Financial Crimes Unit

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Eric Schneiderman- Head of new Financial Crimes Unit.

Obama in the SOTU address announced the creation of a

financial crimes unit.

When Obama took office he appointed Darth Vader/Larry Summers as his chief economic advisor. Summers was under Secretary of Treasury to Robert (former CEO of GS) Ruben who went along with the 1998 the Republican proposal to gut many financial reforms and allow Investment banks to merge with Insurance companies.

1998 was the start and the process continued throughout the Bush administration. Cutting regulations and regulators led to the finacial meltdown of 2008/2009.

Fed Chair, Alan Greenspan Mr “Free Market” himself

admitting deregulating banks was wrong

Summers, who left the Obama administration almost year ago,  had coddled the big banks.

This new unit, which is three years late, will be headed by New York Attorney General Eric Schneiderman

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Another Republican Debate

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Republicans will score this a clear win for Romney.

Another typical Republican food fight that was painfully short on solutions and filled with accusations and counter accusations.

Romney’s most effective line was about family values and it absolutely crushes Gingrich – “I stayed with my wife though MS and Cancer” (Newt has had 3 wives and scored big time when jumped on the media for making the topic the first question of the debate.)

More from USA Today

But it’s not over till the fat lady sings

and Newt has a new docudrama coming out at 5:00EST

Preview

If it hits with his billionaire PAC money it could do some damage.

However, Mitt is outspending Newt 3 to 1 in FLD.

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YOUR Comments

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A follow up to yesterday’s Yankee Bob editorial - Two outstanding posts (scroll down at link) yesterday on solutions from JS and Yankee Bob on a financial transaction tax. As always PAUL R keeps you up to date with the latest breaking insight in stocks and trading concepts in the comments section.

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STOCKS

• Long term – As long as interest rates stay low, and there is liquidity without inflation – investment money seeking higher returns will be forced into stocks and bonds. This dynamic has not changed under Bernanke/Obama even though other significant sectors of the world have taken some big hits (Europe & Japan) or are slowly pulling back – China.

The POSITIONS page does not yet reflect the

2012 Outlook.

• The MO can be read like any chart (see  above link) – Three times in January the MO has tried to break out above the 55 to 60 range and failed. Yet is has stayed in a very tight range between 30 and 60. If this range/trend breaks  on the top side bulls win and on the bottom bears win. The fact that the trend is from + 30 to + 60 instead of minus is BULLISH

• Mantra – Low volume rallies are a characteristic of Central Banks and friends manipulating stocks/bonds. They have become quite good at this and these rallies have tended to last.

• DAX (Germany)  was up over 1% yesterday and this failed to move US markets higher. The disconnect between Europe and the USA is growing. Italian bonds are now below 6%. Conclusion – Its way too early to call a long term trend, but it looks like there is some light at the end of a what will continue to be a long dark tunnel for Europe.

• NFLX –  Kudos to Jim J who made a 65% Profit on his combination Option Trade of NFLX. The Strike price for both the Put and Call was $95 and the expiration this Friday. NFLX ended the day up +22.06 after earnings.

• Two more considerations for Option combinations. BIDU (Monday earnings) A short term trade. MCP as a possible long option term combination trade.

• Homebuilders, will be a recommendation this year. 3 homebuilders have been added to YSL 2012 this week. ETF’s - Paul seems to prefer the ITB homebuilders ETF. I like the XHB because it is @5x more liquid and therefore a better for options. Both work as a long term investment.

Emperor of the World

The last Fed Chair Alan Greenspan used to be thought of as the most powerful man in the world. Now our current Fed chair Ben Bernanke is looked at by many as having inherited the title. This is especially true because this Fed, who meets this week, is far more active in trying to solve the problems created by the “free market or deregulated” Greenspan ruled Fed.

Furious debate rages in almost every economic circle over what our Fed is doing and its impact on the world. Every government and their central bank is trying to manipulate their way out of the Great Recession without causing a Great Depression. Our’s is still the biggest economy in the world so Bernanke has the most power.

The problem facing Bernanke is having NO regulations does not work in economics. (Most rational people know this, greed based ideologues would disagree) Even the high priest of deregulation Alan Greenspan has admitted this.

If there are no cops on the street, and no basic rules to follow then greed runs wild.  You develop casino capitalism where no risk is too great, if government/taxpayers bail you out.

