Kleptocracy

From Wikipedia – Kleptocracy ” is a term applied to a government subject to control fraud that takes advantage of governmental corruption to extend the personal wealth and political power of government officials and the ruling class”

Charles Hugh Smith has a worthy editorial. Here’s an outline of the money points. (The editorial will fill in the details)

• Neither party has any interest in limiting the banking/financial cartel

• Our stock markets are dominated by insiders

• The rule of law in the U.S. has been divided into two branches: one in name only for the financial Elites and corporate cartels, and one for the rest of us mere citizens.

• Just as in Greece, taxes are optional for the nation’s financial Elites.

Just how much would it cost to buy back the congress from Special Interests

A Happy 4th of July from our Kleptocracy

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• Technically, the huge 4 day move off a double bottom (prices make a low and test it – see charts on far right) is very bullish If you check out the long term/weekly chart of S&P 500 you’ll find the @seven times a move of this size happened stocks were higher 3 to 6 months later. The dark cloud is there is not as much volume behind this move higher.

• QE #2 is officially over.

• The McClellan Oscillator (MO) chart rose to +68.08 (above +30 somewhat overbought , above +60 overbought, above +90 OMG overbought) Repeat - The +50 resistance level has been obliterated = Long Term Bullish In 2010  the MO made it above +70 3 times. In 2009 the MO reached over +100 twice  Short term  overbought = Bearish

• $USD The Dollar fell  again -0.34% yesterday. (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) The trend since May 1 is bullish for dollar and bearish for stocks. Big reversal down in last 4 days. Most of this movement is based on Greece. Short term tend for stocks now = Bullish

• Reading The Tea Leaves - Shorter term  - Repeat- A raging bull is stampeding and right now it looks like the only barrier is that markets are almost oversold and what earnings season might have next month.  MO is at +68 = oversold. Other Indexes I look at are also entering oversold, but not yet at OMG oversold.

• Outside the HTF and Trading desks there are a bunch of normal day/swing traders who have missed the rally and are waiting to buy the first dip.

The 4 Day Bull Stampede

Long Term

weeks/months/years

• As stated above – a huge technical price move higher over the last 3 years has led to a higher market 3 to 6 month later. One caution – this move has the least volume behind it of the @ seven other major week long moves up in the last 3 years.

• We still have a gap to earnings season – there have been very few warnings. Fundamentally a negative jobless rate (monthly jobs #comes out late next week) in the USA will impact the US economy far more than stocks. Stock growth relies on emerging markets and the potential problem there is they are growing too fast. The 4 day bull rally is  taking a stand – there is NO worldwide recession ahead

• Reading Tea Leaves – I’ve just finished reading Charles Hugh Smith’s editorials on Kleptocracy and have come to the conclusion that there is no way out government (both parties) is NOT going to back the Major Corporations, and the Uber Wealthy. (Obviously, this view is very close to the one Investors411 has held.)

Our Kleptocracy may screw almost every working class American but it also put a floor under the stock market.

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Your Stock List

Here’s the LINK to a spreadsheet of YSL #4.

Our older YSL #3  outperformed YSL #4. Both beat the benchmark S&P 500. So did YSL 1 & 2

Remember t0 Send in by emails or post in the comment section any choices YOU have for YSL # 5

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock

Short term strategy is to short overbought stocks. Bought 1/2 position in TZA. Probably premature.  May sell at open and wait for better entry. A much safer trade is to wait for an MO approaching +90.

Long Term Strategy – In NEUTRAL right now.

Gold/Silver – Almost always when the dollar falls as it has gold rises. It’s not.

Disclosure - I own NLY &  a group of dividend stocks which I have used some short ETF’s to protect. (I’ve cut back on short ETF’s) – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

Paul is on break for a couple weeks

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Outlook for 2nd Quarter

Case for the Bears

• Japan problem is underestimated and damage to the country’s GDP and the world’s supply change is worse than expected
• The latest housing and consumer confidence numbers are worse than expected and a second housing recession is expected.
• It’s only a matter of time before one of the PIIGS countries in Europe defaults and it will spread.
• Libya is a stalemate and challenges/chaos toward oil dictators will grow.
• State budgets are breaking down because of the lack of revenue and this means greater unemployment.
• More people in the USA are on food stamps than ever before.
• Opaque corrupt Shadow banks  are facing a mortgage crisis (thanks to Robert H for the heads up on the 60 Minutes Show)
• Quantitative easing will end and everything will fall apart because there is no entity big enough to buy as many treasuries as the Fed.
• Inflation and the over supply of unsold housing is going to explode in China, sinking the rest of the world.
• Inflation is coming and this will squash equities
• Earnings disappoint

The Case for the Bulls

• The Fed is going to keep pumping liquidity into the economy. QE #2 continues to June 30th.
• Even after 6/30 there will be a whole lot of liquidity sloshing around and QE 3# is likely if we start falling.
• The recovery from -700k jobs per month to +200k jobs per month shows an economic rebound in the USA.
• Emerging markets are growing again.
• The lack of wage growth and the huge numbers on food stamps in the USA will keep inflation lower than expected.

