Lights Going Out Across America

NYT’s/Princeton Nobel prize winning Paul Krugman editorial certainly not a rosy forecast.

This is My Lucky Day

Great Video sent in by E.R. Enjoy! Also from same site totally different but entertaining video from flixxy.com

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 -0.51% up
NASDQ -1.24% up
S&P 500 -0.60% up
Russell 2000 -2.00% -

Technicals, Fundamentals & Analysis

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

Same Mantra for the month -The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Here’s a look ahead for Wednesday market.

The big news out of yesterday was the Fed meeting and suggesting Long Term Interest Rates can go even lower. That’s bullish for stocks.

Significant Indexes

  • The Dollar had a huge rally but ended the day up only +0.11%. Rally (+0.85% higher) that collapses is usually bad news for dollar and good news for stocks , but we are still holding support.= Neutral/Bullish
  • The Baltic Dry Index (BDI) kept accelerating its move  higher (+4.64%) = Bullish
  • McClellan Index – (MO) [Basically longer term  - the rough guideline is over +60 = overbought market = sell or short stocks & -60 = oversold market = buy stocks.] MO fell to +7.68Neutral

Reading Tea Leaves

The BB/HFT traders because of their size, scope, & frequency are creating correlations across diverse markets. They trade futures in currency, commodities, stocks and other markets.  What this has done is create a greater unity in these markets. One prime example is the dollar going down for a few days almost always means stocks will go up.

While normal investors or traders can’t match the speed or size of the BB/HFT’s, the simple advantage we have, is we can watch their direction. Because of their big size hey leave footprints/trends.  Simply follow the trend.

Longer term – What’s growing the fastest is emerging markets and the US companies that export to them. If the dollar keeps falling, US exports will cost less and US stocks will grow.

Short Term – Nothing goes up or down in a straight line. There’s problems out there from a phony opaque financial system in the US to an overheated housing bubble in China. At sometime major problems like the two examples or others make noise and markets tumble.

The three indexes above are guideposts to what’s happening or will happen. Right now the major fight is over a key resistance/support level of the dollar and it looks like the dollar bears might win. This would be good news for stock bulls.

Our key forecasting tool is the MO is in Neutral. This gives us “wiggle room” both on the up and downside.(see above)

However, despite some potential good news in BDI & dollar, when you look at the chart of the MO you’ll see a series of lower highs and lower lows. This is NOT good. For those who know more about technical analysis the MO has also broken down through a “head and shoulders” pattern. Again NOT good.

Therefore, despite some encouraging news in the dollar & the BDI it looks like in short term we are heading lower.

Positions

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

Current positions .

  • EWZ (Brazil – Now 5% of portfolio position) Bought at 69.80. Currently at 70.50. Considering selling remainder.
  • TYH (3x technology – 2% of portfolio position) Bought at 31.76 Sold yesterday at 31.08  for -2% loss

Mea Culpa – Investors411 has brought this up a handful of times yet failed to take action each time its happened. Buy GLD on dips.

The Bulls seem to be loosing control and the MO is in the middle of neutral territory.  Perhaps the MO will drop low enough to consider buying again.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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