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Liar Liar Pants on Fire

The #1 Political Lie of the Year

From PolitiFacts, an organization that that takes shots at ALL politicians and groups, the #1 lie of the year. A drum role please…

The LIE

“A Government Takeover of Health Care”

LINK to Story Once the Tea Party, Fox News, Business lobbyists and right wing political bomb throwers got finished destroying any rational debate on Health Care THE LIE that it was a government takeover still being used today won out over other political fabrications.

What really happened was a “free market” (giveaway to the big insurance companies) takeover instead of the compromise public option -The approach favored by almost all other Western Democracies.  But who could tell because American media focus is on who screams the loudest.

In American Society if you REPEAT THE LIE ENOUGH TIMES IT BECOMES THE TRUTH.

Does Conrgess Serve You or the Banks?

Quote from incoming Republican House Financial Services Committee chair and Tea Party favorite Spencer Bachus

“in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

I’m not joking this is a real quote - LINK here for full story. You may not like him, but at least former chair Democrat Barney Frank often stood up for taxpayers and wasn’t 100% in the back pocket of Shadow Banks.

Shadow Banking Bonuses

Irony is this AM CNBC’s (By far the largest stock market cheerleading outlet) is headlining that Bankers in Europe are having their bonuses cut. Now that Republican/Tea Party people are coming to power how about those Wall Street shadow banks bonus and compensation packages for the six biggest shadow banks. Care to guess how much they get?

Here’s the SEIU (a labor union) on what the Shadow bankers make.

We are about to endure a right wing feeding freenzy over the next few years of asking cops, firefighters, teachers, municipal workers, government employees to cut, freeze (freeze part done by Obama with Federal workers) their salaries and/or loose their jobs.  How about considering the shadow bankers????

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

Technicals, Fundamentals & Analysis

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

• Significantly higher volume Friday due to option’s expiration. Major indexes still somewhat over extended
• Hitting a rabid hornets nest with a stick – South Korea conducts live amo exercises near disputed Island. Latest – Surprise – N Korea backs down
• CNBC lead story Bankers in Europe get bonuses cut
• The week ahead & From Jeff Miller ‘Tis the Season for Investors to Choose What to Worry About Next Year”
• Bloomberg/Businessweek on Challenges ahead for Emerging Markets

Reading The Tea Leaves -

Friday’s blog made a clear Bulls and bears case. The outlook for the bulls seemed stronger till the end of the year. Outside events like a North vs. South Korea escalation would negatively impact stocks.

• The BDI has fallen 700 points in the last two months. Its at 1999 and has a major support at around 1700. That’s the line in the sand bad news support level. If the BDI falls below this big bad bears should rile. Even the 700 point drop is significant. In late spring/early summer the benchmark S&P fell about 10%. Correspondingly the BDI fell a huge 2400 points to 1700. Therefore relatively a 700 point drop is not that bad, but it happening while stocks are RISING. This is a divergence to keep an eye on.
• The dollar is also pushing out to the upside of a short consolidation range. Another bearish grow that’s worth watching.

Markets obviously change due to outside events. So while the case for the bulls remains stronger the case for the bear is growing.

Positions

• EEM - (Emerging Markets ETF) -1/2 positions sold
• #1 UWM - (2x small cap stocks ETF) -
• #2 UWM
• EUO - (double short the EURO currency) Bought Friday at 20.76

UWM - Note that even though major US indexes makes small gains that the Russell 2000 (small caps stocks) usually does better than its other three sisters (see box above) UWM is an ETF that does 2x what small caps do.

EEM – Even though we are still in the green with this this ETF it is under performing US stocks. The BDI is a good forecast tool for emerging markets that rely on trade more so than more developed countries. The whole world, of course, relies on trade. So considering selling the remainder.

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.” -

Obama’s Victories

It may be over the top  to call the events of yesterday Obama victories (credit/blame should be spread), so lets call them birthday presents.

Bottom line -  We should have done better, but it could have been a whole lot worse.

• The BP oil gusher in the Gulf looks to be completely capped. Also, victory for oil industry who now proves they can stop leak at 5,000+ feet.
• SEC gets record settlement against shadow bank GS, legislation to prevent what GS did is included in financial reform legislation, but GS wins by preventing a whole lot of bad PR by going to trial.
• The biggest birthday present is the Financial reform bill passes congress. (Senate, 60 -39)
• Another big victory is Republican leadership, like in health care, promising to repeal it all instead of saying well keep this part because its good and eliminate that.

Here’s the lead NYT editorial on Financial Regulation. Some relevant points.

• “Since January 2009, the financial sector has spent nearly $600 million to weaken reform” – they scored many victories.
• “the margin of victory was really about partisan politics and not the bill’s content.” Majority of blame here is on Republicans, but NYT does not mention Democrats are not without partisan transgressions.

Investors 411 has beat the drum for a tougher bill and it to be more inclusive of transparency in government agencies. However, we got more out of this than we did out of health care legislation. Both are steps in the right direction that need amending.

The next big battle is who heads and is on the board of resolution authority and consumer protection. Geithner is opposing Elizabeth Warren as the new head of Consumer Protection Agency. Warren is perhaps the #1 hero in the accountability, transparency and reform of Wall Street.

