Afghanistan Bubble Building

Islamic Republic of Afghanistan

جمهوری اسلامی افغانستان
(PersianJomhūrī-ye Eslāmī-ye Afġānistān)

د افغانستان اسلامي جمهوریت
(PashtoDa Afġānistān Islāmī Jomhoriyat)

So after adding 21,000 to the original 38,000 troops in Afghanistan the generals are calling for another 45,000 troops for Obama’s “necessary war.” This would be a unilateral increase of American troops. This unilateral increase would put over 100,000 troops in nation building Afghanistan for the next 5 to 10 years. Basically we will end up unilaterally increasing troops by almost 200%. How is any of this different than the unilateral Cheney/Bush military approach.

Have we learned nothing from the trillion(s) spent in Iraq. – A corrupt government, dominated by Shia’s who love Amadinejad & still have huge economic problems. Imagine Israel bombing a suspected Iranian nuclear plant. It not only would turn Iranian religious fanatics into terrorist bombers, but the Shia’s in Iraq would join them.

What happens next probably Pakistan, Yemen, the Sudan ? Frank Rich has a column on this “Obama on the Precipice” in the NYT LINK

China blowing by the USA

Tom Friedman had another column this weekend entitled “The New Sputnik” on China blowing by the USA in the creating of alternative energy. LINK

This is just another reason why the #1 investment choice of Investors411 continues to be FXI -The China ETF.

Blowing and Building Economic Bubbles

Both the WSJ and the major financial channel are cheerleading unregulated capitalism this AM. Why not, the Lehman Brothers collapse is a year behind us and taxpayers have bailout Wall Street. Happy days are here again and nothing substantive has been done to regulate or reform what got us into trouble in the first place. Economist Simon Johnson on “Was the G 20 Summit actually Dangerous” traces the lack of capital requirements for US financial institutions. LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow -0,44 % down
NASDQ -0.79% down
S&P500 -0.61% down
Russell2000 -0.47% -

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 and Fundamentals

Volume declined and was below average. Technically, it looks like the bears are running out of momentum. In the very short term we are a bit oversold – so look for an early rally.

Big news for week is the jobs number fro the month of Sept. coming out Friday.

BDI seems to be turning higher = Bullish

Fearless Forecast Took it on the chin last week as major US indexes fell. However September is turning out to be a pretty good month. The dollar is the over ridding factor in market direction. It would be good in the long run  if US markets stopped moving higher without some sort of more major retreat (5 to 10%) Constantly going higher feels too much like a bubble building.  Fearless forecast for the week is for the dollar to fall and markets to rise.

This rally is built on the falling dollar, means US goods (exports) will cost less abroad. Therefore for major US companies that sell overseas profits will grow.


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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) .

2388 is support now resistance level/number to watch Yesterday BDI +20 t o close at 2183. Short term Bullish for stocks

The BDI is @49% 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 ) A 50% retracement from highs is a major support level. Therefore some stabilization is understandable.

What this means World trade is in trouble – lots of ships are sitting in ports empty.  To some degree, China has stopped buying raw materials and/or the US consumer is not buying as rapidly as earlier in the year. Braking a support level is significant, but 2183 (current level) is still a long way from the Dec. 2008 663 low. = Storm clouds gathering

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$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

The dollar fell -0.17% yesterday and closed at $76.78. After a major two day rally that created a higher price high (bullish) the dollar cooled off a bit.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

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

revised to reflect recent trades this weekend

Plan to add to EWZ (Brazil)

Also MVIS (a stock) NOT an ETF is technically looking like its small three day retreat makes it a possible buy.

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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