www.talkingpointsmemo.com – Photo – For more on story see link and link

Terrorist Plot Attack

Yes, there was a horrific subway attack in Russia, but front pages everywhere in the USA did NOT report on the 9 terrorists caught in our country. They were, according to charges, picked up for “Seditious Conspiracy, Attempted, Use of WMD’s…Plot to Attack Police” and other charges.

If this group was Gay, Muslim, Jewish, Black, Mexican, or some other minority it would have been headline news in American media.  But these were white Christian militia terrorists and the media in the USA looked the other way.

Blatant Biased and Bigoted – The American media fear mongers what it wants and stories about Christian terrorists being arrested are just ignored because they are Christian.

Another example – the BBC last weekend headlined and uncovered a massacre of over 300 people by the LRA (another Christian terrorist group – often called the Lord’s Christian Army) in the Congo. Europe heard all about it. Did you see any American media pick up on the story?

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

See Positions , Strategy , and Overview for changes made over weekend.

Check out comments section of blog – Both Critic & Ewanapat have some very relevant fundamentals about IMAX & 3D stocks.

Throwing up your hands in frustration is not the answer. Technically, its hard to tell what’s holding up US equities. We had another day when volume (the #1 confirmation factor of a price move) fell as stocks rallied.  There has NO conviction/volume behind stocks for many moons. This week is continuing the low volume quarterly pattern

Holiday weeks (Easter) usually bring lighter volume. Its also the end of the quarter and money managers like to buy hot stocks to show their clients in their quarterly reports. The job’s picture is supposedly better. So why does there continue to be no volume behind rallies? What’s holding up stocks technically?

On individual stock technical analysis using volume is still sound, but it is irrational for US equities as a whole.  Same prediction/Fearless Forecast hold for rest of week.

The dollar is the index to watch. It goes up = stocks go down. It goes down = stocks go up. A new high for the dollar would be bad for stocks.

Significant Indexes

• McClellan Oscillator rose to -3.92 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO)LINK. – We right in the middle so NO clear signal. However we are still in bearish pattern of lower highs and lower lows.
• US Dollar – fell s -0.40% yesterday. The two day drop of -1.09% takes some of the pressure off the dollar’s breakout to higher levels. What the dollar does over the next few weeks is critical to stocks and economics around the world. The dollar has risen 10% since Dec.. This means that US & China (their money is pegged to ours) exports are 10% more expensive to the rest of the world. A higher dollar,therefore, puts real negative pressure on stocks and an economic recovery.

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

YOUR Stock List

This list has been developed by YOU sending in your stock picks, we discuss them individually (usually by email) and if they are trending positively they get included in YOUR list. Thanks to many of you who have sent in choices. If you payed attention to the List published on each Tuesday, you’ll find a lot of winners. One way to back check this is to use the calender at the top of the blog – click on past Tuesdays.

Caution- This is just technical analysis and lots of other factors enter into a decision to buy or sell

NB -Last Week’s comments in black. This week’s violet. Chart links underlined in Blue

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

• CAAS –  Some increase volume behind dip, but at strong support level - A risky Chinese company, but its now or never time to buy the dip. If you bought you won. Made higher high on chart. Pullback due.
• PCLN –  Still consolidating after breakout - A buy the dip stock If you bought you won Consolidation due.
• F –  Huge sell off last week and strong but less volume rally yesterday -Too risky Looks like its running out of gas – too much downside volume – wait
• IMAX . Made a strong move yesterday and broke out of  short term consolidation pattern - A buy the Dip Stock If you bought you won Overextended now, but you know the story – buy the dip.
• CSCO, Seems too over extended from 50 day moving average, but clearly a market leader - Will move with technology. Another winner, but weak volume suggest top is near – Wait
• SHOO – Consolidating in what looks like cup & handle trading pattern - A buy the dip stock HUGE winner – way too over extended to buy now, but buy a reasonable sized dip.
• ICON,  Failed breakout back in consolidation pattern - Potential, but too risky. Another winner. Retreated yesterday in weak volume = bullish. A buy the dip stock.
• VPRT Consolidated and made a move yesterday - Possible breakout candidate. Breakdown in heavy volume.
• DGIT - A bunch of higher lows over last month in “ascending wedge” pattern & at its resistance level - Potential breakout stock Pullback in weak volume is bullish. Another chance at breakout, but risky.
• VCI Big fall/volume Friday partial recovery yesterday - too risky  Dip in weak volume = bullish. Faces resistance, but potential breakout candidate.
• CREE –  Still consolidating a buy the dip stock. Still consolidating in weak volume near high = bullish. A potential breakout candidate. Still a buy the dip stock.
• SNDK – .   Dipped last week and major rally yesterday A buy the dip stock Another Winner. now consolidating  A buy the dip stock.
• VSH – .   Strong volume on down days -Weakening Too much big volume behind down days.
• CTRP – Dipped in weak volume last week, rallied off support level - a buy the dip stock HUGE winner – Decent volume at new high. Over extended, but buy the dip
• CNAM Fall in weak volume, two day rally in strong volume – Big risk China stock, but potential big reward. If you got guts a buy the dip play. Breakout failed, now consolidating. Again more risky, but buy the dip

