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.

Apologies to some of you who are trying to post comments as “guests” – It’s NOT working and  only “registered users” are able to make comments. Trying to work this out.

Tea Party Patriots

Reality is that Tea Party Patriots and like groups are a major force in the USA and many of YOU have commented on their right wing radicalism, racism, and rage. NYT’s Frank Rich & Talking Points Memo . The TPP hero’s have taking some truly radical views defending BP.

• Rand Paul defending BP wanting Obama to leave them alone.
• Joe Barton (Republican chair of energy committee in congress) calling the $20 billion Obama got from BP a “shakedown.” He later apologized.
• IBD (Investors Business Daily - “Rallied to  his(Barton’s) support.”), Rush Limbaugh (“the $20 billion would go to ACORN”) Republican Study Committee = “A Chicago style Shakedown.”

To the TPP’s everything is the fault of a big monster government. So much so that they would rather see YOU pay for BP disaster.

Just what is does our government do – Primarily writes checks to seniors (social security & medicare) and fight wars. (65% of federal budget and growing) Just who elected our democratic government  (20 of the last 30 years Republican Presidents)we did. Yet the TTP’s rage against government they elected as the source of their problems  - You self indulgent, arrogant  IDIOTS – the problems we have are our own making -our own fault. Take responsibility.

TPP’s are all wrapped up in sensationalism from Palin’s “drill baby drill,” to their “don’t tread in me” banner. When the TPP’s heros take a position on BP you find out just how dangerous they would be. Do NOT ignore these people.

China Revaluation

Stocks all over the world are up on news that China is loosing currency restrictions. This avoids or lessens the tensions a potential trade war with the USA. It’s a long sought goal of US foreign relations and a feather in Geithner/Obama’s cap.

If you combine this with Obama getting $20 billion from BP you could say he’s having a good week. (more on tis below)

However, no matter on how tough Obama got with China & BP his lack of support for substantive regulatory reform on the too big to fail shadow banks is a major disappointment

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

Friday was one of the most boring options expiration days ever. Usually a Quadruple witching day/options expiring means a HUGE amount of trades and a volatile market.

BIG story over weekend is China Yuan/currency has moved to a 21 month high. Bush & Obama have been pushing the Chinese to deleverage their currency from the dollar.  Looks like Obama, time & a win win situation finally moved the Chinese. Since the “Black Boxes”(see Thursday’s update) that make up 80% of the trading are fixated on a falling dollar this is going to give bulls a shot of adrenaline today = BULLISH

BDI in freefall. At some point the Black Boxes (Huge computers of Huge institutions that make up 80% of all trades) are going to notice the BDI whichis a proxy for world trade. World trade is Slowing and the  first impacted are highest exporters like China, Germany, etc.= Bearish

Fearless Forecast Last Week = “Rally Ho” We held onto gains made early in week.

Fearless Forecast This Week = Rally Ho Again – China news is extremely bullish and this surprise should boost markets above +80 on the MO scale. Conditions should be getting very oversold by the later 1/2 of week. So expect the rally to dip or flatten then.

The China news is a significant positive surprise. After years of just talking the Obama administration has got China to move. Unfortunately the news has caught us with just a small stake in equities, so we’ll miss out on what should be a big jump this AM in equities.

Significant Indexes

• McClellan Oscillator fell to +50.47 [+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. Just below overbought territory = moderately overbought = moderately bearish
• US Dollar –  The dollar continued its fall Friday -0.10% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar seems destine to fall to its 50 day moving average which is $1.06 lower and rising. = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped is in free fall from @ 4200 to @ 2700 Friday. The China news could impact this index today Often a lagging indicator, but clearly long term  = Bearish

Positions

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

Have not yet had a chance to Update over weekend.

High beta stocks (See YOUR watch list) and high beta ETF’s (see past Investors411) going to do well early this week on China news. Could be a good short term buy the dip play here. Be careful that your choice is NOT too overextended from/above its 50 Day moving average.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Bravo Barack

Obama finally hit one out of the park yesterday. Let’s not damn him with faint praise  like America’s media or try to politically toast him for everything he does like the far right, but this time say Amazing, Well Done and Bravo Barak.

• Obama got a $20 billion dollar Trust fund from BP for folks impacted by the BP volcano of oil.
• Obama got BP to suspend their dividend for a year — the money goes to those impacted not shareholders.
• Obama got a NO cap agreement on the $20 billion
• This is especially significant because just a few weeks ago congress could NOT pass a plan for a $10 billion dollar fund. Something many congress people should be ashamed of.
• Obama got BP to pay $100 million for idled workers.
• Obama got, Kenneth Feinburg (oversaw 911 victims) to head independent agency to administer claims

Has an American President ever got $20 Billion from one of the biggest companies in the world? NEVER – This should be the headline of every major paper in the USA – but it isn’t. It is the lead editorial in NYT.

