Investors 411 Blog

by Barr Jozwicki
July 20, 2010

Jobs, Jobs, Jobs

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , ,

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

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Jobs, Jobs, Jobs

Ever since the 2008 meltdown Investors411 has stated financial and economic conditions are “far far far far far bigger than first imagined.” This statement that has been made many times and is still bolded in the position section of the blog.

Poll after poll (except among Tea Party supporters) have said “To Hell with the Deficit, Its Job, Jobs, Jobs.“ See yesterday’s Investors411 for  a list of historians and economists who make the same case less colorful language.

Immediate Help

  • Extend unemployment benefits its “the human thing to do.” Republican Billionaire Mort Zukerman
  • Extend unemployment because (the average American unemployment check was under $300 a week in 2009) it will stimulate the economy. These people will SPEND the money and we all benefit because money flows.
  • Republican’s know that the longer they can delay a vote on this the less money will flow and consequently the more people unemployment will grow before the November elections. Every day they delay = the more votes they get in November, because they can blame Obama for unemployment.
  • It’s certainly hypocritical to endorse the Bush tax cuts on the wealthy. Next vote for unnessesary war funding outside the budget for over 10 years. Then play politics because our own American families of former workers are going hungry.

Longer Term Help

  • Infrastructure projects get you the most bang for the buck according to Mort Zukerman (who I usually don’t agree with) and most economists.
  • We need an Independent Infrastructure Bank Not one where a powerful Senator like Democrat Harry Reid can take $350 million for a high speed train from LA to his home state of (Los Vegas)Nevada.

Bottom LineAndy Grove, Intel’s CEO had it right – Globalization has created a major “scaling” problem in the USA. Unless we somehow change that direction the ultimate result is going to be very negative economically for the USA.


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 +0.56% down
NASDQ +0.88% down
S&P 500 +0.60% down
Russell 2000 +0.44% -

Technicals, Fundamentals & Analysis

The High Frequency/Black Box traders (that are focused on the here and now) pushed the markets higher in weak trading. This has been the typical headline for many moons in what’s been a falling market since April. – Lower price highs and lower lows.

IBM was the earnings report of most interest and its down @-4% in pre market trading = Bearish

APPL – Both Monitor and Paul R have warned about today’s earnings report at close.

YOU have pretty much reached consensus that holding a stock, especially in a declining economic environment, is highly risky before its earning report. If you are an insane lover of risk (short term trader) and AAPL continues to drop before earnings – it does take some of the downside risk away.

Ruptured oil well leaking again and possible leaks on oil on ocean floor related to BP oil spill. Best site for this is The Oil Drum = Bearish

Significant Indexes-

  • McClellan Oscillator (MO) rose to +21.91 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. = NEUTRAL
  • US Dollar –  The dollar Friday was basically flat +0.04% [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. Earning have trumped this indicator for now & we have consolidated for last two days. = NEUTRAL
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China.) BDI is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks the BDI rose Friday & +0.70% yesterday. At long last the BDI finding a bottom - a bullish sign, but too early to tell.Fundamentally the -60% drop is very BEARISH

Reading Tea Leaves-

Don’t think the negative fundamentals of the BDI (Trade and China) & Europe have been fully integrated into stock prices yet. Sure fells like we are going to have a negative day. But, with Black boxes in control (almost everyone else has fled to safer investments of bonds and treasuries) – you never know.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

From YesterdaySH – The ETF that shorts the S&P 500 was bought at 51.45. It’s up over 3% now. 1/2 will be sold at 3% profit and a stop/loss has been put in place at what it was bought for. 1/2 of SH was sold for 53.02 for +3% profit.  Letting the rest ride and will sell when conditions on MO near oversold.

No other positions long or short are contemplated in immediate future because MO is neutral. Sorry, there is little to do but sit tight,  be happy you’re almost all in cash, and wait till we get oversold or overbought.

One exception is GLD or DGL (@200% GLD). Its dipping and if it falls to its 200 DMA – would consider buying on fundamentals.

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July 7, 2010

Economic Whirlpool

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Economic Whirlpool

Yesterday, Andy Grove described the scaling process as the reason American jobs may never return.

  • Even if we had another internet revolution those jobs would go to an educated emerging market country. In fact the environmental green jobs are going there now.
  • Grove himself points out his solution may/would lead to a “trade war.” Jsovjani (in comments section) accurately reminds us it was “one of the major causes to the Great Depression.” It would also lead to inflation.

