Barack’s Big Bubble

Senator Maria E. Cantwell
Every Sunday, the NYT’s  Frank Rich , produces one of the most insightful columns LINK that is outside the box of the ordinary pablum of America corporate media. It’s entitled The Night They Drove the Tea Partiers Down . But let’s expand on some of his secondary points and forget about the Tea Parties for now.

Those of you who follow the stock portion of this blog and have beat the S&P 500 financially again as in the last 4 1/2 years, have notice Investors411 repeating as a mantra that volume is falling as markets are rising .  A very very very unusual scenario. Money is NOT coming into US equities for the sidelines if anything its exiting stocks. Why?

There is a growing lack of confidence & building anger over the US financial system (“shadow banks”). The vast majority of Republicans have always wanted the financial system to have no umpires or rules (think baseball without umpires or rules) Obama and the Dems have blessed this position and actually made it worse. They are stripping away vital protections that made our financial system accountable and transparent. If anything proposed changes are cosmetic. (story for another editorial).  Here’s a few relevant points that Obama and the Dems have pushed making our financial system less transparent.

  • They dropped Mark to Market accounting . Now financial simply don’t have to account for losses in real time.
  • Even though former Fed Chair Paul Volker is supposedly the Head of Obama’s Economic Recovery Board they have ignored his pleas to break up the too big to fail banks. In fact these banks are bigger and badder than before. LINK
  • They (The Dems led the charge) voted to gut the reforms instituted after the World Com accounting scandal/collapse n 2002 that Bush helped put in place LINK
  • At least one Democratic Senator has had the guts to stand up for the public - Maria Cantwell I’m not sure” why Treasury Secretary Timothy Geithner still has his job, calling his financial reform plans “appalling.” LINK

I know you’re getting a lot of happy talk or “political bromides” about what’s going to get done, but that does nothing. The anger is only going to grow as the bubble expands. Our finacial system is LESS accountable and transparent than when Lehman collapsed.

Bottom Line for Longer term investors and everyone else – Invest in tangible assets and countries that are less involved with the US financial system. No NOT make long term investments in US financials. Recognize another bubble is building. The longer we wait to fix it the worse its going to be when it pops.



Index Percentage % Volume
Dow +0.17% down
NASDQ +0.34% down
S&P500 +0.25% down
Russell2000 _0,14%

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, Fundamentals & Analysis

The end of the week saw a rally, again in low, decreased volume.

In my decades of watching markets, I’ve never seen the US markets rise so far on volume that kept decreasing. The USA is a market of short term traders not long term investors. This can bet be exemplified by CNBC, the #1 financial channel, whose focus is “Fast Money,” “Mad Money,” (actual names of popular shows) & what’s happening NOW. Its exiting to watch, but its like watching a poker TV channel.

We have moved from way oversold positions to a neutral position. Perhaps the best chart you can use to tell if a market if oversold of overbought is the McClellan Indicator LINK ( more on this later – key to chart – 0 is neutral and when you get to @ +60 you are overbought and approaching -60 you are oversold)( buy at oversold and sell at overbought) We are going to use this chart a lot more.

As stated many times before The new #1 forecasting tool is what happens to the dollar.

FEARLESS FORECAST FOR WEEK – Tomorrow, not enough time for full analysis, but it looks like we are in rally mode.


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) .

The BDI is @ 21% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +58 points yesterday and closed at 3393. We look to be starting another major move higher. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1300 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ


The Dollar is currently the #1 forecasting tool .

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

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

US dollar rose a modest  +0.05% yesterday. The dollar closed at $75.76

From last week – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.52 this AM . The support level is a t @$75.00 Both are important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow. Right now smack dap in middle of trading range, but 50 day moving average is decreasing so the squeeze is on.


The  Positions Section (top of blog) to see all the latest buys and sells

Our major core positions into weekend. – See Wednesday’s post – Click on Nov. 4th (last Wednesday) on the calender on to of blog.

Will return Long Term Outlook  to CAUTIOUSLY BULLISH when a higher high (we break out to new high) is established on S&P (chart pattern).

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog


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