt, an election rigger, and his family directly related to the opium trade.

Solutions - Absolute worst solution is some form of  Obama compromise – (send in 20,000 troops)

If you’re going to commit to war/nation building in Afghan do so absolutely . Otherwise you’ll never win . If you do commit – Expect/be prepared for of tens of thousands of casualties, a lot more than 40,000 troops sent, many trillions in cost, a huge extended cost of occupation/nation building beyond Iraq, Afghanistan to other countries, our huge deficit to explode higher and the majority of Americans/world (already against the war) to grow in size and anger.

My choice – Ronald Reagan made a wonderful decision NOT getting us involved nation building in Lebanon after the bombing of the marine barracks.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow -0.91% up
NASDQ -0.83% up
S&P500 -1.03% flat
Russell2000 -2.09%
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Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

  • Brown = repeat statements
  • Green = usually bullish statements
  • Red = Usually bearish statements

Technicals, Fundamentals & Analysis

Dollar fell  a  significant -0.60 so stocks rose The inverse relationship between the dollar and stocks is so strong it is easily the dominating factor in movement of equities. The other forecasting are distant seconds to the US dollar’s movement.

Monday’s since September have been historically very good for stocks. If the dollar is going to breakdown and stocks breakout higher it most probably will happen this Monday or next.

Major rally in most countries overnight.

KISS = Keep It Simple Stupid The dollar rules

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 4% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a VERY significant +155 points yesterday and closed at 4111. Up 12 days in a row . The BDI’s growth did slow down a little as it approaches its major resistance level at 4291 . (This years high)  The BDI has rallied about 2000 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

Like most major resistance /support levels expect 4291 to hold. Technically – Upward momentum slowing is a sign that the 4291 resistance level will hold and after being up 20 of the last 22 days the BDI is certainly overbought.

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra Dollar up = US stocks down & Dollar down = US stocks up

US dollar was down a  significant  -0.60% yesterday. The dollar closed at $75.23 . Usually a major support level at least temporarily halts any fall.” The $75 support level held and now the dollar is near the bottom of its range.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.20 this AM . The support level is a little below $75.00 . Both are EXTREMELY important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow.

There is a major squeeze play going on as the resistance level keeps falling as does a major trend line. Support remains flat at @ $75.  Only $1.20 separates the two. Which ever side the Dollar breaks out through will set the momentum for it and the opposite will happen for US ( and most world) equities.

CAUTION – The first breakout (up or down) is often false. Right now the momentum (since the long term trend is down) is with the Dollar bears and consequently stock bulls

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$NYMO The NY Stock Exchange McCellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +5.83. This indicates stocks are just a wee bit overbought and moving is either direction is possible.

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching -60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Sorry have not had a chance to update Positions section in well over a week – see past updates

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

Going to add Indonesia & Vietnam ETF’s – but waiting for dips. Also going to add DGP (this ETF does about 2x what the GLD does) – More explanation later. As a trade like GS. Again, waiting for dips

Traders (short term plays) These are not ETFs, but individual stocks

Extra Note of Caution here Even though I always warn you AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! please note I’m far less confident in individual stock picks

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. But subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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