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Global Economic Monsters

  • Over Leveraged Shadow Banks – Financial reform has fizzled in congress. (see a zillion past Investors411 for more) Short term – a shot in the arm for shadow institutions and their stocks. Long term - FDIC guarantees deposits of YOUR $ and they can still take any risk they want.  Bubble building casino capitalism, where gains are privatized and YOU socialize the risk.
  • Debt Crisis – Europe Debt on the hot seat right now. Aussie’s Clarke and Dawe do a great job explaining this and their drop dead funny. Now add to this all the derivatives (over leveraging) placed on debt. First a bailout. Now central banks around the world are pouring $ into the Euro to stabilize it and keep dollar low.
  • China Slowing Growth – A country can’t keep its GDP growing at 10% forever. Google [China, Slowing, Growth] and you’ll find story after story worried about a Chinese housing bubble or manufacturing decline. China’s #1 ETF – FXI This ETF used to outperform the S&P 500 by a wide margin. Now it underperforms. Investors $ are speaking and there is some cause for concern.
  • BP/RIG/HAL Oil Spill – Major damage to these stocks and more importantly the environment. We all know its only just begun and yesterday was the start of hurricane season. 27% of America’s oil & 15% of our natural gas comes from the Gulf.
  • “Supreme Leader,” “Great Leader,” ” Dear Leader” AKA Kim Jong-il –  You’ll never see a flotilla of Palestinian or any other peace activist off the shore of North Korea. (A double standard) Most repressive country on the planet, always confrontational and has nukes. Just committed an act of war by sinking South Korean naval ship.
  • Mid East - Where to start? Iran, Afghanistan, Iraq etc. Current Crisis between Israel/Turkey does far more than put the $3 billion in “free” trade between these two democracies at risk. Terrorist through out the region are now in a stronger position and embolden because of this confrontation. Everything in the MidEast is oil/energy related.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow +2.25% down
NASDQ -2.64% flat
S&P 500 +2.58% down
Russell 2000 +3.05% -

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

Significant Melt UP in light volume = Moderately Bullish

Obama and his administration seem to be dropping hints that Friday’s job numbers are going to be good. This was fundamental behind melt up. Buy the rumor & sell the news.

Volume did NOT confirm the price move. So what else is new. Volume, which is historically the #1 confirmation factor of a price move has NOT worked for many many moons. = Neutral

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza, Euro debt crisis – yet we have a melt up. How markets react to news is our #2 (now #1) confirmation factor. Yesterday was a good price reaction despite bad news. The potential bad news is built into price right now = Bullish

MO has some positive momentum but in Neutral territory = NEUTRAL (NEUTRAL is all in CAPS because this right now is most important indicator.)

AAPL is the unofficial leader in this rally and the chart formed a T (see chart) yesterday in weak volume. Could be a top. Moderately Bearish

Expect Fed and other central banks to keep  propping up Euro.European markets at 6 week high.  = Bullish

Reading the tea Leaves – Historically, it difficult to see a follow through day after yesterday’s melt up in light volume. Baring an unforeseen incident – like Israeli’s killing more peace activists on ship heading to same area – it wouldn’t be a surprise to see a rally into the jobs number.

Significant Indexes

  • McClellan Oscillator took a huge jump higher to -5.78 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is NEUTRAL territory.  How the MO works.
  • US Dollar –  The dollar fell -0.02% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling. Chart shows at least 6 attempted breakouts above @87.5 have failed in last 2  1/2 weeks. = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update this/last weeks trade.

EVVV was eliminated from YOUR stock list because company was bought – (Thanks to Paul R for info)

IMAX remaining shares sold near open at 17.02

Windows of opportunity to BUY and Sell -

The McClellen Oscillator (MO) is working well right now and +60 or above = Overbought = sell. -60 or below = Oversold = buy

This works best with the broad based ETF’s that mirror the major indexes or for those who can handle more risk ETF’s that do 2x or 3x what major indexes do like TYH that does 3X major tech stocks. Approaching or below -60 buy. The further the better.

Above +60 sell or go short with ETF’s that short major US indexes. Example SDS (2X short S&P 500)

One major reason I stated that there was a “decent trading” opportunity yesterday was the MO was at -50 or almost oversold. We had a low volume melt up.  One major reason the MO was not an investing opportunity was we were not below -60.

Mea Culpa = Hindsight is great = should have invested MORE when MO was between -60 & -130. If I had, I’d start to take a little profit right now

(Will continue analysis of MO later)

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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