I am wondering what you think of investing in the Iraqi dinar?From MH

Iraq

The USA is pulling combat troop out of Iraq by end of August & only 50,000 to remain. “No combat troops will remain.”

So without the bells, whistles, victory celebrations we’re kind of  leaving Iraq. Like Osama Been Forgotten, Iraq Been Forgotten. Here’s what remains.

  • The Sunni’s got toasted in the civil war and there are still probably millions of refugees in Jordan, Syria, & Iraq
  • There has been NO resolution of an elected government in Iraq for 5 months. Two leading sides each have @ 90 members of a @350 member parliament.
  • American’s & Saudi’s back Allawi faction. Iran backs Maliki (current PM) faction.
  • Kingmaker seems to be Sadr (actively courted by all) who fought Americans and hid out in Iran. Sadr likes Maliki’s side but hates him because he imprisoned his followers.
  • All that oil, everyone own a gun, religious hatred/killings and huge amounts of corruption. Not a good mix.
  • July was deadliest month in two years according to Iraq government. But this is still down from 2008 levels.

Reasonable to assume as US withdraws and no or a weak governing majority formed - violence will grow. If the Allawi faction gains power the Iraqi dinar could pop higher.  Obviously great risk here. But where there is great risk there is great gain.

Best place to go for more is Informed Comment blog.(scroll down)

For the US this obviously was an oil war (the peak oil mega trend). It is in the US interest, and that of all the corrupt officials no matter what side they are on, to keep the oil/money flowing. However the hatred is very very deep and religious between Sunni’s & Shia. The other major group – Kurds want the same oil that the Sunni’s claim. This is all very very confusing and I could go on & on.

Bottom Line – Dinar pops on Allawi taking over (most likely winner because Saudi’s & Americans will fix it for him) Then you have a power vacuum with US leaving and all those guns, hatred, and money/oil. Violence already growing and the kingmaker is the most radical Shia religious leader (Sadr) in Iraq. Not a pretty picture.

So if you love great risk buy now on the hope of Allawi forming a government. But I’d sell into Allawi taking power because American’s don’t want to go back.

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 -0.36% up
NASDQ -0.52% flat
S&P 500 -0.48% down
Russell 2000 -0.94% -

Technicals, Fundamentals & Analysis

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the vast majority of trades.

Last big week for earnings reports.

Significant Indexes-

  • McClellan Oscillator (MO) fell  to +42.72 over the last few days [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. A minor price fall ( yesterday’s -38 Dow points) creates a major 24 point move on the MO vs. a major gain (Monday’s +200 Dow points) creating almost the same move higher. When the MO falls 24 points on such a small loss its usually bullish. Again “wiggle room” has opened up for the MO to go higher – High two weeks ago 90 minus 42,.72 = @ 47 points or wiggle room for bulls. NEUTRAL
  • US Dollar –  The dollar  fell  -0.43% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar  is in a two month long fall and is divectly above a major support level.(its 200 Day Moving Average – see chart) The fall for stocks = Bullish
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a two week rally and is up +17% rally and is at 1977 Monday. Yesterday the BDI fell slightly to 1964. We’d have to break support at 1700 to turn really bearish or go back up above 1977 to turn bullish = Neutral

Reading Tea Leaves-

Investors purposefully chooses the three indexes that have perhaps the most significant impact on the market. They all measure different areas. Here’s the BASICS

The McCellan Oscillator -MO BASICS (see above)

  • The MO measures if the market is oversold or overbought.
  • It does NOT use volume to caluculate this (see above)
  • The BB/HFT traders are making day and swing tardes that almost ignor old technical rules like volume as a confirmation of a market move.

The BDI – BASICS (see above)

  • Measure costs to ship goods worldwide.
  • Transparent figure – Unlike many economic figures – think shadow banks.
  • Without exports/inports our globalized economic structure collapses.
  • Lower prices = less goods shipped. Higher prices = more goods shipped & good for stocks.

The DollarBASICS (see above)

  • The BB/HFT pay close attention to what the dollar does.
  • Currency markets dwarf stock markets.
  • When the dollar falls it means all those companies that export US goods will make more profits and markets will move higher. (& visa versa)

Analysis –

The US Dollar is in a two month free fall. (see below) . Today’s a big day because the dollar’s price is right on its 200 Day Moving Average. It certainly looks like the 200DMA support level is going to fall and therefore stocks will move higher. If you want to track (or invest) in dollar daily see UUP (Dollar Bullish index) This is where the action is.

Bulls are still in charge of mid term trend and we have more “wiggle room.”

Positions

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

EWZ is the only long position at this time. Will sell 50% at 5% gain or if it returns to the price it was bought for.

Interested in buying more (ETF’s based on major US indexes) on any further dip. Especially a dip in stock prices as the dollar rises like yesterday.

YOUR Stock List

BIDU, AAPL, SNDK, PCLN , F, CREE (8/10), SAM , GMCR, HMIN (8/10), SWKS, RADS (8/5), SKX, VCI, UFS, IMAX, UPS.

Paul R has posted some information on some of these stocks – see comments section of blog. Will get to in depth analysis next week.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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