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Jobs – Millions Created

The non partisan Congressional Budget Office came out with its assessment of the Obama stimulus yesterday. “The massive package of tax cuts, construction spending and enhanced safety-net benefits was passed in February 2009 in the midst of the deepest recession since the 1930s.” Some highlights-

  • Boosted real GDP between 1.7 & 4.5%
  • Job growth between 1.4 & 4.8 million (depends on how you count).
  • Cost estimate down from $862 to $814 billion

If the middle class is NOT working you’re never going to get out of recession.  Some are worried about deficits so here’s the deficit figures by Presidents since WW2.

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 -1.32% up
NASDQ -1.66% up
S&P 500 -1.53% up
Russell 2000 -1.17% -

Technicals, Fundamentals & Analysis

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

Mantra for the month The Black Box/High Frequency Traders BB/HFT control the majority of trades.

US stocks had yet another “distribution day.” This translate to major price drop greater than 1%, in increased above average volume. Volume was just slightly above average. We’ve had almost a handful of these hits in the last two months. = Bears Rule

Almost every market technician, especially after the benchmark S&P 1070 support collapsed sees more bad news to come and no real support until @ SPX 1020. (this years low)  SPX 1052 now

To make matters worse, The third Hindenberg Omen occurred yesterday. (see last week’s Investors411)

This fall is happening despite the Fed pouring money into the system. Could be that the Fed money is the only thing holding things together – Cushioning the fall.

Critical Mass – Every pro knows about the distribution days, the Hindenbergs, Sept. is the worst month of the year, uncertainty of elections , etc. At some point this will become a self fulfilling reality that can even overwhelm the BB/HFT’s.

The BB/HFT’s have made a killing on low volume rallies and are the dominant traders by volume. Their plan (always short term) seems to be to catch everyone in short positions. Then as the dollar falls – make a quick killing in an oversold market.

Yesterday’s housing numbers were twice as bad as expected.  That’s a huge amount. = Bears Rule

Significant Indexes

  • The Dollar (USD)  [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar was flat for second day in a row, +0.02% yesterday.  Two week rally in place. Now facing resistance at 50DMA. Two flat days in a row could signal a reversal of trend & the dollar start to drop. But until this happens, for stocks outlook = Bearish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rally +0.70% yesterday. 5+ week Rally trend is strong but weakened yesterday = 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 -67.59 Officially we are oversold, but the MO has (last May)gotten below -120. = Bullish

Reading Tea Leaves

There probably a better than 50/50 chance we’ll reach support at @ SPX 1020 (This year’s low) within a couple weeks.

The dollar is still what to watch. UUP is the ETF.

Positions

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

Current positions – Small positions in EWS (Singapore) & USO (commodity-Oil)

Threw in the towel on EWZ at 67.68 for 2% loss. The other 1/2 of this trade sold earlier was a +3% gain.

Investors wait for -80 or below on the MO and/or we fall close to 1020 on the SPX to buy the dip. Traders its going to take lots of guts to buy right now.

Investors411 seeks to educate you to make choices for yourself. I trade in six different accounts from a consertive non profit corporation to a far more aggressive acount for someone much younger than I. Everyone is different. There is NO right choice.

I do like NFLX and will include it on YOUR Stock list despite its bad day yesterday in moderate/increased volume

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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