Paul Volker

Shadow Banks – Shake & Break?

The WSJ is reporting that former Fed chair Paul Volker (like Elizabeth Warren one of the good guys/gals in the Obama administration) has finally got Obama’s attention. Perhaps it was the loss of the Senate seat in MA that helped. “Obama on Thursday is expected to propose new limits on the size and risk taken by the country’s biggest banks.”

This should have happened almost a year ago, and we will have to wait to see if this is just political spin or if Obama is serious. Economist Simon Johnson asks all the right questions

How to know if something serious is going to happen – shadow banks stocks will fall.

Author Simon Johnson is the former Chief Economist of the International Monetary Fund, an MIT Professor and author of a must read - The Quiet Coup (referenced in earlier Investors411) This article is about history repeating itself. Financial oligarchies have crushed many developing countries and arguable the IMF helped break those oligarchy. He believes “recovery will fail unless we break the financial oligarchy that is blocking essential reform.

Remember Iraq

A withdrawal was another one of Obama’s “change we can believe in promises.” Virtually nothing’s happened. A poll in the distinguished Foreign Policy magazine states that Arab publics say that ending the US military presence in Iraq is the single most important thing the US could do to improve its relations with that region.

“What they [Arabs] saw as US atrocities in Iraq motivated many of the terrorists active after 2003″

Bottom Line You want to reduce the number of people threatening terrorist attacks on the USA – Keep your promise, stop nation building and get out of IRAQ. What ever happened to elections that were supposed to happen there?

KISS & Stocks (Keep It Simple Stupid)

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


Index Percentage Volume
Dow -1.14% up
NASDQ -1.26% up
S&P500 -1.06% up
Russell2000- -1.07% -

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

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

Stocks staged a major fall (below 1%) in increased, above average volume. Volume, our #1 confirmation factor did again confirm the move lower. 3 of the last six trading days have seen significant falls in increased above average volume. While the numbers on the downside could have been larger, this is cause for concern.  It shows institutional investors leaving or selling stocks and stocks go no where without the big boys and girls.

Markets did recover about 30%+ of the losses at the end of the day.

  • McClellan Index at -17.72 = A little bit oversold.  There’s a long way to go till we reach @-60 or oversold or @ +60 or overbought. Notice a clear trend of lower highs and lower lows on chart. = Bearish pattern

IBM & INTC have both had better than expected earnings results and are down (not much – a few %) This is not a good sign for stocks, especially in technology.  It looks like you’ll need a grand slam earnings report to move higher

US Stocks have been flip flopping between up and down days, but volume has been with the bears.

China , who has led the world out of the recession looks to be in a pull back or correction. Down about 10+% . China could correct some more. Odds are US will follow China and some sort of correction is starting in USA. Not logical to see the country leading the world out of recession in a pull back and the US not follow.


The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own


ETF Watch List

Ideally, you’d like to McClellan index below zero (the further the better) and these all would be better buys. The closer to -60 the more you think about buying and the closer to +60 the more you think about selling.

Strategy – going to hold tight till conditions reach overbought or oversold.

Charts set to 2 years – click on ticker symbols.

  • EWZ – Brazil (16% of portfolio) – Reaching a critical inflection point. This chart is either near a low point in forming a base or after an outstanding run of over 100% about to take a hit. Perhaps, like China its time to lighten up.
  • MOO – Agriculture (10% of portfolio) – Latest buy had a strong upside run, pulled back a bit and is moving sideways.
  • FXI – China (Reduced to 6% of portfolio) – Over the last month or two we’ve been taking profits on FXI. (Down from 24% of portfolio to 6% ) Lots of volume when stock moves down and now FXI has established three lower highs and lower lows over the last three months.
  • see Positions section of blog for some considered ETF alternatives

Again – Waiting for McClellan Oscillator to reach oversold or overbought positions before making a major move.

Investors411 opened a small positions in ENOC (2% of portfolio) Bought at 35.95. Of all the stocks on our watch list this one was holding its own on a big down day.  More Later.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.



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