This puts us in an economic whirlpool-The kind that forms when you let the water out of the tub. The USA is traveling in ever shortening economic circles leading to the dark hole or drain. China ( as well as other countries) obviously employs tariffs, manipulates its currency and severely restricts foreign ownership. We simply go on taking it on the chin for decade after decade.

Winners

  • The people in emerging markets that get jobs and improve their economic situation (yes sadly often slave labor)
  • The power and money oligarchy in the USA that profits from globalization.
  • The politicians that can pit anyone who is foreign or different against whites for the diminishing # of jobs in the USA (think TTP’s)
  • The concept of a strong (dictatorial) central government  and tightly managed capitalism (tariffs, monetary policy, censorship, foreign restrictions, etc.) – China’s communist party
  • Global companies that find cheap labor abroad.

Losers

  • The USA economic growth and jobs.
  • Companies that hire US workers andplay by the rules.
  • Democracy in both the USA and China. (more on this most important factor later)

Bottom LineChina is the big winner Look how easily they are manipulating a trans national company like Google out and their own BIDU in. The looser is the USA that fears its own shadow and becomes ever more dependent on China’s restrictive capitalism and one party system for its own economic well being. Maybe the Intel CEO is right. Shouldn’t we at least take some further steps to combat “scaling” in the USA

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 +0.59% up
NASDQ +0.10% up
S&P 500 +0.54% up
Russell 2000 -1.49% -

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

Technicals, Fundamentals & Analysis

Mantra for week - Fundamentals rule. Old fashion fundamental earnings analysis dominates as earnings season kicks off big time next week. ”Double dip recession” has become an investment mantra starting in Europe and now echos worldwide.

Reading the Tea Leaves – To analyze what happened in the US stock market yesterday I’d have to read the minds of millions of people including those big Black Box traders who control 80% of the market. For forecasting future price moves, yesterday’s, below average volume trading was both irrational and  irrelevant in the longer term.

In the short term, you could say traders saw an oversold market so they bought. Prices got too high and they panicked and sold. The black box traders who follow currency (dollar vs. Euro) saw a falling dollar and bought in the last 1/2 hr. giving most US indexes a gain for the day.  Most relevant data is rally did not last long = bearish

Here’s What’s Important

The BDI’s (see below) increased its daily decline through its support level is the most significant economic indicator/forecast out there.  What this is saying is that world trade is drying up. More specifically trade of emerging markets – China. Those of you who have followed Investors411 for years know that emerging markets/globalization has been leading world wide growth.

If you look at the 3 year of the BDI below, you’ll see what technical analysts call a triple top, a broken support level and a red line that is descending almost vertically. This s NOT good. The BDI is at @2100 and in the depths of the 2008 meltdown it was at @600 so there is still a long way to fall before we reach that level.

Nevertheless, without the interdependence of world trade [globalization & I realize globalization has its bad, good, & ugly] we face the danger of recession part 2. The BDI says YES worldwide recession part 2 is coming.

Significant Indexes -

  • McClellan Oscillator (MO) rose a bit to -45.22 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. .= Still NEUTRAL, but close to oversold
  • US Dollar –  The dollar rose a significant -0.62% Friday [Anything over +/- @0.50 is significant.]  Mantra - right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. Two weeks ago a -0.62% move in the dollar would have meant an easy 100+ point move in the Dow. This could/will change, but right now dollar is = Less Relevant
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  2217 yesterday.( This is a huge -49% drop in 6+ weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a massive -4.02% Monday. Rate of decline increased as it broke through its support level. = BEARISH

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own - Updated over weekends – Investors411 holds NO POSTIONS at this time.

Investors – Investors411 recommends no long position at this time. Wait for the MO to fall below -60. The further the better. (see past Investors411). Remember – Since 4/23 US markets have formed a bearish pattern of lower lows and lower highs. Hopefully, we will be buying at a low, but the 5 to 7% guideline (sell 1/2 for a 5% gain) because of the bearish trend.

Traders - There is some space to make a trade with a short ETF like SDS. The best read of the tea leaves is because the BDI is rapidly sinking & markets according to the MO are not yet oversold some room for a short exists. So I’d short any rally in stocks.

Answer for Monitor’s Question – I believe Paul R is away till Monday. The 5% rule is really a 5% guideline. Happy you made $$$ and I usually set a stop/loss at the price I bought it for.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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July 6, 2010

The Glamor of Greed

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , ,

Looking at  pretty pictures – reference below *

Drawing by 8 year old granddaughter Emma

The Glamor of Greed

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Andrew "Andy" Grove, co-founder of Intel  Corp.

