Investors 411 Blog

A Financial Dr Strangelove

Larry Summers , Obama’s chief economic adviser, is the financial Dr Strangelove of this administration. Ever since his nomination was first suggested, Investors411 has strongly objected to his controlling influence in our economic policy. Summers was the protogee of Goldman Sachs CEO Robert Rubin. He took over as Sec. of Treasury under Clinton and approved laws that gutted consumer/taxpayer financial protection.

Summers, has time after time backed the unregulated capitalism, that even Alan Greenspan has admitted was a mistake.  The latest expose comes from the $1.8 billion that vanished from when he was President of Harvard University. Boston Globe LINK

Summers has over ruled the voices of reform within the Obama administration.

Trickle Down Economics

Summers and the Obama administration are running the same kind of trickle down economics that widened the gulf between the rich and poor under Ronald Reagan . They’ve continued Paulson’s (Bush’s Sec. of Treasury) socializing the risk for the wealthy and making the middle class taxpayers pay.

Wall Streets wealth (rise in stock prices & shadow bank bonuses) is being led by rebounding emerging markets and American companies investing their money and jobs abroad.  The reason the Russell 2000 (smaller companies) lag the other major US indexes is they do less business abroad. Big Shadow banks (up collectively well over 100%) are getting bailed out with trillions of dollars (both printed money and your tax $) Main Street gets chumb change.

Nobel Prize winner Paul Krugman editorial in NYT states on jobs”There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers. This is wrong and unacceptable. “ LINK

He offers the following jobs solution LINK

The Bigots Demonstrate at Our School

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

For the moment the Dubai economic meltdown has stabilized because oil rich Abu Dhabi has promised to bail out the over leverage Mid east playground for the ultra wealthy. Volume, was, of course up over the 1/2 day trading Friday, but still below average. 3 of the 4 major indexes (not small caps – Russell 2000 – This index makes most of its profits from within the USA) have all achieved higher highs - Bullish Hopefully they are now in proves of achieving higher lows.

Repeating mantra = The dollar rules – The trend here is a moderate or slow decline of the dollar.  What would reverse this is an event like an attack on Iran – stocks would fall & the dollar would rise.  Perhaps, technically, there could be a short term rise in the dollar.

Obama’s Afghan speech tonight – Escalation in war, to a rational person, would ususally mean an immediate drop in stocks.  But, these are NOT rational times.

Now going to get a bit more technical

If you don’t understand a term look in up at Investopedia.com dictionary LINK

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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 fell -87 points yesterday and closed at 3887. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1700 points since late September. After 16 up days in a row, now, 8 down days in a row & down through the former resistance/now support level 0f 4291 .

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. Recent price drop-Nothing to panic about yet

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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 fell an insignificant -0.17% yesterday . The dollar closed at $74.80 . 

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at -17.07 This is a slightly Oversold Position . This chart is showing we seemed to haveave reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  There has been no clear buy or sell signal for over a month,. Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

Positions

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

I did get a chance to do some editing in the Positions Section of the blog. ( Note 2 added positions)

From Friday – Probably going to take some profits today (sell 1/3+ positions) in FXI, EWZ, GLD & all of DGP. Hopefully, will get a chance to buy back into these positions when the McClellan Index gets oversold. Personally I did sell/take profits on 1/3 of FXI & all of DGP . No one ever went broke taking profits – but right now this move looks like a mistake.

List of positions & percent of portfolio (see positions section for more)

16% FXI

16% EWZ

11% GLD

10% MOO (agriculture ETF – more later on this)

5% AMZN (stock)

5% NVS (stock)

5% BRSIX – not listed in Investors411. A small cap mutual fund that I’ve owned for almost a decade ( I liked the company because they gave a lot of profits back to charity)

10% -  3 Bonds – not listed in Investors411 that I’ve owned for years.

sometimes @15% in day & swing trading I do not discuss in Investors411 & the rest in cash.

Best recommendation – It’s time to buy some protection. Iran, lost a 25 to 3 vote in the UN regarding their desire to achieve nuclear weapons or nuclear power (if you trust Ahmadinejad believe the later) The chances Israel or the USA will attack is growing. Obama committing more troops to Afghanistan further surrounds Iran. The price of oil will skyrocket if their is an attack. Yesterday Iran’s navy picked up some Britsh racing ship.

Some other terrorist event may occur reguarding oil.

So, on dips, buy the commodity oil. I have to check this out further, but the appropriate commodity (not company based) ETF’s seem to be USO & OLO (OLO does 2x what oil does) The later is very thinly traded. Going to work up to 10% of portfolio.

Long Term Outlook = CAUTIOUSLY BULLISH