Black Boxes (see below)

NB –  Last Investors411 for week

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

Markets were mixed in surprisingly light volume – This Friday is one of those days all kinds of options expire. Translation there should be a lot of trading.

FXE – The ETF that tracks the EURO fell -0.36% in very heavy trading. The amount of decline is not very significant, but the heavy trading is. Perhaps a reversal of the week+ long EURO rally is happening.

“Black” Boxes

Jim Cramer, host of Financial Channels “Mad Money show, last night called them “Black Boxes” I’ve called them the “Mega Sharks” and “HUGE institutions/hedge funds” that dominate trading. Cramer stated that 4 years ago they made up 30% of the trading, now these entities with their giant computers make up 80% of the trades on the US stock exchanges.

These Black Box traders are another form of casino capitalism-in other words – they rig the game so that YOU loose and they win. Some examples

• High Frequency trading – Their ultra fast trades caused the major 800 point Dow meltdown in stocks a few weeks back. Now 10% curbs have been put in, but both Debolt and the Washington Post stocks were hit with 10% dips this week. Translation – their high speed computers that run on algorithms are in and out of a stock/sector/country’s currency before  you even begin to type in your trade.
• Imagine you are trading SNDK. A stock that has and is doing very well right now. Black Box computers can instantly pick up any news on the company from media outlets to probably the amount of facebook, google or twitter traffic on SNDK and the team monitoring those black boxes can act accordingly.
• They can manipulate to a significant degree a stock, sector, ETF that is close to an important technical level. One way is pumping and dumping. They pump something up, other suckers join in, then they dump it.

They rule and they run the rule book. In other words what used to work like volume confirming a price move seems no longer to apply.  The game has changed and the 20% of us that are not Black Box traders are their easiest targets. Sometimes they go up against each other and sometime they work together. In the long run fundamentals (earnings, company growth, profits, etc.) do move markets. However the Black Box traders that dominate markets can do a lot of damage/manipulation before fundamentals kick in.

Right now the Black Boxes are obsessed with the Dollar/Euro relationship. That’s where the money and the action is – the giant currency markets.

It was surprising to see Cramer, who is basically a market cheerleader, speak out against Black Box trading. He recommened supporting one of the champions of Investors411 – Senator Ted Kaufman. Here’s Kaufman on casino capitalism and black box trading

Bottom Line – Many people no longer invest in stocks. This is evident from the lack of volume. Black Box trading is one of the factors in out casino capitalist system that rewards the few at the top and the rest of socialize their risk.

About the best I can do is follow the tracks of the black boxes and make trades accordingly. Right now their obsessed with currency trading. Until casino capitalism is repaired investing for the long term (years) is more difficult.

Significant Indexes

• McClellan Oscillator fell to +60.11 [+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. Just into Oversold territory = Bearish
• US Dollar –  The dollar rose +0.30% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important.

Reading The Tea Leaves -

The high volume turn around in the FXE (see above) & the oversold condition of stocks (MO) indicates the likelihood of a short term reversal of trend in the EURO. However, major reversals usually happen at support levels and the dollar & the EURO are still a ways away from its 50 day moving average. And one day’s trading in currencies is ardly an indication of a reversal, only the possibility of one. So lets go with moderate upside that gets us back to @+80 on the MO.

Positions

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

Out of all stock positions.

Out for the rest of the week – Back Monday

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Obama’s Speech

Here’s today’s lead editorial in NYT Obama needs to  “follow through — with more energy and dedication than they have shown so far.” The NYT was one of the best reviews I saw others were a lot harsher. Bluntly – great speech, but where’s the beef?

The rock and the hard place – So far BP’s stock has lost @50% of its value. You push these SOB’s too far too fast and the company disintegrates leaving the taxpayers to pick up the bill.

America’s Debt

Who is the biggest holder of America’s $13 trillion dollar national debt? Hint they hold over $5.2 trillion of it. Slide presentation on Huffington Post was a big surprise to me. The 15 biggest holders of US debt-Link here

Who holds 40% of the national debt and what does that mean?

Tea Party

Tonight at 7:00 PM EST Chris Matthew’s will have a documentary “The Rise of the New Right” on MSNBC. I suggest that you watch it on line or see it live.

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

Another low volume major move for US indexes that crushed significant resistance levels for several of the major indexes = Bullish.

As stated before, volume has NOT been a factor in trading for many many moons.