On the other hand (the last 4 words are the four most used words by many non ideological  economist) if you over regulate economics you can negatively impact growth. Will our Fed and other entities worldwide be able to fix the damage with just the right amount of regulations and execute a soft economic landing?

Bernanke and the FED are the most powerful economic group in the world. Investors411 has tried to give you a front row seat in the how the Fed impacts everything from stocks to world wide inflation to commodity prices to a falling dollar and even more.

So far there has been NO Great Depression, and the Bernanke Fed deserves credit for that, but will the Fed be able to engineer  a soft landing? What happens when the training wheels come off?

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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	+0.92%	down
NASDQ	-1.04%	down
S&P 500	+0.58%	down
Russell 2000	+0.79%	-

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Technicals, Fundamentals & Analysis

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

• Were Back – The old pattern of up days on lower volume – Basically as Investors 411 has repeated for many many moons, its the Fed liquidity (quantitate easing) providing the stimulus and investors are staying home  (out of selling) and enjoying the ride.
• Repeat from yesterday.- Monday’s have historically been the best day of the week as earnings season continues.
• Repeat from yesterday – We have what may be a shift of leadership into major US companies and the too big to fail financials that enjoy government and Fed support.
• If yesterday was a rally day (markets up  about 1% or greater) then today is the confirmation day. Do stocks hold onto most of the previous day’s gains. If so rally confirmed and bulls are happy.
• Obviously, still endorsing the concept that the Fed’s POMO [schedule] is and will be the key factor in keeping a long term rally going. (see Investors411 for past months).
• Worldwide Inflation (not USA) is the clear and present danger. Problem in #2 emerging market India
• Appropriate piece via Seeking Alpha from The Inflation Trader
• Obama’s State of the Union is the big political news today and may contain something to drive markets higher.

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Reading The Tea Leaves

From yesterday – The dollar is falling like a stone and that’s good for American exporting companies. There are still growing worldwide inflation fears in part brought on by our Fed’s quantitive easing. (see Friday’s Investors411)

“Don’t fight the Fed” is an old Wall Street axiom. The falling dollar and the special “gifts” to shadow financials are the results pushing stocks higher.

The raising of interest rates in India may take a bite out of stocks today.

What to watch today

UUP -The dollar tracking ETF. Perhaps a reversal today, but clear two week bearish trend. This is good for stocks. However hard to see US stocks take a big hit while dollar is falling.

Dow Index – Dow stocks historically do about 1/2 what Small caps and techs do in a rally.  They have done better for for a month+. Dow at new 2 year+ high.

AAPL - Strong day yesterday. The general for tech stocks bounced off its 50 DMA and for now has issued an all clear signal. Up a massive 3.28%. Very interesting that most of the smaller cap stocks in tech did NOT also have big gains. = Big cap stocks rule

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Positions

• DDM - (2x Dow stocks) Bought at 57.40. Will place 5% trailing stop on this position today.
• REMX - (rare earth metals)(1/2 position) Gained 1.58% yesterday will place another 3% trailing stop on this ETF today.

Under consideration -

DDM - (2x DOW) The trend to big cap stocks is apparent. A buy ,but a bit overbought right now

UCO -(2x oil prices) All commodities, are under pressure from inflation worries in emerging markets. UCO broke support level in big way. Waiting for it to settle.

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

FAS (3x financials) & UYG (ETF that does 2x financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

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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#3)

The Positions, Strategy and Overview sections of the blog are being revised. The changes should be finished over weekend. After this is done if time allows we’ll try a YSL #4

Obama’s Speech

Barak Obama’s major addresses are almost always grand slams.

Unfortunately, actions speak louder than words.

Speaking about the 9 year old who died in the Arizona terrorist massacre – “I Want America To Be As Good As She Thought It Would Be.” This is a link to both speech and comments on Huffington Post.

The Maestro

The following is a description of an interview. It’s from the Atlantic magazine, author - CHRYSTIA FREELAND

Title -The Rise of The New Global Elite

Here’s an excerpt.