New plays that have similar 3d fundamentals as IMAX. Personally I’m more comfortable with this group because I believe in the fundamentals behind 3d technology. Some fundamental analysis included. Problem with these are their sales are not pure 3d plays.

• DWA (Dreamworks) Think their new Dragon 3D movie will be a success and move this stock up. Dragon’s did not live up to expectations. Big volume behind downside move. Only for short term players who want to buy elliptical downside bounce.
• CNK (Cinemark)  Still a bit over extended – Tempting Consolidated over week & broke out of that pattern yesterday. A buy the Dip Stock Winner that has dipped yesterday Think weekend Titan’s movie will bomb and hurt box office. Careful, but still buy the dip.
• RGC (Regal Entertainment) Too overextended wait for dip.- Tempting Just keeps moving higher  Dipped last two days. Same fundamental problem of Titans, but better movies coming up.  Still buy further dips.

32 million new heath care customers (Obama/Pelosi health care bill) means some stocks are going to rally on this increased supply and the growing aging population of baby boomers who need health care. New group

• ESRX (Express Scripts) – (see yesterday’s blog) Investors411 own this stock. - Broke out, now a bit over extended wait for dip. Rally yesterday, but weak volume makes it a risky buy the dip.
• TEVA (Teva Pharmaceuticals) Gone elliptical - wait for dip. Now dipping in reduced volume = bullish. A buy the dip stock.

Analysis – WOW – Look at all those buy the dip stocks that were WINNERS Some of those stocks are a bit over extended, but there are sill some “buy the dip candidates” and (not quite as good) “potential breakouts. “Almost all of these stocks have the potential for a long term run.

The McClellan Oscillator is near Zero so overall market upside and downside risk is equal.

Best read of tea leaves - This week should do well and Monday’s are usually good. TEVA, & others that fall in weak volume that do not have a strong resistance level are best shots at fast gains. However a breakout from a longer consolidation is usually better long term play.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iran Day 14

Collage of dead protesters – Photo Andrew Sullivan Blog

Sorry, I’m just too emotionally exhausted and heartbroken to continue sifting through the blogs and tweets on Iran. You look at too many videos, audios blogs, tweets, and analysis and it’s overwhelmingly sad.

Best 4 sources still

Nico Pitney at the Huffington Post here

Andrew Sullivan at the Atlantic here

Robert Mackey at the NYT here

BBC- world’s largest news outlet that strives to be unbias here

The Obama Debate

We’ve had an excellent debate over Obama’s policies and effectiveness in the comments section of the blog .  You all have make some great points. Investors411 has both praised Obama and condemned him (mostly over the choice of Larry Summers as chief economic advisor)

Right now Obama is a very popular president (something like 60% positive and 32% negative) So what.

To jumble the title of his book – We have The Hope , but not enough Audacity .  This summer is the time for him to forget about consensus building and take charge. The single issue he alone can make the most difference in  this summer is health care.

"[Obama's]command of the issues — and ability to explain those issues in plain English — is a joy to behold. His administration has spent months talking and working with everyone on health care. Fine. Now its time for Audacity.  Take one plan and lead. See Nobel Prize winner Paul Krugman editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Volume was below average again  and up just a smidge for the NASDQ and Dow. Perhaps some expert analyst can glean something from the volume, but the bottom line is no big moves are being made by the big institutions and there are a lot of people sitting on the sideline. Some of these folks are very unlikely to get back into investing in stocks. Volume is NOT confirming any price move.