From yesterday – “FXE (tracks the EURO) is the ETF to watch along with Spain’s EWP”  FXE was up a very significant +0.97% & Spain was up @ +5.75% along with Italy. Spain and Italy are the two largest of the European PIIGS + Hungary nations that are having debt problems.

The MO has reached Overbought territory = Bearish

The Baltic Dry Index BDI kept falling – It’s dropped well over 25% of its value in the last month. Since the BDI measures shipping rates this fall is NOT good for world trade, economics. The BDI is often a lagging indicator,. For stocks = Bearish

Significant Indexes

• McClellan Oscillator rose dramatically to +79.56 [+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. You have to go back to March of 2009 to find a higher MO. Clearly  Oversold = Bearish
• US Dollar –  The dollar again fell significantly -0.82% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important.For stocks = Bullish

Reading the Tea Leaves - The HUGE institutions that control 80% of the market ran wild yesterday. Their black box computers all gave a buy signal in front of what’s called a “quadruple witching day” on Friday – This means lots of options expire so there’s usually lots of volatility and trading. Except few outside the Mega Sharks (huge institutions) are investing or trading- so volume has dried up but not volatility.

The Mega Sharks seemed to have decided that Europe is going to be OK & will rally like the US did when Obama took office and the Fed flooded our shadow banks with $$$$. Back then the MO pushed up over +100 and stayed above +20 for 2 months as stock continued to rally.(see chart) Its now at +80.

A similar situation with the EURO could be happening. Don’t let American self centerdcenternessness get in the way – Europe total GDP is slightly larger than ours. We had another day where treasury auctions in Spain & Ireland went well. Just like they have had in the USA for over a year. Therefore, what happens there matters.

Even though we are now clearly oversold, we could see a sustained rally (couple months) develop. The dark cloud in all of this is the falling BDI.

Personally, what’s happening fundamentally does not justify, the rally. It’s Irrational, especially with falling trade (BDI). But mega giant sharks/institutions control this market and what anyone thinks outside their giant computers is irrelevant. The mega sharks control of stocks are a quantum shift from old trading patterns and rules. (best examples – volume is irrelevant & huge volatility in currency markets)

Positions

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

Sold 1/2 of UUP (ETF tracks dollar) for small loss at 25.08 -2% Will probably sell rest today

Sold VCI at 38.00 for +15%

Traders – +80 on the MO is the signal to sell what remains or short any rally.  See Positions section for some ideas.

Investors – Some of YOU commented (see comments section of blog) that you sold into the rally. Good idea. I’d sell into a rally today also.  No one went broke taking profits. When the MO dips down to @+30 you can nibble.

From Yesterday – “Not the technical breakout we were hoping for. Let’s wait till the resistance level actually falls to change the outlook. Maybe today .” The technical levels fell and the long term outlook = NEUTRAL

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Dawn over Newton MA

Obama’s Prime Time on BP

Preview here. Major American oil companies & BP will be in front of congress today. The Bottom Line for me is – the transformation to alternative fuels. This is the golden opportunity to make a giant leap forward to alternative energy solutions.

Chaos and lies has surrounded BP (the free market’s) response to this oil spill. Government from the past and present administration has bought BP line for way too long and was caught with its pants down by its ankles. The right wing’s solution is to scream & their drill baby drill mantra.

Perhaps today in front of congress and with Obama there will be the DAWN of some different solutions.

Wonder if oil executives will make the same mistake and arrive in big private jets like the car executives did? Will they get called on it?

Dawn of Financial Reform

The NYT Business section lead story the Volker Reform section of financial reform looks like it will pass! –

“Bankers have all but given up on defeating …would effectively bar federally insured banks from trading for their own accounts”

What this means is that YOUR FDIC insured deposits would NOT be used socialize the risk of banks trading opaque, over leveraged derivatives. Gee instead they might even loan that money to buisnesses and home buyers.

Current war – Blanche Lincoln’s Derivatives reform. See above link. Better email your congressperson or Senator and tell him/her you support Linclon’s bill.

Why Afghanistan?

The Pentagon, yesterday released the reason we  and should continue in Afghanistan, They have perhaps a trillion dollars of minerals. The Iraq war was fought over oil and now the loosing effort in Afghanistan needed an excuse to continue. China could get those minerals instead of us. What happened to terrorism and why is it the war machine – the Pentagon –  doing a report on minerals now?

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 benchmark S&P 500 fought its to its 200 day moving average/resistance level. Got their in the morning and spent the rest of the day in retreat. = Bearish

One significant data point that investors/traders should remember – Currency markets>Bond Markets>Stock markets. Translation = Because currencies and bonds are so much larger than stock markets they are the DOG that influences how the TAIL (stocks) wags.

