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
Dow 1.59% up
NASDQ -1.75% up
S&P -1.62% up
Russell 2000 -2.03% -

Technicals, Fundamentals & Analysis

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

One way to quickly skim what’s happening is to count the Bearish, Neutral & Bullish signals in Investors411. These are short term trend indicators. If all capitals are used BEARISH or BULLISH put far more emphasis on that forecasting tool. Reading The Tea Leaves will give a daily overview.

US Stock Markets -

Major meltdown in increased above average volume. Not OMG volume but a bit above average. = Bearish

Interday Markets fell in the AM and stayed flat through out the PM = Could be forming a base or support line = weak Bullish

All major US indexes almost directly above a significant support level – Their 50 day moving averages = Bullish

The CRB is the basic index for all commodity futures. The USO (oil XTF – since it is an ETF it shows volume) is only one commodity. Both took huge hits yesterday. As mentioned on Monday a minor (relative to housing/shadow bank 2008 meltdown) bubble looks to  be bursting. = BEARISH

Another negative is the focus of investors Ireland looks like it faces same problem as Greece. = Bearish

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar rose another  significant amount  +0.88% yesterday. It took out another resistance level like a knife through butter For stocks = BEARISH
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Fell  another  -1.86% yesterday. Major support recently broken and BDI keeps falling at 2+% each day = Bearish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] fell dramatically and are in oversold territory  = Bullish
  • 10 Year Treasury Bond (TNX) [Bonds compete with stocks for Investors. Rising TNX also signals inflation. Rising yields bad for stocks] After breakout two days ago fell -2.20% back to its support level = Neutral/Bearish

Reading The Tea Leaves -

There are still too many bearish signals out there to to balance the fact that we are approaching the 50 day moving/support level average for the major US stock indexes. The MO is clearly in oversold territory at -86.89 but has fallen beyond -130 ONLY twice in the last three years

There’s a shot because of the low MO and support levels for the major indexes is in front of us that bulls could make a stand. The problem is that just about everyone else who I skim for analysis is full of doom and gloom.  In fact, more are starting to talk about a double dip recession.

Bears are approaching the 50 day moving average with HUGE momentum so the Long Term Outlook was changed to NEUTRAL

The Wild Card is the High Frequency Traders that dominate the stock market (50 to 80% of trades) I get the feeling they are “pumping and dumping” HFT and other entities push or pump panic traders/investors in one direction then when it reaches a fever pitch go/dump in the other.

So being totally out of the markets, I think there a chance to nibble on another big dip. At a -120 MO I’d take a bite.

Additional reasoning -The rising dollar is playing a major role in falling stocks. The USD is trading above its top Bollinger Band. Translation its gone up too far too fast. So if the tracking ETF for the dollar the UUP goes up  and stock dip this AM, I’ll BUY

This trade will evaporate if we go sideways for a few days. But at least a snap back counter trend rally is very possible right now.

Positions

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

(I do manage 6 accounts that have other positions)..

Investors411 has No long positions at this time. Even our YOUR Stock List is under construction.

Traders. Potential for a buy the dip trade exists today.(see above) Would use riskier TYH (3X techs) & EDC (3X Emerging Markets) rather than less leveraged ROM (2x techs) & UWM (2X small caps) to start. Reasoning – I’ll take a quick 3 to 5% profit on 1/2 and let the rest ride. The more leverage the quicker you get to the profit/stop loss

Investors. -87 on the MO is mighty tempting. I do think there is more downside to come. If you can take the high risk  EEM or one of the various other specific emerging market countries is what I’d choose. You’d love another  Dow down 100+ points before nibbling.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.”

Longer Term OutlookNEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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