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Financial Reform

From high Frequency trading to opaque credit derivatives our financial system is broken. If we go forward with this over leveraged opaque system it would be like never fixing BP’s gusher in the Gulf. We have the Tea Party members who want virtually no government oversight to the Obama administration who keeps saying, “go softly, go softly.”

Dallas Fed Chair Richard Fisher is another whose is standing for reform.

Turkey/Israel/Gaza = Crisis

Turkey, has called for Israel to join all kinds of international inquiries into what happened. Ranging from a joint US/Israel/Turkey group to one set up by the UN. The Turkish foreign minister said, unless they accept “it shows, they have something to hide.”

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

The Bears Growled Friday. Major meltdown Friday in above average increased volume. (NASDQ volume less of an increase) = Bearish

Fundamentals behind meltdown-

• Less than expected in over hyped (by Obama administration) jobs report
• Hungary announces economic troubles
• The Big News is France“

Troubles in Europe again causing major currency shift – Euro falls and dollar to rises. = Bearish

Market Leader -AAPL - still haing in at 258 = Bullish

Technically – The area around 1040 on SPX (S&P 500) is the line in the sand. SPX now at 1065 – Beyond 1040 the Limbo Line breaks down.

Fearless Forecast Last Week – “Down Week“ Unhappily right

Fearless Forecast This Week - Down Week – See Tea Leaves section below – Basically investors fearful of more problems in Europe will have traders selling into rallies.  Partial success with Gulf spill, Central Banks propping up Euro, Government officials saying things aren’t so bad in Europe could give us an up week. But, traders will probably sell into rallies. Eventually, the Euro, China’s problems & casino capitalism will take its toll.

Significant Indexes

• McClellan Oscillator fell dramatically Friday to -30.48 [+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. Momentum down/Bearish, but in not yet oversold = NEUTRAL
• US Dollar –  The dollar rose a massive +1.20% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for stocks = Bearish

Reading the Tea Leaves All those former communist countries of Eastern Europe who bought into the American capitalist “free market” over leveraged, shadow system starting with Hungary are in economic trouble. France has problems and together the Western and Eastern countries of Europe have a bigger GDP than the USA. More shoes will drop before this gets better.

Its no longer a question of if but when will these shoes drop. This week, next week, next month.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Bought SDS (2x Short S&P 500) at 34.52 Friday. Will sell 1/2 for hopefully 5% profit. Have stop/loss at 34.52. Its contradictory, but willing to buy more in any large stock rally. (S&P rallies, this stock goes down)

Small remaining 1% positions in VCI & ESRX – Also considering selling into rally

Invetors411 main strategy remains wait for the McClellen Oscillator to fall below – 60 before going long.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Nuclear Power

Editorial from Yankee Bob (bolding/color/format mine) in response to my including nuclear power as part of comprehensive energy plan that focused on alternative sources.

Why the hell would you support Nuclear energy??!!

There is no more expensive way to boil water then Nuclear. It’s the most expensive way to produce power when you consider the social costs.

• The deaths from radiation releases that are routine and routinely labeled as safe render it a loser.
• There is no safe place to store the tons and tons of waste unless you’d like to store it under your bed!
• The waste has to be shipped via truck or rail around the country. Sooner or later there will be a deadly accident or terrorists will hijack it.
• The waste will be deadly for 100s of thousands of years. Nice of us to pass the risk on to future generations.

If nuclear is so wonderful,

• why does the industry need the government to guarantee loans so reactors can be built?
• Why does the taxpayer have to assume the risk and get stuck for the tab even if they never produce a watt of electricity??!!
• If Nukes are so safe why does the government have to insure them because private companies won’t?
• What happened to the market place providing solutions?

This new nuke tech they are planning on building does have design problems and has not yet been certified by the regulatory agencies. It’s nuke industry propaganda that is touting their safety,no one else. when was the last time cost analysis factored in the cost of decommissioning a plant? They don’t! What is the cost of the public subsidies for guaranteed loans and gov insurance?

By the way,if you have a meltdown and lose a whole state,do you really think the gov will pay off on the loss of property to common citizens or just corporations? Why can’t we apply an equal amount of public subsidies to good clean solar or wind or geo thermal?