With the NYSE up +75 points at it high yesterday – Interday the MO easily reached the +60 or overbought territory. This over bought position added strength to the resistance level and hurt the bulls yesterday. = Bearish

Looks like we may see some teeth in financial reform. Long term Bullish but short term = Bearish

An investment agency downgraded Greek debt in the PM yesterday, but the Euro held onto a significant move higher. In past, this would have sent the Euro tumbling. Sometimes there is a delayed reaction, but for now & for stocks = BULLISH

The Baltic Dry Index BDI has dropped well over 20% of its value in the last month+. Since the BDI measures shipping rates this fall is NOT good for world trade, economics. For stocks = Bearish

Futures up this AM = Bullish

Significant Indexes

• McClellan Oscillator rose to +50.26 [+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. Considering the volatility of the MO this is about as close as you can come without being overbought. = moderately bearish
• US Dollar –  The dollar fell a significant -0.77% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ -1.4% lower in the AM and rose throughout the afternoon.

Reading the Tea Leaves -

A lot of reasons to be bearish this AM. But almost all of Wall Street’s eyes are focused on what’s happening to the EURO. FXE is the ETF that tracks the Euro and it was up +1.09% yesterday despite a downgrade of European debt. There’s a lot of reasons – see red bearish signals above, but if the EURO is going to continue to go up so will stocks.

FXE is the ETF to watch along with Spain’s (EWP underperformed yesterday)

Another charge at the resistance levels for stocks seems likely. Remember, each failed charge weakens the attacking force.

Positions

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

With the DOW up 113 points at it high yesterday – Interday the MO probably reached the 60 or overbought territory. This over bought position probably hurt the bulls yesterday. = Bearish

Traders - YOUR stock List from 2/6 & from 9/6 a list of stocks that were outperforming and “worth a trade.”

• VCI – broke out to new high
• SNDK – broke out to new high
• SAM – broke out to new high
• BIDU – @4-6% rally
• ESRX (not on list but position Investors411 held) – broke out to new high

No one ever went broke taking profits. My best read of the tea leaves is to sell 1/2 into today’s rally (let the rest ride and hope it turns into long term gains)

Of course the ultra long ETF’s often mentioned (UWM, THY) have have done as well in the mini rally of the last three trading sessions.

Dumping 1/2 of UUP for small loss.

The bottom line is will the EURO continue to improve?

From Yesterday – Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but frankly, fundamentally I sure don’t see the light at the end of the tunnel.” – It was premature. Major indexes bounced off their 200 day moving averages and retreated in heavier volume. Not the technical breakout we were hoping for. Let’s wait till the resistance level actually falls to change the outlook. Maybe today Therefore, a return to CAUTIOUSLY BEARISH.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Center For Public Integrity

The two top groups of journalists out there doing investigative journalism in the public interest are the Center for Public Integrity. and

OpenSecrets.org

Both groups aren’t afraid to go after the polls and power brokers/lobbyists whoever they are. Stories like-

• 97% of the violations happened at 2 BP refineries
• The companies with the most lobbyists have turned this into @ 15% greater profit in each of the first two years
• Top ten lobbyist firms take financial reform to the Bank

The main focus of YOUR comments over the last few days has been on BP. These two sources above will help. The Huffington Post today echos what YOU said yesterday British Petroleum’s is Worth More Dead than Alive. Yesterday’s -15% drop in BP stock price, if continued, means that YOU – the Tax payer could end up paying for this disaster because BP may soon become bankrupt.

Rolling Stone, sorry Obama fans, front page story is The Spill,the Scandal & the President The Spill is clearly BP’s fault, and Cheney/Bush put the lobbyist and former business executives in place in far more than the energy industry. But, Obama has failed to clean house. Not the change we can believe in

Big Political Shift?

The lead NYT story today focuses on what Investors411 mentioned yesterday – California’s overwhelming passage of Prop 14 -

“traditional party primaries will be replaced in 2011 with wide-open elections. The top two vote-getters — whatever their party, or if they have no party at all — will face off in the general election.”

There are positives and negatives in this legislation. But overall it seems to give more power to moderate voters or have candidates appeal to a broader base in order to win. There are lots of variables, but its certainly a change.

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

Stocks are dancing on the cliff’s edge. Last few Investors411 have focused on how close the major indexes, especially the benchmark S&P 500 are from breaking their last major support level. The S&P (SPX) yesterday closed at 1055 and that edge is at @ 1040.

Major indexes are down @-13 % from their highs. Two different talking heads on the financial channels have mentioned -15% down is a significant figure. Because if its reached over 80% of the time it means -20% or an official bear market will follow.

