Obama – Leadership & Polls

Head and shoulders of a man in his forties with close-cropped hair, dressed in a dark grey suit, light blue shirt and blue with maroon and white rep tie. On his left lapel is a pin of the American flag. Over his right shoulder the U.S. flag and the presidential seal are a bit out of focus.

Lots have analysts have remarked how fast Obama (now at about +50%) poll numbers are dropping .  The one missing ingredient is leadership.

Yes, Obama has lost  support among Democrats and Independents for nor following though on some of his promises. However, the most visible issue is the health care debate . He is getting slaughtered on this because he has NO POSITION . There is something vague about if nothing’s done medicare will go broke and in another 8 years costs will double. This is True, but what or where is the Obama Health Care plan?

Right now Obama looks like that 98 pound weakling who is getting sand kicked in his face.  They labeled him and his non existent Obama plan all sorts of names and it sticks because he doesn’t have a concrete plan. Unless he chooses something and leads the only way to go is down and the mob will win .

Cash for Clunkers

The best stimulus program to come out of government .  The government spends something like $3,500 and gets the consumer to spent $15,000 to $20,000 on a new more fuel efficient car.

The government is getting the consumer to spend @5 times what it has invested .  That 5 times gets multiplied by fuel efficiencies, tax revenues, keeping manufacturing jobs, and the employees of the dealers and manufacturers spend that money to buy other stuff. This all gets money flowing even faster.

This program should be continued with other big ticket items that can be made more fuel efficient .

The best rival to Cash for Clunkers is the $8,000 stimulus for first time home buyers. This also has a huge multiplier effect.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow -1.96% up
NASDQ -2.00% up
S&P500 -2.21% up
Russell2000 -2.45% -

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 and Fundamentals

Major US markets had a significant meltdown in increased above average volumeBEAR’S RULE the short term momentum and the volume indicates that there is more downside to come.

A week ago I mentioned that Jim Cramer was wrong and we were due for a more significant correction.

Support levels to watch on benchmark S&P 500. SPX currently at 998. The first is 980 . If that falls we could see a lot deeper correction .  Lots depends on the jobs data on Friday. However, we had great manufacturing news and when good news sinks the market – that’s an indication of more pain to come.

Lots of analyst look at this as a technical correction.  We came too far too fast. But there is a major underlying fundamental factor. The BDI shows worldwide trade falling. Much of this is due to China pulling back on buying commodities. China also has a technically overheated market. (see yesterday’s blog)

The big news for the month is the jobs report on Friday Right now we reacted so poorly to the good ISM (manufacturing) news, you have to worry about the employment news.

On financials from yesterday-If you prefer gambling to investing, I’d wait another day or until prices get closer to 200& 50 day moving average before putting bullish chips on the table.

Therefore , FEARLESS FORECAST is for a down week .

The  jobs report for August comes out Friday most important fundamental of the week. ISM (manufacturing ) report out today.  What’s key here is  we get a good number (above 50 would mean manufacturing growth) If market does not move higher on good number, it is a strong indication that market correction underway. - You betcha-what now looks like a  correction is underway not only in exporting countries, but importing countries (USA)

——–

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) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off – Up +2 yesterday


“Remember almost every country has based their recovery on exporting their way out of this mess” (Source – seeking Alpha)The infotainment financial channels and analysts used the BDI when things were going well and are now ignoring it. The #1 factor behind the BDI’s retreat is China seems to have stopped or seriously slowed down buying commodities.

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

The dollar was rose a significant +0.75 % yesterday. Dollar closed at $78.74. Its  major support level is @$77.5 & it has 2 major resistance levels – a falling 50 day moving ave. at @$79.20 and the August highs of @ $79.5 .  If it breaks down through support stocks should rise, if it breaks up through resistance stocks should fall.

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

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The high Beta names are getting beaten up. Financials took a big hit yesterday.   The BDI’s drop and the fall of the Shanghai Index technically (see yesterday’s update) certainly forecasted and forecasts further deterioration. If the BDI has stopped its fall we’re OK

My philosophy has always been why be greedy – China/Brazil in the long run will outperform the USA. But a correction will take those stocks further down.

  • If you’re in this for the long term (years) hold onto all FXI & EWZ
  • If you’re not let’s sell 1/3 to 1/2 the positions. The gains should be @ 20+% and hopefully buy back in at a lower price

When the BDI starts to recover – reaches a higher high. Then jump back in. Right now, this is NOT some huge reversal, but a correction of an overheated market. If the BDI continues to fall from current levels, we are much deeper trouble.

Your Comments

Both privately and in the comment section of the blog you are asking for individual stock recommendations. OK I have a few. Stay tuned.


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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