YOUR Comments

Sorry I’ve run out of time. However Ewanapat has a fabulous link to a controversial article on Ron Paul/David Stockman . This continues the debate over Barney Frank & Ron Paul stated by SE

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!

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

Technicals, Fundamentals & Analysis

Mantra for week “Earnings Season begins this week. - How markets react to news has usually been the key. If a stock shrugs and goes nowhere on good earnings news you know there’s trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.”

• 2nd Weak volume flat day in a row = Mildly bearish
• Stocks rallied into close = Bullish
• BP seems to have fully cap oil spill = Bullish
• GS settles with SEC, pays record $550 million fine, but avoids prolonged bad PR = Bullish
• GE reports lowers forecast. Down @2% in pre market trading - Bearish
• GOOG reported earnings and was down @4.5% in pre market trading (7:45 EST) = Bearish
• BAC reports and is down @4.5% this AM = Bearish
• Fin/Reg is over. No ore questions what will legislators do. = Bullish

You can check pre market trading here – Just type in ticker symbol

Significant Indexes-

• McClellan Oscillator (MO) fell to +43.48 [+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. The Black Boxes have not allowed the MO to rise above 80 since 3/09.  Now close to overbought position = mildly bearish
• US Dollar –  The dollar fell a massive -1.04% yesterday [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. This inverse relationship is part of their algorithmic system. There was a delayed reaction the last time the dollar fell over 1.00% – The next day we had an almost 3% rise in stocks.  For stocks =BULLISH
• 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 in almost 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a much decreased -0.53% yesterday. The decrease could be the start of the BDI finding a bottom – a bullish sign, but too early to tell. Fundamentally the 60% drop is very BEARISH

Reading Tea Leaves

From yesterday “is Black Boxes push markets slightly higher. Reasons – dollar probably continues to fall  & momentum higher at close yesterday.”

Today – Yesterday’s huge drop in the dollar gives bulls something to rally on. See analysis of events above. Is the BDI turning? – another sign of hope. The MO is at 43 and there is some wiggle room till 60 and a lot of distance to major resistance at @80. Bad earnings news from giants GE, BAC & GOOG will hurt budding rally.

Wow  - an enormous amount of cross currents impact US stocks differently. Looks like a roller coaster rally. Watch UUP the ETF for the dollar – if it keeps falling stocks go higher.

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

Same strategy still holds. Our one small short position SH seems to be in some danger today. Short term  traders may  get in trouble with short positions today.

What’s Up? – Your Smack Down List- 20, count them, 20 smack downs – you guys are angry – The HULK is on his way; The New Your Times – a phenomenal resource – Charts, graphs and data. Consumer Rights Legislation; Barney Battles Banks; David Brooks on Obamanomics; Tomorrow - Torture

     Your  SMACK DOWN LIST

Investor’s411 is sending THE HULK (Movie version above) to Smack Down the following people, institutions, & concepts that you selected. Instead of 10 Smack Downs YOU came up with 20. To see full list of comments & reasoning scroll down on this link.

1. Alan Greenspan
2. Hit & run Drivers
3. Hezbollah
4. Hamas
5. Inflating intelligence
6. Larry Summers
7. Ahmadinejad
8. Bush
9. Cheney
10. Rumsfeld
11. Tortures
12. Junk mail
13. trashing the environment
14. Former Senator Coleman
15. Minnesota going without representation
16. MN Governor Pawlenty
17. those who cut education
18. those who cut health care
19. N. Dakota sate legislature
20. those who discriminate

For those of you who missed out on Smack Down comments or thought we missed something - tomorrow’s #1 topic is TORTURE. There will be another Smack Down List next month.

AP photo Scott Appelwhite 

Consumer Rights Legislation

Barney Frank is leading the major consumer rights bill through congress . You can imagine how hard the Shadow Banks & Credit Card Companies are fighting this bill to aid consumers. Obama meeting with big banks today. NYT story

Say what you want about, Barney Frank, but he like Elizabeth Warren is one of the heroes fighting the big money Shadow Banks. No bank(s) owns Barney Frank The Republicans and many Democrats owned by the big banks killed his efforts for consumers last year. Check out his long but enlightening “Great Economic Hole” Speech of 2/4/09

Why the NYT’s is a Phenomenal Resource

* NYT has a graph and interactive chart telling Where Your $ Bailout Money Has Gone 

* NYT has another chart/outline on Our Government’s Total Bailout Tab

* NYT has another interactive chart on Pay at the Top (CEO’s)

Obamanomics

Obama’s landmark economic speech is reviewed by conservative NYT columnist David Brooks Also see April 15th blog post on Obama’s speech.

Tomorrow TORTURE

This is the #1 topic among the blogs. Want to lead the discussion? Send in your comments below.

STOCKS

Technicals & Fundamentals

Repeat from yesterday -Forget all about the major indexes - What happens to the shadow banks (financials) absolutely dominates stock  trading.

Earning season continues – Markets have already factored in most of the bad news into this earnings reports. Apple and Ebay did hit earnings home runs. UPS struck out

XLF - The ETF that tracks financials (mostly shadow banks) rose +0.91% in decreased 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 -(again a repeat) 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. Especially in the XLF

Reading the Tea Leaves - Look for a pull back this week or before the governments “Stress Test” becomes public May 4th. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!