When you combine this with the fact that we are close to this years low/support level its like dancing on the edge of the cliff.

Good news is stocks fell in decreased, below average volume = Bullish

Bad news volume increased as stocks fell & we ended the days near the low= Bearish

Bernanke spoke to the markets and created a bright picture in the AM. He emphasized “Don’t Cut Spending.” and our recovery while slowly progressing was still “fragile.”

Besides the dollars decline from highs what Yankee Bob brought up – BP - was behind the late day selling. Of course its impossible to exactly know since perhaps 80% of the trading is done by the huge sophisticated computers of mega institutions and their proprietary algorithms.

Futures are up dramatically this AM = Bullish

Significant Indexes

• McClellan Oscillator rose a bit yesterday to -21.25 [+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. We are a smidge overbought, but basically = NEUTRAL
• US Dollar –  The dollar fell about the same amount for second day in a row -0.35% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar had fallen @ 1.00% but rallied in mid afternoon, sending stocks lower. NB – The currency markets dwarf the stock markets in size.

Reading the Tea Leaves – The dollar will probably dominate stocks till earning season. That’s along time for a lot to go wrong or other shoes to drop in Europe. If you want to get really depressed here’s The Black Swan author Nassim Taleb on Debt, Spreading Like a Cancer

Hopefully you don’t share his gloom and doom, I’m more optimistic. But he makes some relevant points.

Traders – Rally day that gets sold into because few want to hold longs over weekend. Watch for news out of Europe.

Positions

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

Investors -It’s simply NOT a time to be in stocks. The long Term Outlook is negative – CAUTIOUSLY BEARISH. Why invest when it looks like stock will be lower over the next 6 months.  The single largest positive we have is stocks become so oversold they stage a counter rally and over the period of perhaps a week to a month you can make profits going long.

The second way to score (make money) is to use the ETF’s that are short the market like SDS (2X short S&P 500), UUP – that is an investment in a rising dollar and/or GLD. The strategy remains the same – buy the dip.

One reason to invest so that you make $ if the markets fall is a hedge. Your income may suffer, so at least on the other end you’ll make money.

Investors411 opened a 2% position in UUP (ETF tracks the dollar)at @25.60 (Have to double check this figure) Will buy more on dips.

Still holding very minor positions in VCI, ESRX & SDS

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Global Economic Monsters

• Over Leveraged Shadow Banks – Financial reform has fizzled in congress. (see a zillion past Investors411 for more) Short term – a shot in the arm for shadow institutions and their stocks. Long term - FDIC guarantees deposits of YOUR $ and they can still take any risk they want.  Bubble building casino capitalism, where gains are privatized and YOU socialize the risk.
• Debt Crisis – Europe Debt on the hot seat right now. Aussie’s Clarke and Dawe do a great job explaining this and their drop dead funny. Now add to this all the derivatives (over leveraging) placed on debt. First a bailout. Now central banks around the world are pouring $ into the Euro to stabilize it and keep dollar low.
• China Slowing Growth – A country can’t keep its GDP growing at 10% forever. Google [China, Slowing, Growth] and you’ll find story after story worried about a Chinese housing bubble or manufacturing decline. China’s #1 ETF – FXI This ETF used to outperform the S&P 500 by a wide margin. Now it underperforms. Investors $ are speaking and there is some cause for concern.
• BP/RIG/HAL Oil Spill – Major damage to these stocks and more importantly the environment. We all know its only just begun and yesterday was the start of hurricane season. 27% of America’s oil & 15% of our natural gas comes from the Gulf.
• “Supreme Leader,” “Great Leader,” ” Dear Leader” AKA Kim Jong-il –  You’ll never see a flotilla of Palestinian or any other peace activist off the shore of North Korea. (A double standard) Most repressive country on the planet, always confrontational and has nukes. Just committed an act of war by sinking South Korean naval ship.
• Mid East - Where to start? Iran, Afghanistan, Iraq etc. Current Crisis between Israel/Turkey does far more than put the $3 billion in “free” trade between these two democracies at risk. Terrorist through out the region are now in a stronger position and embolden because of this confrontation. Everything in the MidEast is oil/energy related.

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

Significant Melt UP in light volume = Moderately Bullish

Obama and his administration seem to be dropping hints that Friday’s job numbers are going to be good. This was fundamental behind melt up. Buy the rumor & sell the news.

