The manufactured debt crisis has dealt a serious blow to our economic recovery. The clear and present danger of the jobs crisis and a double dip recession has been negatively impacted. Since the Tea Party has come to dominance the jobs picture has headed south. There is far more pain ahead for the US economy

  • The focus has been changed from creating jobs to dealing with the debt.
  • Corporate oligarchy is taking advantage of the distraction to ship more jobs out of the USA. Latest – Ford builds billion dollar plant in India. Emerging markets are growing while ours continue to shrink.
  • Corporations are overflowing with record profits, yet NOT creating jobs in the USA. Any cuts in government spending NOW means less jobs NOW.  Without jobs there is no recovery. Lisa Shapiro on job cuts
  • Most cuts to government in the next year+ will do serious damage to job growth. Those cut 5 and 10 years out will do far lass damage.

Obvious political consequences of debt deal for Obama was perhaps stated best by a young voter who first voted in 2008. – “I’m done with Obama…I can not support a President who won’t stand up against bullies.”

Mitt Romney, at the last moment, threw his support behind the Tea Party and rejected the budget compromise. The Invesment Banker running for president (Romney) is no different than any Tea Party member. Far less moderate than most Republicans who voted for the deal.

I would have followed Bill Clinton’s advice. Raised the debt ceiling using the 14th amendment and included tax cuts for the wealthy in any deal.

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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

Index Percentage Volume
Dow -0.09% down
NASDQ -0.43% down
S&P 500 -0.41% down
Russell 2000 -0.52% -

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

  • Huge range higher and lower in stocks. Day ended a bit below even and volume fell.
  • The MO was over -80 yesterday. (see chart) When the Dow dipped @ 140 points the MO would have reached the lowest levels  in over a year. But the MO, tabulated only at the close, closed 130 points higher.  Now that the pressure of the manufactured debt crisis  is gone both the MO and the USD should be better in forecasting. Translation – way too many oversold short positions becomes an important factor to juice a rally.
  • Two of our most successful technical forecasting tools listed below -
  • The McClellan Oscillator (MO) chart rose to -69.81(-30 somewhat oversold, -60 oversold, -90 OMG oversold). MO clearly shows oversold  conditions exist. Current Level = Bullish
  • $USD The Dollar rose significantly +0.49% yesterday (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) On a fundamental level you’d expect a rally in dollar over temporary settlement of debt problem. Technically we are sitting near bottom of trading range.= Neutral
  • Reading The Tea Leaves – A technical relief rally was hurt by bad economic data (ISM number) yesterday. However, when you are this much oversold all you need is the slightest hint of good news to string together up to handful of bullish days. When MO gets into the green (above zero) that technical pressure eases off.

Longer Term Outlook

weeks, month, months

  • Some serious damage has been done to the US political structure as a functioning body. Even though we didn’t default everyone now realizes that there are a sizable number  of US politicians who are willing to hold the US economy hostage to their ideological beliefs.
  • For Main Street USA this means uncertainty. This will be devastating.  The debt crisis deal will cost jobs rather than create them. If you contract the money supply in the USA it means less jobs.  Investors411 mantra - How do you fix any deficit without jobs?

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Paul’s Corner

Hello world, it’s Aug 2 and pre market futures are down, let’s sit on the side  of the market for awhile!

My good friend Ron Brown from HGSI summed it up nicely last week “It is a dangerous market environment, so unless you like extreme mood swings, it may be best to hold off on initiating new positions.”

One would have expected more than a mild yawn in the market after Washington agreed to stop acting like children but what can you expect from a bunch of babies? Futures are down this morning as it appears the forecasters on Wall St are back to looking at why the economy is stalling again. When they figure out why I wish they would tell us.

So what was in demand on a down day is always a great place to search for stocks. Yesterday Aug 1 the top 3 groups:

Oil & Gas Exploration & Production (11.88%, 12 securities)

  • Anadarko Petroleum Corp (APC)
  • Approach Resources  Inc. (AREX)
  • Berry Petroleum Company (BRY)
  • Brigham Exploration Company (BEXP)
  • EQT Corp. (EQT)
  • EV Energy Partner LP (EVEP)
  • Gulfport Energy Corporation (GPOR)
  • Kodiak Oil & Gas Corp. (KOG)
  • Noble Energy  Inc. (NBL)
  • Range Resources Corporation (RRC)
  • Royale Energy  Inc. (ROYL)
  • Vanguard Natural Resources (VNR)

Casinos & Gaming (5.94%, 6 securities)

  • Churchill Downs Inc. (CHDN)
  • Entertainment Gaming Asia  I (EGT)
  • Gaming Partners Internationa (GPIC)
  • Las Vegas Sands Inc (LVS)
  • Melco Crown Entertainment Lt (MPEL)
  • Nevada Gold & Casinos  Inc. (UWN)

Specialty Chemicals (5.94%, 6 securities)

  • International Flavors & Frag (IFF)
  • Lubrizol Corporation (LZ)
  • LyondellBasell Industries NV (LYB)  (YSL 4 Member)
  • Material Sciences Corporatio (MASC)
  • Rockwood Holdings  Inc. (ROC)
  • W.R. Grace & Company (GRA)

Dave Steckler always has an interesting blog and he specializes in ETF’s. Yesterday he discusses how to use the Bollinger Band around a stock and the 4 day SMA to time entry signals:

The composite index touching the upper BB should be viewed as a set-up, not as a long entry signal.  If the market continues falling like it did in the first half of June the composite index will continue climbing the upper BB – wait for the index to close below the 4-day SMA after touching the upper BB before going long.  Put another way, the BB touch is the set-up and the SMA crossover is the long signal.  This last happened on June 14th.

Please read his whole blog to understand this principle.

LINK

So what’s the market going to do today, futures are up this morning, is this a new morning in America? Let’s load up Quote Tracker………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not.  Note, none of the above stocks are recommended for buy or sale. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

Short term traders - You have an MO at -70. This should be a decent opportunity to invest in a momentum play

Longer Term Investors – Specific areas tied to globalized companies and foreign stocks could outperform. Defense contractors & some heath care stocks are negatively impacted by debt deal in DC and will sufer.

NLYAnnaly Capital Mgt. Ultra high dividend stock – Kudos to anyone who bought NLY on the dip.

In  my personal portfolio I have a Put position to protect NLY

GLD – (Long Gold ETF)

UDN – (Short Dollar ETF)

Both UND & GLD were bought  because of the clear and present danger of a default. Both are overbought at the present time. It would be more prudent to enter each position when it was oversold.  Selling UND today.  Better long term outlook for GLD (gold).

DisclaimerPersonally I own  a group of dividend stocks including NLY. I have placed puts on one ETF of a major index and a couple of dividend stocks. I buy everything in the hypothetical Investors411 portfolio. I sold about 1/2 of the short positions yesterday

JS in the comment section has used the term ”insurance” to describe the way ”Puts” are used protect long term investments. – email me if you want to know more or post a question in the comments section.

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Long Term Outlook (for US Economy)

BEARISH

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative Comments Section every day.

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Long Term Outlook (for US stocks)

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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