[He]…was interviewing a guest who made a forceful case that the U.S. economy had become “very distorted.” In the wake of the recession, this guest explained, high-income individuals, large banks, and major corporations had experienced a “significant recovery”; the rest of the economy, by contrast—including small businesses and “a very significant amount of the labor force”—was stuck and still struggling. What we were seeing, he argued, was not a single economy at all, but rather “fundamentally two separate types of economy,” increasingly distinct and divergent…

What made the argument striking in this instance was that it was being offered by none other than the former five-term Federal Reserve Chairman Alan Greenspan: iconic libertarian, preeminent defender of the free market, and (at least until recently) the nation’s foremost devotee of Ayn Rand. When the high priest of capitalism himself is declaring the growth in economic inequality a national crisis, something has gone very, very wrong.”

(highlights mine)

Just Like President Eisenhower who had spent his who life in the military and warned in his farewell address of the rise of the military industrial complex. Alan Greenspan, THE MAESTRO, has, so to speak, found religion or the truth.

The New Global Elite is a long but worthwhile editorial. Investors411 will bring you more on how globalization and politics has created

a worldwide plutocracy of privileged wealthy elites who have far more in common with each other than any country.

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Check out a new Yankee Bob’s always passionate editorial, the stock advise and other remarks in the the comments section of blog.

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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	+0.72%	down
NASDQ	+0.75%	flat
S&P 500	+0.90%	up
Russell 2000	+0.83%	-

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Technicals, Fundamentals & Analysis

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

For longer term investors - A more complete explanation of why US stocks are moving higher and will continue to do  lead by the opaque shadow banking sector in coming soon.

If you’ve been paying attention it is a compilation of past Investors411 of the lat few months. Greater detail in following updates.

Essentially the pattern is the same as when Obama first took office. Low interest rates combined with quantitative easing (Fed buys bonds from opaque shadow banks that have few rules/regulations governing them) This trillion+ in liquidity drives stocks higher. Add to this that many emerging markets are still economically growing at 3 to 5 times the rate of the USA. This is both where the jobs are and the new consumers for products are being created.

This market manipulation has another 6 months left of quantitative easing and if housing and jobs do not recover it will probably be extended.

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Reading The Tea Leaves

Mea Culpa – I was wrong about the BDI. (See comments section of blog on Tuesday) It seems an oversupply of ships being built is what’s causing its fall.  When you erase this factor, fundamentals are more bullish. The high price of commodities shows the rapid expansion of emerging markets and export dominated countries. Bottom Line –  the BDI has been dropped as a forecasting tool.

The MO looks like its back on its way to establish a higher high (see above) Momentum with bulls.

What to watch

AAPL -Today will mark the 9th day since Apple turned higher. Over the last couple months Investors411 introduced the DeMark 9 day timing as a tool to use when stocks get over extended.  Another way to look at this is to see how far AAPL is above its 50 day moving average on chart – Far, but not as far as in the past. Our stock market general if it has a good day today is probably in for at least short term consolidation.

UUP – (tracking ETF for Dollar) Gapped lower and continued to fall throughout day within consolidation pattern. Dollar down = stocks higher

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Positions

• UWM – (2x small cap stocks) UWM still outperforming other US indexes. (I have a 4% trailing stop loss on 1/2 this position)
• REMX – (rare earth metals) Hopefully a long term holding was bought  again at 23.55. Tuesday (see comments section of blog)

Under consideration

UCO -(2x oil prices) Very erratic, waiting till correction settles in

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

EWZ (Brazil) & LBJ ( 3x Latin America – majority Brazil) Obviously the later is more risky because its leveraged 3X. Waiting for larger pull back on both.

UYG (ETF that does 2x Dow financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions. Those with no ethic problems with shadow banks could consider a buy.

DGP – Will buy back into this 2x gold ETF on dip. Consolidating at support level. Those that can tolerate the risk – now’s the time to buy.

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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#3)

Jolly Green Giant

No one brings out the venom and praise in the comments section of the blog like Alan Greenspan. Well, he’s done it again. The decades long Republican Liberation has staked out his economic position to the left of Obama (Something not very hard to do)

But this time its dramatic – Greenspan’s called for the elimination of ALL the Bush tax cuts on everyone not just the wealthy (Obama’s Position).