Volume did NOT confirm the price move. So what else is new. Volume, which is historically the #1 confirmation factor of a price move has NOT worked for many many moons. = Neutral

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza, Euro debt crisis – yet we have a melt up. How markets react to news is our #2 (now #1) confirmation factor. Yesterday was a good price reaction despite bad news. The potential bad news is built into price right now = Bullish

MO has some positive momentum but in Neutral territory = NEUTRAL (NEUTRAL is all in CAPS because this right now is most important indicator.)

AAPL is the unofficial leader in this rally and the chart formed a T (see chart) yesterday in weak volume. Could be a top. Moderately Bearish

Expect Fed and other central banks to keep  propping up Euro.European markets at 6 week high.  = Bullish

Reading the tea Leaves – Historically, it difficult to see a follow through day after yesterday’s melt up in light volume. Baring an unforeseen incident – like Israeli’s killing more peace activists on ship heading to same area – it wouldn’t be a surprise to see a rally into the jobs number.

Significant Indexes

• McClellan Oscillator took a huge jump higher to -5.78 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is NEUTRAL territory.  How the MO works.
• US Dollar –  The dollar fell -0.02% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling. Chart shows at least 6 attempted breakouts above @87.5 have failed in last 2  1/2 weeks. = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update this/last weeks trade.

EVVV was eliminated from YOUR stock list because company was bought – (Thanks to Paul R for info)

IMAX remaining shares sold near open at 17.02

Windows of opportunity to BUY and Sell -

The McClellen Oscillator (MO) is working well right now and +60 or above = Overbought = sell. -60 or below = Oversold = buy

This works best with the broad based ETF’s that mirror the major indexes or for those who can handle more risk ETF’s that do 2x or 3x what major indexes do like TYH that does 3X major tech stocks. Approaching or below -60 buy. The further the better.

Above +60 sell or go short with ETF’s that short major US indexes. Example SDS (2X short S&P 500)

One major reason I stated that there was a “decent trading” opportunity yesterday was the MO was at -50 or almost oversold. We had a low volume melt up.  One major reason the MO was not an investing opportunity was we were not below -60.

Mea Culpa = Hindsight is great = should have invested MORE when MO was between -60 & -130. If I had, I’d start to take a little profit right now

(Will continue analysis of MO later)

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Gulf Oil Spill & the Financial Crisis

Bob Kuttner, often mentioned in Investors411, explains why the Gulf Oil Spill is almost exactly like the Financial Meltdown. [Bob is from my hometown and used to endorse my wife when she ran for school committee]

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

Significant Down day in mixed light volume = Moderately Bearish

Massive amount of bad news – N. Korea, BP failed to plug oil, Israel/Turkey/Gaza. Surprised markets did NOT drop more. = Bullish

MO getting close to Oversold = Bullish

Expect Fed and other central banks to prop up Euro again = Bullish

In the long run price fixing rarely works. This is what our Fed and other central banks are doing to the Euro. However, as long as investors are willing to buy government bonds at a low price the situation will hold. Best read of tea leaves – Don’t see any signs of impending breakdown. = Bullish

Significant Indexes

• McClellan Oscillator fell to -50.19 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is nearing OVERSOLD territory.  How the MO works.
• US Dollar –  The dollar rose +0.03% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update last weeks trade.

YOUR Stock List

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

Terminology

• 50 Day Moving Average of price- blue line on chart = 50DMA
• 200 Day Moving Average - red line on chart = 200DMA
• Ticker symbol for each stock is a link to a chart.
• Volume - Horizontal red (down days)and green (up days) line at bottom of chart show volume
• * Owned positions
• “Volume good” - translation – relative to major indexes individual stock is looking good – probably more upside volume on rally days than downside volume on toasting days.

Most of you are looking for longer term buys. Remember Stocks are in most cases riskier than most ETF’s. Our main strategy is to buy the dip of a stock that is trending higher.

Relativity – The last YOUR stock List was done on 5/18

• The Dow was above 10,600. Now the Dow this AM is just above 10,000 = almost -6% lower
• MO was at -68 then and -50 now = conditions were more oversold then than now, but still oversold.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

