Japan Death Toll

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Japan

Major news of day is TEPCO (Utility co. for Japan nuke disaster), has finally admitted what was obvious -  “[nuclear]  fuel rods have been damaged.”

Translation – The rods will have to be encased is cement/lead or whatever they use – Everything else is just media fluff, unless there’s a meltdown

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Why Stocks Have/Will Rally

Three major factors behind the worldwide stock market recovery since the 2008 lows.

  • Massive stimulus/bailout by governments.
  • Opaque accounting systems (FASB) & 0% interest rates for shadow banks
  • Quantitative Easing.

Focus today is on Quantitative Easing (sometimes referred to as QE 1, QE2, Fed POMO)

The following is a link to a three year chart of the benchmark S&P 500

Notice the strong correlation between quantitative easing and stocks moving higher.

  • QE #1 starts in the spring of 2008 (along with FASB) and market move dramatically higher
  • QE #1 ends at the end of the 1st quarter in 2009 – stocks move down.
  • QE #2 announced in Nov. of 2010. Stocks move higher again (they start a month+ earlier in anticipation of more QE 2)

Since November 2010, the chart pattern has been bullish with low volume rallies. The Fed buys treasuries from (and gives them a 0% loan rate) shadow banks and they, wink wink, know what to do with the money – prop up stocks.

  • Major Fundamental events (Japan & revolutions/oil prices) can only dent this steady march of low volume rallies higher.
  • Every technical analyst realizes that low volume rallies for month after month are basically an impossibility.

So unless there is another unforeseen factor, stocks should again move higher till QE 2 runs out on June 30th. If stocks fall then QE #3 is possible. This is a bubble building manipulation that benefits the ruling wealthy class in the USA, so it should continue.

Bubbles pop and working class American’s will pay the cost or go under (inflation or monetary collapse). However, for now, stimulus (Obama tax compromise) FASB & 0% interest rates are still in place. So the future looks decent for stocks till the bubble bursts.

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index Percentage Volume
Dow +0.71% up
NASDQ +0.29% up
S&P 500 +0.43% up
Russell 2000 +1.16% -

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

Japan, Libya/oil are still the two dominant factors. But they are diminishing.

  • Friday, A whole bunch of big US shadow banks passed a government stress test and were allowed to issue dividends. In the opaque financial world we live in, this means even GMAC (GM’s financial wing that was overwhelmed with over leveraged debt) is healthy according to the US Treasury who pushed for opaque accounting (FASB) and has given the  bankster class in the USA a get out of jail free card.. – Accountability is near non existent, but lots are buying on this news.
  • Obviously, UN intervention in Libya has changed the balance. Protracted battle or quick victory now the question.
  • Perception of  an improving  Japan and Middle East at forefront of news. (Jeff Miller)
  • It’s back – Sure looks like the the Fed manipulated POMO market has taken hold again. Time will tell, but the same low volume melt up pattern is starting to dominate. Every day this pattern happens it gets stronger.
  • Any pure technical analysis of this market says things will crumble, but the Fed manipulation has worked before it was interrupted by Japan and high oil prices and it should work again.

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Shorter Term Forecasting Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar fell again Friday -0.42% Bearish longer term pattern. Major support level broken. Today battle to see if the dollar can confirm breakdown. = Bullish
  • McClellan Index(MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to -26.76 Below zero, which gives bulls slight advantage, but overall =Neutral

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Reading The Tea Leaves

From Friday - Longer Term - A potentially winnable war in Libya, Japan rebuilds without nuclear power, and Saudis plus other oil dictatorships asserting authoritarian power/stability. If only those reactors don’t radiate a big hunk of Japan we have the potential for bulls to run.

Looks like we’re back in the low, decreased volume, rallies of a Fed manipulated market at least for the short term and perhaps longer.

The US Dollar falling is going to make US goods cost less abroad and is a short term +++.  However if it falls to far too fast the bubble could burst. If we continue to see a string or 0.50+ losses, then the bubble is getting ready to pop.

AAPL is now an anchor holding back bulls.

What to watch today

  • USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya. (diminishing factor, but still important)
  • UUP(Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
  • AAPL – Trading below 50 day MA is bearish.
  • Japan Rector Developments (diminishing factor, but still important)

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Positions

The Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. (oldest held positions listed first)(see comments section where all trades are first announced.

  • Bought UWM (see Friday’s blog) at 43.49

Commodities are on fire after coming off lows last Wednesday. Those of you who bought the dip made out. Also small cap stocks have done the same.  See above for more analysis.

From FridaySo I’m buyer today – probably UWM.

Today – Considering RJA – Has dipped because of Japan. Psychological impact of radiated food in Japan will send world agriculture products higher.

  • One plausible long term play is to go long small cap stocks and short technology.  Techs are getting hurt by loss of Japan manufacturing.
  • Another is long US car dealers and short Japanese dealers.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices.

REMX (Rare Earth ETF) - Really believe this a good long term holding.

DGP – (ETF is 2X gold)also SLV (silver).

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals - Both DBC & DJP are on breakout runs.

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

UWM (2x small cap stocks) TNA (3X small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION section of blog (at top of page) for lists of potential stocks & ETF’s including the new ”YOUR Stock List.”

Still NEUTRAL, but far closer to CAUTIOUSLY BULLISH than CAUTIOUSLY BEARISH

Longer Term OutlookNEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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