Is Obama Tough Enough?

Huffington Post Photo

That’s what many on the left are starting to ask, including MamaJama in the comments section of the blog.

  1. The Shadow Banks . The Democrats and Obama, even though they have a majority have done next to nothing to fix the problem that allowed “Financial Weapons of Mass Destruction” or Credit Default Swaps to flourish. They have bailed out he “too big to fail” shadow banks, but not instituted any significant safeguards.
  2. War and Government secrecy issues – There have been some minor changes, and progressive pablum, but Afghanistan has no long term plan and is looking more like Iraq (a pro Ahmadinejad Shia government in power and US troops still entrenched) or Vietnam
  3. Health Care – The recent “waffling” on the public part of Heath Care has many believing Obama doesn’t have the guts to stand up and fight. Economist Robert Reich brings up the same question.  LINK The NYT has a front page story on Democrats willing to go it alone LINK

The Big question is – Where is the Obama who stood tall during the election campaign and fought no matter where the polls had him? Perhaps this Health Care stuff is all a Muhammad Ali rope a dope strategy. Get a bill passed the Senate then fight. But the historic trend (above) shows a lack of leadership.

Thursday (2:30 EST) Obama is having a conference call to supporters. Will keep you updated.


STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow +0.90% down
NASDQ +1.30% down
S&P500 +1.01% down
Russell2000 +1.50% -

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

We recovered almost 1/2 of Monday’s losses, but in even weaker volume . Therefore no confirmation of the price move.

Last night Jim Cramer (The major financial channel’s popular host) announced with a flourish (his style) that the recent 3% dip was over. LINK Perhaps he’s right. But, volume did NOT confirm yesterday’s rally.  Going to stick by yesterday’s Fearless Forecast – This dip is going to be extended. Technically markets just got too overbought. Cramer’s WRONG.

THE MAJOR FACTORS HOLDING UP THE MARKETS (not Cramer’s)

  • China – Their stimulus package is working, but the BDI (see below) indicates that there may be long term trouble for exporting countries
  • Shadow Banks/Financials – Both the Fed and the administration is  giving them wheel barrels of money and doing nothing to solve the problems that got us into this mess.
  • US and other stimulus packages worldwide – Cutting taxes and helping to keep jobs is vital in a recession. The problem for the US is we were in such a debt hole to start with.
  • Gradual Falling Dollar – Helps recovery to a point , but also means higher oil prices. This is the key chart to watch right now . (see below)

Significant forecasting tools/Indexes for stock markets

BDI The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI fell -70 points yesterday.  The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs.

In a nut shell the BDI is

  • short term - Bearish pattern
  • mid term Bearish pattern
  • long term - Bullish pattern

Bottom Line This is NOT looking good . While we are still a long way off from major support levels the mid term (since June) bearish trend is growing. This hurts most exporting countries like China. Are trade barrier growing internationally or is this just a long technical correction? – The case for trade barriers between nations and a growing worldwide recession is getting stronger.

$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 fell -0.38% yesterday and, you guessed it, stocks rallied.

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

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Still have not had a chance to revise Positions section of blog.  Buying on dips – Smaller positions in FXI (China) & EWZ (Brazil) have been added to. Also an SPX (S&P 500) position has begun to be built on dips .

The BDI is troubling, especially for our China investment. China is becoming more self sufficient daily and has a strong net surplus, but if trade numbers continue to fall they will get impacted.

  • Considering selling the smaller amount of China stock recently added at a loss and a small amount of longer term position on China.
  • Considering going back into US financials  as a longer term play on dips – If Dems & Obama are going to do nothing to regulate these massive (too big to fail) institutions and continue to throw cash at them – They will continue to make $$$$$.
  • This is shaping up to be at least a 5 to 10% correction.

Long Term Outlook = CAUTIOUSLY BULLISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

  • Share/Save/Bookmark