• AAPL . @+1% since 5/18. Last big cap tech stock left standing. Has held up pretty well. Caution – Chart shows its near strong resistance level. Formed double bottom = Bullish Should continue to outperform. Buy the Dip
• SHOO @-6 Chart shows lower highs and lower lows. Old favorite that has produced in past in bearish pattern – Gone.
• *ICON @-6% Another series of lower highs and lower lows – Gone
• DGIT @+0 Firm tend line higher. Higher highs and lows. Good volume. Dipped down @5% from high three days ago. Has had 10% dips in past. Buy the Dip
• *VCI. @-2% Has series of higher highs and lows. Good volume. Big fall -5+% in moderate/weak volume yesterday. Buy the Dip
• SNDK @+5% Broke out to new high and is falling back to breakout level in weak volume. Buy the Dip
• CTRP @-0% Stock has big swings and trouble getting past strong resistance at @42. But series of higher lows & decent volume make it a potential winner – Buy the dip
• *ESRX - @-2% Still outperforming markets, Volume good. Has strong resistance level at @105. Consolidating. Future Breakout candidate. Buy the dip
• *IMAX @-15% Investors411 has sold 3/4 of this position. Our +60% gains are melting away. Dangerous head and shoulders trading pattern forming. Volume not good. At critical juncture. Sell into rally.
• MSPD @-8% Lower lows and lower highs. Oversold right now but pattern broken.

Fresh Five – 5 new stocks

• OSTK (Overstock.com) Exploded higher in early April & May. Now consolidating. Dipped last 3 days in weak volume. Getting close to rising 50DMA. Buy the Dip
• JAS (Jo Ann Stores) Has had trouble (like ESRX) getting past resistance level above 47. Good volume. Dipped last 2 days after attempted breakout failed. In trading range between @40 &  @47 Outperforming.  Buy the Dip
• BIDU (Baidu INC – China’s Google) Outperforms. Broke out/soared  in May & has pulled back. Support at rising 50DMA. Buy the Dip
• SAM (Boston Beer Co.)Great Beer Co. going elliptical on breakout run higher. Wait for correction
• EVVV (ev3 Inc.) Had a HUGE +17% move yesterday in giant volume. Wait for correction (Last 2 both have lots of potential)

On the whole YOUR stock list outperformed major markets over the same period of time. Since generally the stocks chosen have a higher Beta (more volatile) you’d expect them to do worse.

Since Central Banks around the world are flooding the currency markets with money to stabilize the Euro its hard to see another major leg down in stocks right now. Remember, if Euro goes down, the dollar goes up and that hurts stocks.

BP/Transocean/Halliburton, N Korea, Euro Debt, Israel/Turkey/Gaza issues have all seemed to have been priced into the market. Overall, for long term investors still = CAUTIOUSLY BEARISH

Politically the Obama administration, as every administration before him, will bend over backwards to keep stocks moving higher into elections.

Traders – You’d like the McClellen Oscillator (MO) to be lower, but a short term  trading window is decent. NOT great.

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Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

What’s happened to the Change We Can Believe In?

Obama – “I was Wrong”

Obama has admitted he was wrong to trust BP in his mea culpa on the gulf oil disaster. He’s obviously also wrong to trust that shadow banks will act in the interest of the USA. Even Apple or Google (for all their good PR) bottom line is their profits. What we need is a regulator of regulations that prevent greed from running wild. (See Popeye’s comments)

So Obama – Do something and stop dithering. There is a myriad of choices besides correctly blaming BP/Transocean for the disaster.  Solutions from take them into temporary  receivership to adding a tax on gasoline to pay for the clean up. You could create hundreds of thousands of jobs hiring more people to clean up the mess.

Fed Manipulation of Currency

The admission that our Fed is manipulating the currency market is really no surprise. Investors411 has suggested this for weeks. What is a surprise is that the German Finance Minister Rainer Bruederle has openly admitted it.

Bottom Line is Bernanke manipulates currencies. This may be totally unconstitutional. Stabilization of the dollar/Euro relationship is in short term = Bullish

Turkey+Israel+Gaza = Crisis

Israel has boarded Turkish ships 80 miles from the coast in international waters. This was much publicized relief effort for Gaza. 9 protesters died including Turkish citizens. Some ships were taken to Israeli post. Turkey is a member of NATO who has very specific treaty obligations about “acts” committed against its members.  This includes treaty relationships with the USA. Reports “Total Rupture” of Turkey/Israeli relationship possible. Other ships on the way to same area. = Bearish

This situation is developing minute by minute Google “Turkey Israel” for more

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

Markets down in light pre holiday trading and news of lowered Spanish bond rating = Bearish

The admission that our Fed is manipulating the currency market is really no surprise. What is a surprise is that the German Finance Minister has openly admitted it. Stabilization of the dollar/Euro relationship is in short term =  Bullish

Fearless Forecast Last Week = “Down Week” Dow was down, NASDQ was up.

Fearless Forecast This Week – Fed manipulation of currency make a forecast almost impossible. North Korea, BP oil disaster, and now Israel/Turkey/Gaza makes for a lot of negatives = Down Week.

