Index Percentage % Volume
Dow +0.64% down
NASDQ +0.38% down
S&P500 +0.80% down
Russell2000 +0.49% -

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Trends, Politics & Economics

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$719 Billion Stimulus + $70 for ATM Fix

Both the House and Senate have agreed on a $719 Billion dollar Stimulus Plan & a somewhat stimulative $70 Billion dollar fix of the Alternative Minimum Tax . The ATM was a tax on the wealthy that our “brilliant” legislators forgot to index to inflation. Therefore, each year this tax dipped down lower and lower until it reached the upper middle class.  Middle class and Lower class Americans are more likely to spend their stimulus benefits  than the upper middle class so it is not as stimulative as other parts of the package.

The Tax Policy Center has a how the entire stimulus is being distributed. Sorry they have the House and Senate versions and have not posted a compilation yet.

Economic Overview (part 1)

Over the years Investors411/Market Updates out performed the benchmark S&P 500.  Part of this reason was due do the sectors/ETF’s/countries that were chosen to invest in. There is a very simple strategy behind this.

Trickle down supply economics is not an effective wealth producer for a country and a growing middle/working classes produces wealth far faster.

We invested in Exchange Traded Funds like FXI (China) EWZ (Brazil) EEM (emerging Markets) EPI (India)  and other countries because these and other countries GDP’s grew at a far faster rate than ours.  These countries grew because their working/middle class expanded and these folks spent their $ and reinvested in their economy.

What mattered is that more of the working classes had money to spend and they reinvested it in their economies. No longer was a rich oligarchy at the top controlling all the wealth.  Even in Venezuela wanna be dictator Chavez redistributed wealth that in turn got immediately reinvested in Venezuela.A couple of years ago Venezuela  became the world’s #1 stock market in price growth.  Lots of this wealth has now been squandered by Chavez, but the principle works.

A growing working class which reinvests in its own economy moves the economy and stock market far faster than a country that has a growing upper class and a shrinking lower class such as the USA.

(To be continued)

Tom Friedman Strikes Again

Nobody hits it out of the park each time he/she comes up to bat. However. Tom Friedman has come up with another innovative idea on who would buy up all the exiting subprime homes – immigration.  Its worth checking out this thought provoking editorial on protectionsim.

Stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Technicals

Our super strong support level held firm as the Dow bounced off its lows.  The benchmark S&P 500 also had its support level challenged again (see chart at blog) The more time a support level gets tested the stronger it gets.  Kind of like an enemy attacking a fort after a while they give up in frustration.  There is one additional support level about 500 Dow points lower – last years November low.

Secondary Indicators

Both Treasury Bonds and LIBOR have moved in a bullish direction over the last few months. The Baltic Dry Sea Inde x that measures the flow of goods between countries, is still on fire +64% over the last 6 days and another +4% on Tuesday.  The BDI mega rally is slowing but this rally is still a big time short term bullish signal.

Fundamentals

Geithner and what he plans to do with the second 1/2 of the TARP money continues to be the most talked about topic Here are diverse some editorials on the whole mess.

Jobless claims and Retail numbers numbers just came out this AM and are slightly better than expected.

Short Term Outlook

Lesson Learned – Fundamentals, especially in volatile bear markets can easily trump technicals . Tuesday’s meltdown on Geithner’s plan is a perfect example of this.  Technically, on the benchmark S&P 500, like the Dow and other major US indexes we are rangebound.  The S&P is rangebound between 800 and 880.  Currently at 833.  Until we see some breakout (up or down) there is nothing to get  excited about.

Looks like trend is now lower and support will get tested again today.

Long Term Outlook Bears Rule

See Blog http://www.investors411.com – Click on calender Feb 10th and scroll down. This section will be a future heading on blog.

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