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	-0.20%	up
NASDQ	-0.20%	up
S&P 500	-0.37%	up
Russell 2000	-0.67%	-

Technicals, Fundamentals & Analysis

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Significant Indexes

• The Dollar fell a significant -0.52% on Friday. It also broke a support level (200 day moving average) = Bullish
• The Baltic Dry Index (BDI) is back moving higher = Bullish
• McClellan Index – (MO) Check out the link to the new chart. Lots more data. Basically the rough guideline of over =60 = overbought market = sell or short stocks & -60 = oversold market = buy stocks. MO dropped to +25.52

Reading Tea Leaves

There is a 5 week bullish trend. Benchmark S&P 500 at 1121 and every stock analyst watching the resistance levels around 1130. The dollar is dropping like a rock, and the BDI is moving back up.  The dollar is closely watched by the BB/HFT’s. The market moved higher into the close and Monday’s are usually the day of the week that stocks have performed best.

The MO at +25.52 is neutral, but I’ve talked about “wiggle room” or in a move that extends higher for a few weeks the difference between 60 & 26 = 34 Or the difference between an old recent high 97 & 26 = 61.

So best read of tea leaves is markets are going to make an attempt at breaking through major resistance at @SPX 1130.

As suggested by many of you I’m going to try to get more of the “basics” down in the other sections (heading at top) of the blog this week.

Positions

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

Current long positions EWZ & TYH (TYH is for higher risk short term traders not investors) Same sell 1/2 on @5% gain. Both are up a @2% since bought last week.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Introducing – Smack Down- A top ten list of  ”toxic” politician’s personalities, groups,  or even ex girl/boy friends that deserve to have a can of whoop ass opened on them; Kissing the Pope’s ring – another Republican apologizes; Have you puked yet? – Roller Coster stock markets; &  Shadow Banks Rule Wall Street.

 

The Hulk from Marvel comics – by Brian Hitch (source Wikipedia)

                     SMACK DOWN

Investors411 has gone to great expense to hire The Hulk to Smack Down anyone or group YOU think deserves to be knocked off his/her pedestal.

Just because this blog focuses on economic trends doesn’t mean you have to. Send your nomination(s) to the comments section of the blog. 

 If you can’t find the comments link at the bottom of this post go to top right of blog and click on “Subscribe to RSS.” A list of previous post will come up and click on one blue headline. An old post will come up and scroll down to comments section. (sorry my trusty tech is still working out the bugs) 

Alan Greenspan – The Jolly Green Giant -(my choice) This guy was put so high on a financial pedestal that it reached up into the clouds. He, more so than anyone else, could have stopped the greedy “free market” shadow banks and others.

The SMACK DOWN LIST

#1 Alan Greenspan

#2

#3

#4

#5

#6

#7

#8

#9

#10

 

                   Kissing The Pope’s  Ring

Another Republican Representative who dared to call the leader of the Republican Party, Rush Limbaugh, something other than his “His Holiness” has genuflected and apologized. All these nabobs of negativism like Limbaugh do is stand and throw stones. The once great Republicans (Party of Lincoln, Teddy Roosevelt etc.) has been reduced to is labeling these hate monger’s as “a great leader of the conservative movement.”

STOCKS

 

 

Index	Percentage %	Volume
Dow	+1.63%	flat
NASDQ	+2.22%	down
S&P500	+2.13%	down
Russell2000	+3.88%	-

 

Technicals & Fundamentals

Forget all about the major indexes – What happens to the shadow banks (financials) absolutely dominates stock  trading.

Yesterday Tim Geithner played dodge ball in front of Elizabeth Waren’s TARP Oversight Committee. This gave shadow banks hope that all the profits would be privatized and the risk socialized (payed for by taxpayers)

Yesterday was a Geithner rally.

XLF - The ETF that tracks financials (mostly shadow banks) rose +7.40% in increased volume.  Financials have lead this rally and if they  collapse so will almost all other sectors (see Positions section of blog on XLF) This leading index is the one to watch.

Short Term Outlook - Second technical chink in the bulls armor appeared Monday – another big volume sell off.  Volume, the #1 confirmation factor of stock price moves. But Tuesday’s bigger volume (for FLX) means we are one again going up on the roller coaster and gives hopes to bulls.

Too early to make a call on which way this may break, but short term traders should pay attention. The Danger signs to watch for - more big price/volume decline  and/or stocks moving lower on no news or good news.

Still bullish in the short term. But think in the longer term, say Sept/Oct (or sooner) – a test of lows could happen.

For traders – If you really want to gamble – The ETF’s that do 3x what the shadow banks do long – FAS and 3X what financials do short FAZ. This is for those of you who have experience trading covered calls.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!