And lastly,without Homer’s Nuke plant making piles of plutonium and where would the weapons industry be. First ,they depended on it for making nuclear weapons and now they make a s–t load of the enriched armor piercing stuff that we have littered Kuwait and Bosnia and especially,Iraq with and it’s probably responsible for the Gulf War Syndrome. Why would you be in favor of Nuclear power? Eventually,we will lose a city or a state.

A shorter rebuttal from John Sovjani

Bob; I think nuclear should be part of the solution. Japan and France get most of their electricity from it. As Tom Freidman has said, we invented and developed it and now other countries are taking it and running away with it. If subsidies weren’t given, which energy tech would succeed in the market place? Also, which technologies do we have now that are proven and how long it will take any of these to have a significant impact without subsidies? Was it 10 years for approval for windmills off Cape Cod?

Have an opinion? Let it be heard in the comments section of the blog Nuclear energy, Immigration & Fixing Shadow financials are the latest topics – but anything goes.

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 for changes made each weekend

From Monday – “Sell in May and stay away” an old Wall Street saying.

This is the third or fourth “Distribution” day for major US indexes. Distribution = big, increased, above average volume associated with a major (biggest since 2/4) selling day. Technically 3D days (a pun) is about as big a signal of a market reversal there is, especially when rally days have so little volume. = BEARISH

Technically almost every analyst sees two major obstacles – We reached a “Fibonacci retracement number for the benchmark S&P 500. and US markets are at the place they were before the Lehman Brothers meltdown sparked the massive selloff. = Bearish

This added to a roller coster markets (up, down, up, down), which usually indicates a top has the boys and girls who live by technical analysis running for cover. = Bearish

Lots of analysts specifically  blamed yesterdays massive selling on Greeks who protested austerity measures as conditions for loans. They like most American want to see the Greek bankers pay more. The demonstration was the small picture. Markets selling off so much on this relatively minor news = Bearish

The real problem is in all the PIIGS in Europe got nailed when their bank, like ours were got over leveraged. There are other causes but  over leveraged loans have played a huge role across the world = Bearish

The Dollar (see below) is a major fundamental problem to recovery. As the dollar moves higher two negative factors come into play

• Oil prices, tied to dollar, also move higher. May & June historically have been period oil prices increase before summer driving season.
• US exports cost more abroad, because the dollar is more expensive and this cuts profits. = Bearish

Analysis - Big red bear paw prints all over the place. (see above) This time a low volume rally is probably just not going to cut it and traders will sell into the rally.

About the best hope to stem the tide is improvement in the employment numbers on Thursday. We also have a strong earnings season = Bullish

However, What Investors see, impacting those strong earnings is

• Higher gas prices
• Higher costs to export goods
• Continuation of European debt problem
• No solution American shadow banking problems.

Perhaps we will get a weak volume rebound today.  However these weak volume rebounds are on very thin ice when traders see such massive volume behind sell offs. So the roller coaster ride is probably going to finish where many coasters do – down from the top.

1168+ The 50 DMA & 1150+ (an old high) are two major support levels on the benchmark S&P 500 now at 1173.60

Significant Indexes

• McClellan Oscillator fell dramatically  to -46.43 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. – The MO broke through a strong support level at -33 support level. Breaking down through support almost always means there is more downside to come.  However support levels do put up resistance to further falls.
• US Dollar – Had a HUGE breakout and was up +1.16% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important Dollar closed at $83.83. The breakout of the trading pattern to a new high for the dollar focus almost all eyes on the growing value of the US dollar. Rising dollar almost always = falling stocks. The dollar is rising and falling because of the fluctuations in European currencies = Greek debt.

Positions

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

Caution – From Monday -The stocks in  YOUR Stock list are especially vulnerable to a sharp correction in the market.

Caution – From Tuesday- More and more US equities are looking like they have reached at least a short term high.  The jobs report on Thursday is critical to advancing markets.

Long Term Outlook – In anticipation of the S&P 500 (click on link to chart at side of blog) breaking through its 50 DMA the long term outlook is going to get downgraded to NEUTRAL.  This may be jumping the gun,but the momentum is with the bears.