Yesterday’s big move higher was probably a whole bunch of traders (as opposed to long term  investors) getting caught having to cover their short positions.

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Top 3 Recommendations/concepts

Very happy with the mid term results posted yesterday! Obviously Investors 411 toasted the benchmark S&P 500.  Going forward 3 recommendations/concepts

• China (FXI )will continue to outperform USA (See Positions & Overview at top of blog for more on this and other recommendations)
• Brazil, (EWZ ) India (INF ) and alternative energy (GEX/PBW ) are still decent buy the dips plays.  But you have to be careful on all of the above including China. Even though they will outperform USA. They will fall faster in a meltdown.
• The economic problems  created over the past decade are massive. Over leveraged or phony wealth accounted for huge part of economic growth and where is that growth going to come from now?  Our (the USA) debt, dependence on foreign oil, and our inability to change entrenched special interest groups are three large anchors holding our economy back.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iran Day 10

Photo  Flckr user Jamie Vatanhah

The BBC has an excellent post of brown shirted Iranian government forces riding on there motorcycles and shooting into a crowd here or a women from inside Iran describes what’s happening to BBC here

NYT lead story has Government publicly admitting that there were more ballots than votes cast in 50 Iranian cities here here The usual sources still provide the best description of what’s happening . Also add the live NYT blog the Lede

Read Scott’s worthy description of Iran’s/US past history in his post on the right side of blog.

The Obama Debate

Frank Rich editorializes its Obama’s Make or Break Summer here (See Sunday’s blog) Bob and D already staked out there positions. Here they are.

Bob – I am feeling badly betrayed by Obama. His health care reform is nothing that will help and his reforms for Wall St look like they were written by Wall St. He has not kept his promise on Don’t Ask, don’t tell and his Justice Dept is defending DOMA. His energy head is pushing for Govt.subsidies for Nuclear Power,but not for renewables. He refuses to prosecute the High Crimes and War Crimes of the Bush administration. I am angry,ashamed and I feel betrayed! Maybe Nader was  right! Obama is not going to give us health care ,or green energy. He is giving us endless war,a fascist state and new nuclear power plants. At least Bush never pretended to represent us,but O did. Damn him to hell!

D – Bob, I can understand people being frustrated with Obama, he hasn’t done everything I want too. But sometime you you get what you get and your cup is 1/2 full. I hope it fills up more over the course of the next 4 years. Some of the Positives that Obama has helped create -

1) As Barr said under Bush we got Ahmadinejad, Under Obama we got the Cairo speech, Lebanon election and the Green Revolution in Iran
2) We don’t have a right wing radical nominated to the Supreme court, we have Sonia Sotomayor
3) Laws expanding children’s health care funded by a cigarette tax
4) science means something again and we passed stem cell research
5) Abolishing torture, ordering Guantanamo closed and a fixed timetable for Iraq withdrawal.
6) A big stimulus bill/taxcut to get the economy moving again.
7) Moving toward better lower cost heath care for more Americans
Keeping the economy from crashing and a stock market rebound
9) Money in the stimulus for green jobs and education.
10) The new respect the US has gained from other countries around the world.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Both the NASDQ and the S&P moved higher in above average volume.  However Friday was what is called a "quadruple witching day"  This means either a whole bunch of stock traders were riding around on their broomsticks in audition for the new Harry Potter movie or a whole lot of options expired.

Bottom Line – Increased volume NOT a fact on Friday.

Major event – Fed Meets this week

Technicals & Fundamentals

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The dollar in the short term and the BDI in the long term

$USD -  The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went down-0.34% .   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows. Still to early to tell

Fundamentally its hard to understand why the dollar is rising, because we are printing to much $ and have s large stimulus package. Still other countries and traders are buying dollars. Lots of different ways to spin this – one is there is still confidence in the US economic system.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and the BDI fell minimally on Friday 4073 to 4070 . The BDI is more a long term indicator. The chart pattern shows that the BDI has reached a critical resistance level its high of the year.  This could either be a double top chart pattern (bearish) where price fails to move higher or we may break out to new highs. Time will tell.

If trade is diminishing through out the world then a worldwide recovery is in serious trouble.

Reading the Tea Leaves

Still think this market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation.  But one Economist who called the whole stock meltdown in the first place Nourille Roubini see a "significant market correction" LINK His reasoning is oil prices and interest rates are rising too rapidly.