Significant Indexes

• McClellan Oscillator fell to -26.55 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is in NEUTRAL territory, but we are now out of WAY oversold territory. How the MO works.
• US Dollar –  The dollar rose  a significant +0.54% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Currency markets are now being directly manipulated by out Fed and other central banks. This manipulation to keep the Euro from falling = Bullish.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have NOT had a chance to update last weeks trade.

So far for YOUR stock List OSTK (Overstock.com) BIDU(China’s Google) & SAM (Sam Adams Beer) have all received at least three votes to be new stocks in YOUR stock list.  Last chance to submit  entries. Room for a couple more.

See Paul R’s insightful comments on SNDK and other stocks in comments section of blog.

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Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Obama, Obama, Obama

• The Obama administration is responsible for us still being in Afghanistan & Iraq. He is the commander in chief (see yesterday’s Investors411).
• His administration is also responsible for the weak financial reform coming out of congress. All Obama had to do it to throw strong vocal support Kafman/Brown, Volker amendment, Lincoln’s derivative bill for them to pass.
• BP, is responsible for the spill, as are a decade of lax rules and enforcers. But its long past time Obama, the commander in chief, did more than talk tough and blame BP. Yankee Bob has editorial on how expensive fossil fuels really are.

Solutions, Solution, Solutions

• John Sovjani in comments sections comes up with some innovative fiscal solutions in comments section of blog A gas tax and legalizing/taxing pot are among his choices.
• Bob Sadinski’s (AKA Yankee Bob) editorial focus is to change more rapidly to alternative energy because of the real environmental costs of fossil fuels. (see link above)

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

Stocks roared out of the gate, but fell in the PM as those huge institutions with those giant super computers all sold.  The translation here is – the bulk of all trading is being made by institutions with complex trading algorithm. They take hold of US markets, usually after 2:00PM and determine direction. That direction was down into close = Bearish

Somehow the rumor/news got out that China was considering taking $ out of the Euro. The announcement  was an absolutely dumb move if you’re the Chinese and are doing this. Probably some large entity that is short the Euro or long the dollar created or contributed to this. Markets still very sensitive to negative European news. China has denied this. = Bearish

The McClellan Oscillator sent out a strong bullish signal yesterday. From Investopedia – “Conversely, when a bear market is still declining, but a smaller amount of stocks are declining, an end to the bear market may be near” Yesterday the financial channels (Bloomberg & CNBC reported a lack of breath and volume behind the PM decline)= Bullish

We’ve not had a bear market, but @ a 13% correction. One technical sign that it is coming to an end does NOT make it so. But the MO has been below 60 for a long time and due for a technical correction or a short run higher.

Fundamentals haven’t changed! But we are long overdue for the McClellan Oscillator to move above -60. A technical bounce.

Futures are up in US and European markets higher. = Bullish

Significant Indexes

• McClellan Oscillator rose to -64.99. [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still OVERSOLD territory, but we are now out of WAY oversold territory. How the MO works. Yesterday was one of those strange days where the markets went lower but MO went up.= Bullish.
• US Dollar –  The dollar rose  a significant +0.62% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. This broke its major resistance level and the dollar is now trading at year + long high. Foe stocks (especially US stocks) =  Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Sold last 1/2 of SDS at 35.50 near market close. There was a +5% gain on 1/2 and a 0% gain on 1/2.

Traders – Bought 1% IMAX at 16.70 & DGIT at 42.26 near market close. Reasoning – These stocks were rallying into the close, markets were falling, Monitor (see comments section of blog announced DGIT and SNDK had made new year long highs ) and these two stocks are clearly out performing well over 98% of the market even though they did not hold onto their breakouts. DGIT & IMAX rallied into close as markets fell.

Still long 2%IMAX, 1% ESRX, 2% DGIT and 2% VCI.

I hope IMAX, ESRX DGIT & VCI turn into long term gains, but fundamentally I seriously doubt it. If lucky will take profits (sell 1/2) on any gain of @5% with DGIT. Also will sell 1/2 VCI (dropped over 4% yesterday – should have sold 1/2 when stock was up over 5%) & IMAX in major rally.

Still waiting for dip to buy EUO. If markets rally strongly today.

Traders Investors411 also bought FAS at open and sold it when it fell back to price it was bought for. (actually lost less than 0.4%)  Caution this is a very volatile (3X financials) stock.

Traders – Trading strategy – Investors411 is taking @5 % profit on any recently purchased position and letting the rest ride. Investors is then putting a stop/sell order on the price it was bought for.  In volatile markets the only thing to do is make short term trades. Will sell 1/2 of  IMAX, VCI, and/or DGIT if criteria is approached at near open. Selling into rally

Investors – Wait for trend to establish itself.

NB – Friday’s Investors411 will be minimal and published early.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING