On Education

Amish schoolhouse in Lancaster County, Pennsylvania in 1941. (from Wikipedia)

Imagine if your were president/dictator of USA. What would you do with education? I would give teachers massive tax cut/eliminate taxes on the first $50,000 they earn and raise taxes on the top 1% of individuals in the country to pay for it. (see yesteday’s Tom Friedman editorial)

Waiting for Financial Reform

Monitor has some excellent comments (see comments section on right side of blog). The long term picture for the USA is certainly one of decline relative to the rest of the world. A fall that is going to hit Main Street harder than anyone else.  We built a huge deficit under the Bush administration & created the worst financial crisis since the Great Depression.

But, we are still waiting for some kind of financial reform.  Add to this we are still spending trillions nation building overseas and stimulus, the usual cure for a recession, is puling us further into debt.  No wonder volume is NOT growing as stocks advance and the dollar  falls. People are loosing confidence in the USA.

One of the  most troubling in all of this is where is the financial reform? Obama was all about “change we can believe in” and aside from a few minor adjustments, where’s the change?  Where’s the transparency? Where’s the accountability? Where are the new laws to prevent corruption?

The reforms that fixed Wall Street after the great Depression were removed and capitalism was left without checks and balances. Look what happened – A massive financial meltdown.  Author Ron Chernow concludes his editorial in today’s NYT  entitled “Everyman’s Financial Meltdown.” as follows ” [we] still await a new season of financial reform.”

More Pay Cuts for Shadow Banks

From yesterdayObama administration is forcing pay cuts on top executives of 7 bailout firms. Good first step. Now we get step two. Fed is proposing review of pay at 28 of the largest shadow banks . LINK Two steps in the right direction, but we need a whole lot more.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow +1.33% down
NASDQ +0.68% down
S&P500 +1.06% down
Russell2000 +1.37%
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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

This is a US stock market dominated by professionals and traders .  We had another significant rally in weaker volume. The Dow was close to even in volume. Historically volume has always been the #1 confirmation factor of an equity move in price.

Oil prices fell LINK to chart -0.22% to $81.19 . Obviously oil prices above $80 is going to hurt ma and pa consumer in any recovery.  Sure looks like some entity or group is manipulating oil prices. Up 9 of last 11 days and going parabolic (up too far too fast) Oil prices like stocks usually move inversely to the price of the dollar.

The BDI rose significantly again = Bearish for stocks stocksandand world trade.

Reading the Tea Leaves – from yesterday -  There is no specific fundamental(s) that you can point to that says yea that’s the reason stocks tanked in big time volume at in the last hour of trading.  Obviously “the Pro’s” know something us common investors do not. Earnings season has been much better than expected with companies beating on both TOP and bottom line. The dollar fell. The BDI is rising.  Stocks should be rising . Perhaps yesterday’s rally was a delayed reaction to the overall drop in the dollar, rise in the BDI and some better than expected earnings reports.

However, BE CAUTIOUS volume has in no way confirmed the move higher. If you look at the beginning of the bull run (March April and May)(check out weekly charts of a major US index) there was huge volume behind the move higher. You expect some slower volume in the summer, but volume has not returned to the markets.

Best guess is for rally today.

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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 is @ 30% 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 +84 points yesterday and closed at 3001. A higher high price on its chart pattern has been confirmed and it sure looks like a bullish run could be starting. =  Bullish for stocks & world trade right now

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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 -.09% The dollar closed at $75.05Perhaps yesterday’s rally was a delayed reaction to the significant 0.55% decline in the dollar the day before-the two day total drop is -0.64% Bullish for stocks

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

The falling dollar is getting a lot of PR. A lot of this is politics and fear mongering. However the dropping dollar does show a growing weakness in America economically and the potential for higher inflation. The real test for the dollar lies in the March 2008 lows around $71+

Positions

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

Trades made this week are updated at the end of the week. -  Sold 50% of position in EWZ and all of EWY. This sure looks like - a big mistake – Should have been adding instead of subtracting – especially EWZ – Still no one ever went broke taking profits .

Monitor’s comments are right on (see comments section of blog)-Investing outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - My problem is one of timing. We can’t get a 5 to 10% dip to invest. Investors 411 should have much larger positions emerging markets.

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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