If these do continue to occur, what started out as an over bought technical retreat could turn into a full scale test the low bottom.  So in future Investors will keep an eye on interest rates and continue to watch oil prices.

This week fearless forecast – Another down to flat week.

• Holding onto long term positions FXI ,
• PBW/GEX (sold 1/2 of GEX and waiting for dip to buy similar amount of PBW – then will sell other 1/2 of GEX and buy PBW.  PBW is just a better preforming alternative energy ETF
• IFN Bought a small amount India ETF.

Personally, have not reinvested in the other positions that Investors411 held – QLD ( 2x NASDQ) EWZ (Brazil) & XLF/UYG (financials) Waiting for more of a dip.

"The Hedge"  SDS and QLD is basically flat since it was introduced.  For more see Position s section at top of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Neda, The Iranian Freedom Fighter

Photo of Neda by unknown Iranian

• You can see the tragic end of Neda’ s life-on the Andrew Sullivan Blog here or the whole video  (you’ll have to scroll down to 2:27 PM yesterday of Nico Pitney’s live blog )at the Huffington Post here

• NYT’s Roger Cohen has an excellent editorial from inside Iran here His first hand account on "Islam stands for Freedom" and what’s happening on the streets is riveting. Violence has escalate during the day and each night cries of God is Great (Allah Acbar) and death to the dictator ring out over  the rooftops of Iran.

• The BBC is the world’s largest news organization and it strives to be neutral unlike American Corporate media (or me – I clearly have chosena side in this). They question the honesty of the Iran elections here The BBC lists many doubts. They also quote Professor Juan Cole who makes the same argument that Investors411 has made – How does a country 4 times the size of France collect 39 million folded paper ballots and count them in less than 4 hours?

• Read Obama’s latest statement invoking Martin Luther King here
  

The question of the week is what do you think of Obama so far – Good, Bad, Ugly? Besides Iran, there are some huge issues facing the USA – Today Frank Rich editorializes its Obama’s Make or Break Summer here

Back with stocks on Monday

Barr

What’s Up? Mullah’s at war – Split in Shia Muslim Orthodoxy – Obama’s financial Fix – Change in Market Outlook & Why – Iran want’s nukes – IAEC’s #1 – The dollar, BDI & other forecasting tools – Reading the Tea Leaves and more.

Major Develops in Iran

photo of yesterday’s opposition demonstration -Huffington Post

List of Major Devlopments

• The “Assembly of Experts” Top Mullahs in Iran that choose the Supreme Leader will hold an “Emergency Meeting”
• Massive demonstration again yesterday (see photo) More scheduled
  
• Continued violence/deaths and signs that some elements of Army are supporting/protecting demonstrators.
• The most Senior Ayatollah is backing the opposition.
  
• It’s like the cardinals of the Roman Catholic Church split into two large different warring faction. Perhaps like when Martin Luther and the Protestant reformation split Christianity centuries ago. Remember this is the Shia branch of Islam.

The three key sources continue to be The Huffington Post’s live blog . Andrew Sullivan’s blog and the BBC .  News breaks there well before cabal or networks. The first two are 24 hours a day bringing live twitters and videos.

One Caution – Like many I’ve been caught up in the “fascist” oppression of the Iranian people. (one of your posts – “One suggestion. Instead of calling Ahmadinejad a holocaust denier, why not label him a fascist beast who would kill anyone from Israel to his own people to rule the world.” )

What if the opposition wins and still wants nuclear weapons? How different are they from their predecessors?

Iran wants nukes – Mohammed ElBaradei – Nobel Prize Winning head of International Atomic Energy Commission.

New Financial Rules

Obama is announcing the new financial rules and regulations today. Lots of it has been already leaked. This is just a start, but at first blush it looks like they are weaker than many expected . NYT’s lead story on this.  Basically think economist Robert Reich has clearly defined the changes we need. “The Three Changes We Need” is his Tuesday, June 16th editorial.

