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Stocks 2011

The economic outlook for the USA is no better than 2009 or 2010. Every time we learn more about the unregulated, over leveraged 2008 financial and housing meltdown the wore it gets.

The 3 dominant mega trends are still significantly impacting economics and stocks across the world. Investors411 has added a 4th – Lies/deception/opaque capitalism.  The 4th trend is growing in the world’s largest economy – the USA & ultimately will devastate economics if it continue.

The problems in the USA are both systemic and due to our dependence of unregulated, opaque, casino capitalism.

There are sectors, countries and asset classes that should do well in 2011. So here’s a rough list that I will  go over in detail tomorrow and Friday

  • Gold
  • US financials (I hate these bastards)
  • Brazil, Norway & other energy rich countries
  • Rare earth sector (from steel to solar materials)
  • China’s wind and solar power industry
  • Energy
  • Even US major indexes should do well – as long as Fed supports them.

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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 +0.18% up
NASDQ -0.16% up
S&P 500 +0.08% flat
Russell 2000 -0.36% -

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Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

  • Markets were flat & volume abysmal
  • Infamous AIG rocketed almost +10% higher Monday. Opened higher  and ended day with slight loss. AIG held almost all of 10% gain is Bullish for stock and shadow financials.
  • Repeat – Weak trading means two entities dominate High Frequency Traders and the Fed.
  • Double dip In Housing Prices is happening. – Roubini – Data seems to back up his conclusion that home values are on way down again.
  • Decline in housing value is bad news economically for the economy & your house. But good news for stocks because it gives Fed more justification to keep quantitative easing and low interest rates going.
  • Consumer confidence dips amid job worries

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Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar was unchanged  0.00% yesterday. It started out way down and recovered. In consolidation pattern= Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Both sources have not posted BDI results for yesterday. Strange & I do not know why. From yesterday – BDI is at 1,773 and rapidly approaching its major support at 1700= Bearish
  • McClellan Index – (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] fell a bit to +9.98 = Neutral

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Reading The Tea Leaves

Paul R stated last evening in comments section that “Looking at the charts and market internals again, things are NOT looking good. Market leaders are breaking down.”

He’s Right - Nothing has felt right about this overbought market. All the major indexes are over extended above their 50 day moving averages. Many of the momentum stocks are consolidating or heading down. This is also a strange holiday week & because of the ultra light volume so its hard to make a clear call.

AAPL is the big kahuna out there for stocks and especially technology. It’s not over bought. If you look at the chart you can see a pretty constant 6 week trend where Apple moves,let’s cal it one standard deviation higher than its rising 50 day moving average. APPL inched out to a new high yesterday. If Apple breaks down watch out!

Always remember – This market is being held up by artificial means – the Fed. That means when bad news occurs like housing prices dipped for 4th straight month & consumer confidence is falling – stock traders think the answer will be more quantitative easing by Fed. This doesn’t mean we can’t have a correction, but over 18+ months its shown there is support under stocks that make buying the dip successful.

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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)

  • #1 UWM - (2x small cap stocks ETF) – Sold 1/2  for +9% profit
  • #2 UWM
  • EUO – (double short the EURO currency)
  • UCO – (double long oil) Bought Tuesday at  12.39 (this is a trade of short duration)

Below is rather technical and might make your eyes glass over. However, if you want to have the basic tools for investing I do strongly urge you go to Chart School (see below)

UCO - Trade -Reasoning –  This is NOT a trade I should have made in Investors411 because it breaks the basic strategy of buy the dip of a trending sector. My bad – several of you sent me personal emails on this and the following is my reply.

  • To make any trades (as opposed to long term investments) you have to understand candlestick chart patterns,
  • In fact, StockCharts – perhaps THE best FREE site on technical analysis has a who tutorial or school section.
  • Almost All the links to charts at Investors411 are links to StockCharts.com charts from the $USD to the individual stocks listened on Your Stock List in the POSITIONS section of blog.
  • Tom DeMark developed a 9 day momentum trading system that has nothing to do with Stockcharts, but to understand the system you have to know how to use candlestick charts.
  • Here’s a good example of the DeMark system on ETF’s in video I did go over this on Dec. 1.
  • I believe UCO is going to be a good long term investment because oil is likely to hit $100 or more. Historically oil prices go up as summer riving season approaches and emerging markets are demanding more oil.
  • However oil prices are at a new yearly high and a long term investor (not trader) should buy the dip in UCO.
  • What I saw was a half decent DeMark 9 trade. A breakout that had yet to run out of momentum. It had only 6 days of momentum from a low and I plan to get out on the 9th.
  • This is not the best use of this system. Another reason I regret announcing the UCO trade.
  • However I will hold onto UCO till day 9 and willing to take a 2% hit on the ETF. (I placed a 2% stop below the price I bought it for)

Bottom Line – there are a lot of trading systems out there. This is one of the better known. None of these systems is perfect. I just happened on this system over a decade ago and often use it for shorter term momentum trades. From DeMark’s Wikipedia listing “His timing techniques have become the industry’s standard.”

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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 for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL)-

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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