Andrew “Andy” Grove,

Andy Grove the co founder of Intel uses a different title than The Glamor (profitability) of Greed. This former CEO calls his editorialHow to Make an American Job Before It’s Too Late” Grove uses the same megatrends Investors411 uses.

His editorial is a well researched, clear, outlined and offers a job centric solution. Here are some major points. [Many thanks to Robert Howetser who is a sometimes contributor to the comment section of blog and brought this editorial to my attention.]

  • The Bay Area in SF (Silicon Valley), the innovative machine of the country hasn’t been creating jobs in the USA lately. It has a higher unemployment rate than the rest of the country.
  • The scaling process is no longer happening in the US And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.
  • From Apple to Dell computer there is a 10 to 1 jobs ratio for former (Silicon Valley) high tech jobs in China vs. the USA. The largest of these is Foxconn ($62 billion in revenues – makes and assembles for Apple, Dell, etc.) and employs more people than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp combined.

Without bringing scaling back to the USA, American companies are going to continue to make profits by shifting jobs abroad. –  That why Grove is calling for a jobs centric government.

“We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars — fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations…”

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 -0.47% down
NASDQ -0.46% down
S&P 500 -0.47% down
Russell 2000 -096% -

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

Technicals, Fundamentals & Analysis

Mantra for week - Fundamentals rule. Old fashion fundamental earnings analysis dominates as earnings season kicks off big time next week. “Double dip recession” has become an investment mantra starting in Europe and now echos worldwide.

Technically the benchmark S&P 500 is down 9 of the last 10 trading days and way overdue for at least a  technical short term rally. = Bullish

The BDI See below) is still in free fall (-47% see below) clear evidence of worldwide economic  (trading) meltdown. = Bearish

Pre market trading in Europe & China is way up @2% (as of  8:00 AM EST)Those of you who took Friday’s read of the tea leaves to heart (you had to love risk) and bought as markets dipped at close – should at least be rewarded in the short term this AM. = Bullish.

*Looking at Pretty Pictures-

Technical analysis is looking at pretty pictures or patterns of stock charts. None quite as wonderful as a grandfather’s view of his 8 year old granddaughter’s work. Who knows why technical analysis works? Perhaps

  • We are all creatures of habits, and the trading herd follows patterns
  • So many folks think it works and therefore it does.
  • We all like to look at pretty pictures.

The bottom line – Investors411 on the right side of the blog offers different financial  charts. Also daily updates on certain charts in text of blog each day.  Those charts on the right side of the major US indexes all show one pattern – a series of lower lows and lower highs for stock prices that started on April 23 2010. If you’re a Bear you love this pattern.

We are currently in one of the lower lows of this pattern.

Fearless Forecast for the Week-

Some kind of technical rebound seems inevitable. If it doesn’t last at least couple of days we’re in big trouble. Some poor earnings results may already be built into stock prices. The accelerating downside of the BDI is a gathering storm. What to watch for is how the markets react to the first few earnings reports. How markets react to news is usually our #2 indicator (see STRATEGY Section on top of blog)

Best read of tea leaves - Good start poor finish = down week.

Significant Indexes

There’s hundreds of charts, oscillators, systems out there to measure trading patterns and flows. The BDI & MO were chosen because they work extremely well right now for different reasons. (Click on STRATEGY section at top of blog for more) The dollar accuracy as a forecasting tool was shaken last week. If it’s accuracy rebound’s Investors411 will continue to use it.

  • McClellan Oscillator (MO) fell a we bit to -53.38 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. In May the MO reached two lows – one at -120 and the other close to -130. Therefore, potential for more downside risk. Even after last week’s disaster for stock the MO is still NOT below -60.= Still NEUTRAL, but almost oversold
  • US Dollar –  The dollar rose a bit +0.19% Friday [Anything over +/- @0.50 is significant.]  Mantra - right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. Last week this got crushed by bad fundamental news as regular investors fled the market. Dollar flat last two days. = Neutral
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  2216 yesterday.( This is a huge -47% drop in 6+ weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell -2.81% Friday. Rate of decline increasing as it nears support level. Looks like support level will get crushed today =Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekends – Investors411 holds NO POSTIONS at this time.

Shoudda, Wouldda, Couldda -

Last Friday Investors411 reccommmended a buy if markets dippped for those willing to take risks. It does look like this trade is going to make $ at the open and perhaps throughout the day. More tomorrow.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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