Sorry, have not spent enough time on analysis and time is short (more tomorrow)

This is just the start – Congress is going to debate this over the summer.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

Markets took a less sever, but still significant hit yesterday. Again the volume was below average. (The NASDQ was close to average) Volume is NOT confirm the breakout of the trading pattern over two weeks ago and volume has not confirmed the move back into that trading patten. The benchmark SPX (S&P 500) closed at 911 and has several significant support levels around 900. (see charts)

Significant forecasting tools/Indexes for stock markets

$USD - Repeated statements in brown – The dollar is the index to watch You could write a book on the dollars influence on everything but for us the bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. After two significant days where the dollar was up a total of over 2% it fell -0.58% yesterday The dollar broke to higher through a resistance level (see chart). Investors 411 mantra is Dollar rallies = Oil & Stock prices fall. Yesterday was one of the rare days this did NOT happen.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. -1.73% in increased but weak volume

WTIC – Oil prices down -0.21% yesterday. Closed at $71.15

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 4 day rally. Bullish sign.

Reading the Tea Leaves

Monday’s lead statement - Expect a tired low volume market to retreat this week . This technically still looks like a market that just got too over extended – went up too far too fast and needs a breather.

The rising dollar is technically the most important influence on stocks. The correlation between the dollar rising and stocks doing the opposite is perhaps greater than 80% over the last few months.

Because we have fallen back into the old consolidation pattern, technically we have had a failed or false breakout. Therefore the Long Term Outlook is changed back to NEUTRAL

You have a Grand Central Station of support levels all converging around SPX 900. SPX now at 911. Then the last line in the sand the May low @875 Taking out  these levels would be a bearish. If 900 falls expect 870/875.

NB – Volume is confirming Nothing. So it looks like the support levels will hold. View this as an opportunity to buy (especially for traders) Longer Term investors IFN (India)  is beginning to look like a buy the dip opportunity. Strong volume is the enemy of bulls.

CAUTION – “This is not your parents buy and hold forever market” We have moved away from the edge of the financial cliff, but the long term structural problems still exist in the world’s # 1 economy and fixing those is going to hurt economically.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

What’s Up? North Korea, data, editorials, and raising the alert levels. How we act here impacts Iran – New daily Positions section for recommended stocks – Reading the Tea Leaves, a broader longer term market outlook.

North Korea Info Page from BBC

Map and links from BBC

Factfile: Underground testing

The Korean war

N Korea’s missile programme

 

The British Broadcasting Company is a more independent source for information than most American media.

North Korea’s nuclear test is obviously a very significant problem. US and South Korea have just raised their alert level.

Solutions here are going to have to involve China/world taking a more aggressive role against North Korea.  NYT editorial here. Iran is watching what happens here. Giving into North Korean demands obviously encourages every nation/dictator to become a nuclear power.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals 

The NASDQ held onto most of Tuesday’s gains, but the Dow and S&P lost most of those gains. Small cap stocks (Russell 2000) were somewhere in the middle. Volume was again below average. We are stuck in a trading range.

From yesterday – “One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains…. Very suspicious over lack of volume.”

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.99%. Financials has been the leading sector and as financials go so go the markets.

WTIC - Oil prices again closed over their $60 support level +1.60% at $63.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

Fundamentally – Almost every analyst out there says we have a glut of oil and prices should be falling. 

BDI – The Baltic Dry Index measures the flow of goods (world trade).  The momentum here is bullish (see chart). This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism)

Reading The Tea Leaves - Longer term pattern is clearly consolidation (last month prices have been stabile) and this is good. The bullish trend that started on March 9th is firmly in place.  

If we break out of this consolidation pattern to the upside the Long Term Outlook will change to Cautiously Bullish. Right now, this senerio looks more likely than a downside breakout.  

• The BDI rising 
• Technical consolidation in prices 
• consumer confidence rising  
• rising commodity prices 

All this shows an improving economic situation worldwide. One downside to all this stimulus is inflation, but for now the mojo is still with the bulls  Questions - 

• Could it be that we are unwinding the economic debt of shadow banks in the right way?
• Are we in the last innings of the housing meltdown?  
• What happens when we impose rules on the shadow banks?  

 As stated before we have dug a huge economic hole. We can go from  -6% GDP growth to zero and this will be positive for stocks. But what happens after that?

Positions - (See positions section of blog for more)

•  EWZ - From yesterday “sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday… looking for a dip (-5 to 10%) to get back in.”
• Inflation - GLD (gold) is one of the hedges against inflation. Down -0.33% yesterday
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now. This ETF has gone elliptical and will wait for a pull back.
• FXI - our major position here only rose +0.68% yesterday.
• GEX – alternative energy – +1.91 yesterday 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !