Updates has tried to give you sources and views outside the 5 major companies that run American corporate media and their advertisers that are an echo chamber of right wing politics. The boards of directors of the 5 major media conglomerates are almost exclusively made up of rich, white, right wing men. Updates features sources outside mainstream media. The sources used for the following piece is Slate (internet) and McClatchy (only newspaper chain to oppose war in Iraq when even the NYT parroted the pentagon.)

"It’s Better To Go Jaw to Jaw than War to War."

Barak Obama has been criticized for his willingness to talk with "the enemy". Before Bush we used to conduct diplomacy with an agenda, but without preconditions. It is crucial that we return to the diplomatic path that won the cold war. You are going to hear repeatedly till November elections Clinton, Bush, McCain and other war hawks argue that Barak and taking with your enemy is somehow naive. Below are two excerpt of the exact remarks Obama made. You will notice how these remarks are constantly taken out of context. See whole Slate story here http://www.slate.com/id/2192940/

The notion stems from the Democrats’ CNN-YouTube Debate of July 23, 2007, when a viewer named Steve asked the candidates "whether—in the spirit of Egyptian President Anwar Sadat’s bold trip to Jerusalem—they would be willing to talk with the leaders of Iran, Syria, Venezuela, Cuba, and North Korea "without preconditions" during their first year in office.

Barak has stated has stated he would obviously have an agenda,but sets no preconditions to talks. Here is his exact reply in the debate -

I would [be willing to meet with those leaders], and the reason is this: The notion that somehow not talking to countries is punishment to them—which has been the guiding diplomatic principle of this administration—is ridiculous. … [Ronald Reagan and John Kennedy talked with Soviet leaders because] they understood that we may not trust them, and they may pose an extraordinary threat to us, but we have the obligation to find areas where we can potentially move forward.

McClatchy news service is giving a taste of how Clinton is going to be used by Republican’s against Obama on this crucial issue of foreign policy. See Obama’s Clinton Problem Already Surfaces in Republican Add at http://www.mcclatchydc.com/homepage/story/39811.html

Index % Change Volume

Dow -0.10% up
NASDQ +0.91% flat
S&P500 -0.03% down
Russell2000 +0.64% –

US Markets

Major US stock indexes closed mixed as oil prices continued to fall. Volume continued to be heavy, which is a bit surprising because in the summer volume usually declines. This indicates that there is a kind of war going on between the major players over the direction of the markets this summer. The increased volume is the casualties on both sides. The Bulls major ally right now is the fact that oil prices have dropped almost 10% from their high. The stock market bulls and bears see the 50 day moving average of oil as the price barrier or support level that oil must fall through for the market to move ahead.

Notice that both the NASDQ and Russell 2000 seem to be leading the other two major indexes. This is a good sign for bulls because these two indexes usually lead and charge.

Chart of the benchmark S&P 500

Chart of oil prices (WTIC)

Recommended Positions (ETFs)

Short Term Traders

If you look at your positions daily you’re a short term trader. Of course there are traders who watch stocks minute by minute.

Updates features a strategy of buying the dips of a trending sector or ETF. What you do is to sell when the ETF is climbing after it reaches a new high. and buy when it dips back down to a major support level or 5 to 10%. There are a zillion criteria to use to define a dip from Bollinger bands to MACD. Look these terms upon Investopedia.com if you do not understand them. Updates keeps it simple and uses the 50 moving average of a stock as a dip criteria.

Long Term Investors

If you look at your positions weekly you are a long term investor. Note well the term investor vs. trader as in short term trader. If you do not look weekly you are making a big mistake, because its your money.

The time to sell is after a long term run or the fundamentals have broken down and the sector is no longer viable. What is suggested is that you nibble or add to a position in a trending sector when it falls 10+% or drops to, or below its 50, or close to its 200 day moving average. At this point you nibble or add to your position.

Hopefully the sectors (ETF) chosen is in a multi year bull market. Example EEM (emerging markets) was a preferred position of Market Updates for years because of the mega trend of globalization. EEM was dropped in favor of the energy rich countries early this year because of peak oil or the supply/demand imbalance in oil. Some emerging markets have little energy resources and will do worse than those that have energy resources. (EWZ and RSX)

Technically there are signs of a long term breakdown. But this will be covered in another update.

Bottom Line

Long Term Outlook NEUTRAL – High oil prices are negatively impacting US equities (Caution – this “Outlook” is based on US equities and while US markets greatly influence other markets it is not necessarily the outlook for recommended sectors).
The question for Wall Street is not whether there will be a recession or not, but how long will it last.

Asset Allocation/ Recommended Sectors (long term) – Buy on dips

* 35% Energy –
Energy rich EWZ, (Brazil) & RSX (Russia) two recommended countries. TRAMX – mutual fund for oil rich Mideast
PBW and GEX (alternative energy).
XLE (energy companies) OIH (oil services) USO (oil prices) UNG (natural gas prices)
KOL (coal companies)

* 40% Cash
* 15% Commodities – MOO Agribusiness, XME (mining & minerals)
* 5% Steel – SLX (Steel)
* 5% GLD
Chief Strategy – Buy the dips of trending sector in bull markets
Changes to Bottom Line Section Bolded .

As Always Do Your Own Research Before Investing

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