YOUR Stock List from last Tuesday. Right now because all stocks could be taking a major correction it is far more significant to focus on the  BIG PICTURE than individual stocks.

Yesterday Investors sold 1/2 of its EWZ position (Brazil) that was bought  many months ago for a profit. The last 1/2 is down from where it was bought. This leaves Investors411 with under 10% position in stocks. (See positions section) Holding onto long term positions in IMAX & ESRX

The good news is as the McClellan Oscillator falls (especially below -60 = Oversold) Investors411 will start buying/nibbling again. Hopefully, more on this tomorrow. What too look for are stocks bucking the trend. (more tomorrow)

Note 2/4 was the last time we had a bigger than yesterday’s sell off and that’s 7 days before Investors411 started to buy. – We all had a good run then. Let’s hope the same pattern sets up.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Jesus was A Liberal

The Dalai Lama & Scotty

Christianity in America is often portrayed as conservative  -  flamboyant right wing evangelists, the conservative aura of the Catholic church, and, the often loud and sometimes violent abortion issue. Well, there are 10′s of millions of Americans who spiritually believe in something far less dogmatic. One such leader of these Americans is the Rev . Scotty McLennan

Back in the 60′s during the civil rights movement and later Vietnam we were all influenced by a great Christian leader from Yale - Rev. Sloane Coffin . (for those of you too young to  remember you can read about him here ) Scotty, was one of those who not only took this activist preacher’s message  to heart, he followed in his footsteps.  Scotty became University Chaplain at Tuffs and is now Dean of Religious Life at Stanford.

His latest book entitled Jesus Was a Liberal : Reclaiming Chistianity for All has just been published. - here You can follow Scotty at his own blog here

For my kids who know Scotty & Ellen well – your copy of  Jesus was a Liberal is in the mail. For those of you who think Scotty’s picture vaguely familiar – The Character of Reverend Scot in the comic strip "Doonsbury" is fashioned after him.

Iran Day 12



• Same recommended sources in past updates continue to provide excellent information. Demonstrations are diminishing and military presence growing. Protestors have switched to strikes and Thursday as a National day of mourning. Foreign media continue to be arrested. Neda has become the symbol of the movement – from major issue in Obama’s press conference (opening remarks here ) to Iranian government saying video was fabricated.
  
• Popeye in the comment section brings up the behind the scenes story of the power struggle in Iran over whose going to replace the "Supreme Leader." Steve Clemons blog has another yet similar point of view on the power struggle behind the scenes here and his daily blog offers more analysis here

Obama Debate Rages on

The are you happy with Obama ? debate continues to rage in the comments section. See posts by Abby and Popeye

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool - volume – gives no indication of which way prices will flow. But there has been some ominous changes in the secondary forecasting indictors See below.

The World Bank’s downward revision of expected GDP for the planet is having an effect. (see yesterday’s update)  I can’t remember stocks falling so much directly in front of a Fed meeting. Usually everybody waits till the Fed announcement after 2:15 EST today to make their move.  Sure looks like bears are gathering to mount a charge

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 US dollar in the short term and the BDI in the longer term

$USD – The Dollar fell-1.16% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. The dollar falling a very significant-1.16% and stocks ending up only flat (the Dow should have rose at least 100 points) is a very bearish sign.

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 now the BDI fell Friday and the rate of decline increased Monday and significantly increased Tuesday. Another very bearish sign

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

Reading the Tea Leaves

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. This week fearless forecast – Another down to flat week. Look for the areas around 875 and 850 on the benchmark S&P 500 as support levels.  So far because of the lack of heavy volume this looks like an over bought correction and not a total meltdown that tests the old lows.

Our key secondary ($USD & BDI) indicators seem to indicate momentum will pickup on the downside.

This is about as close as I can get to bringing out the old Lost in Space robot who screamed Danger Will Robinson,Danger Danger.

The only missing piece is  H igh Volume confirming a downside move. Therefore, NO warning, but keep an eye on markets.

Yesterday Investors411 recommended buying some downside protection on any minor rally. A 5%+ position in -SDS – An ETF that is ultra short’s the S&P 500

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING