The Crash, Bailouts and Future of Wall Street

James B. Stewart has an excellent and frightening  editorial in the New Yorker (you have to subscribe) that starts by describing just how close the world came to total financial collapse. Bernanke, Paulson, & Geithner are heroes for preventing the fall over the abyss. Of course, they’re villains for helping to create this mess too.

Pulitzer Prize winner, Stewart goes well beyond this (If any of you can find a link to this editorial please share it) Here’s a valuable Q&A on his piece from the New Yorker LINK

Willing to bet – Less than 5% of American’s  have some understanding of what happened (the crash, the bailouts, and solutions) Everyone, running around like chickens with their head chopped off,  screaming, or just plain angry.  Instead of listing to the dogmatic screamers – get educated – take some time and learn what happened.

Your Comments

Dr. Gold has written a  guest editorial for Investors411 and has  just posted some valuable insight on the health care debate. Check out the comments section of the blog for her wisdom and all the other comments.

They’re Back

Financial Weapons of Mass Destruction (Warren Buffett’s term) Credit Default Swaps are becoming popular again just one year after the major economic meltdown that almost created financial Armageddon throughout the world. Bloomberg , a major financial radio, TV, web, and print outlet headlines the following “Credit Swaps Lose Crisis Stigma as Confidence Returns.” LINK

Obama Scraps Missile Shield

Front Page NYT. LINK

Finally. Remember the missile shield that was supposed to be built in eastern Europe (Poland) to protect them from a country over 1000 miles away – Iran.  Made no sense then and none now. In the event of war with Iran what you want to do is to keep them from destroying the Saudi oil fields. Perhaps this will bring about some detente with Russia.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow +1.12% up
NASDQ +1.45% up
S&P500 +1.53% up
Russell2000 +2.07% -

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

Technically, A significant big volume rally = Bullish sign Some money is coming on off the sidelines.

CAUTION – This market is up 8 of the last 9 days. It’s overbought.  Look at any huge rally in big volume as  climax selling – and sell (take some positions off the table) into that rally. Sometimes a climax can be two days of intense buying.  It would be great for bulls to have a flat  or down day in decreased volume.  Don’t think this will happen because there are so many waiting to buy the dip.

This rally is based on a falling Dollar (down 8 days in a row) The dollar is oversold and reaching a support level (not a really strong support level).  This combination of oversold and an upcoming support level should hold for at least a day or two.

A dollar that slowly declines helps stocks – up to a point. At some point (perhaps close to last year’s low or huge declines above 0.50% for a few days) a cascading dollar becomes a problem because it shows a lack of confidence in the USA - our debt is too huge.

This is another free market stock bubble building – the questions become will it grow too large? & when will it burst? As long as there are

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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) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off and started to rise over the last few weeks. BDI fell a minor -16 yesterday. They are small losses, but the index has fallen 5 days in a row. BDI trading at 2415 and has recently formed a resistance level at 2388. Would not trust any stock rally, especially in foreign exporting countries if the BDI breaks down significantly below this number.

2388 is number to watch We are getting mighty close to support levels . Another down day is reason for caution.

The BDI is 41% off its high (early June) Before that it gained almost +170% from early April to Jun e

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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.

The dollar has fallen 8 days in a row.  It dropped  -0.37% yesterday. Dollar trading at $76.18 . The last two days have seen rallies in the dollar crushed. There is a support level around $76 (lows from Sept & Aug. of last year)

Mantra Dollar up = US stocks down & Dollar down = US stocks up

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

Current positions listed as % of portfolio

  • EWZ (Brazil) 12%
  • FX I (China) 18%
  • XLF (financials) 10%
  • GLD (gold) 10%
  • EWZ (S. Korea) 5%
  • SPX (S&P 500) 20%

Other positions discussed – But  Investors411 does NOT recommend individual stocks. I personally own- bought a week a two ago.

  • NVS (Novartis)
  • AAPL (Apple)
  • FAS – (3X financials) – I’m in and out of this ETF

Other positions mentioned, but not bought – AIG, C, GS

Would be more focused in taking a little profit from investments especially the closer you are to being 100% invested. Remember this is NOT you’re old buy and hold market. – There are still financial WMD’s out there and rallies/collapses that used to take years now happen in days/weeks.

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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