Bottom Line for Most Stocks – Once a trend is in place, you go with the trend until it breaks.

The Fed Rules (see past updates starting in November or Strategy Section of blog) This trend has crushed major black swan events (Japan & revolutions &  anticipated impending doom listed above) and until it breaks its strong.

This trend has a new force behind it – the better employment numbers. As unfortunate and cruel as the lack of wage growth and record number of people on food stamps  is, it serves to mitigate inflation. Obviously it also show an wealthy oligarchy further crushing lower class Americans.

Dramatically higher oil prices and/or a dramatic fall in the dollar could break the bulls. Of course some unforeseen catastrophe could too. Also,  if earnings season is a disaster, instead of mildly disappointing we could end up down.

Short term we are oversold and ripe for a small correction, but the Long Term outlook remains CAUTIOUSLY BULLISH

and – yes its all a bubble – How can you build a growing economy on a corrupt financial structure and a  growing imbalance of wealth in the #1 economy of the world?

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• Yawn - Another low volume rally. In fact, the lowest , non holiday,  volume day since 2008.
• Repeat - Bulls have two strong fundamentals – Jobs are recovering and Fed’s liquidity injections.-
• Because of the corruption, and lack of transparency housing still a major problem
• Wages still have not increased for most American workers.
• The above two factors should mitigate rising inflation in commodities.
• China has raised  interest rates – 4th time since October – They are worried about growing too fast and a housing problem. This will hurt stocks in the near term
• Emerging  Markets are leading this leg of bull market and the above should give them a whack.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar saw a huge rally collapse and ended  a wee bit higher +0.10. Chart pattern showing volatility/erratic so short term hard to call, but longer term bearish  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell to +46.12. Over past three months The MO has had problems getting over +30. This is, therefore, the highest the MO has been since early September 2010. We haven’t hit +60, but for stocks = Bearish

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Reading The Tea Leaves

Little change from yesterday, except that the leading emerging markets are even more overbought and overdue for a correction.

Bottom Line - No Black Swan events have been able to seriously impact the Fed liquidity driven equity market.

What to watch today - Market movers - UUP (the dollar) still has most influential, unless others make some huge move.

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya not good.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows = Bearish
• Japan Rector Developments – This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting  way over extended.

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Positions

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. Historically driving season in summer drives prices up in the late spring. Supply problems exist because of revolutions/instability in oil producing countries. If these problems are resolved then UCO should NOT be held.

REMX (Rare Earth ETF) - Really believe this a good long term holding.  Simply put because of limited supply of rare earth metals and big demand is going to outperform almost all other sectors. Only some sort of major economic collapse will hurt this sector. A buy.

DGP – (ETF is 2X gold) and/or SLV (silver). AGQ (2x silver) Both inflation worries and a falling dollar positively impact this sector. Silver actually has a manufacturing component.

RJA (Agriculture commodities Index) For a more complete list of commodity ETF’s see POSITIONS

UWM (2x small cap stocks) or TNA (3X small cap stocks) The later for more aggressive traders. Closest correlation to MO and falling dollar. Small cap stocks are outperforming.

EEM (emerging markets) and/or ILF (Latin America) EDC (3X emerging markets) The later for most aggressive traders. Emerging markets are leading the world and after underperforming for years they are back.

EWV (ultra short Japan) The horrific and tragic situation there has been minimized. This holding acts in part as a hedge especially for US small cap stocks and emerging markets.

TMV (3x 20+ year Treasury yields)

A winning hedge has been UWM & EWV combination (some of you may have problems emotionally shorting Japan)

ROM (2x techs) & TYH (3x techs) The later for most aggressive traders.–  Technology has been toasted and if the S&P is higher on June 30th, this sector should catchup.

I’ll keep this on the blog’s home page for a week or two then place it ion the Positions page.

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Your Stock List created 3/7 has underperformed the other 3, because it is overweight tech stocks. A major tech stock, Texas Instruments, bought another company and this should help the whole tech sector today. Paul R often comments on these and other stocks/sectors in the comments section of the blog.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See “POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.“

Burning Book

Libya – The UN/Obama’s reason for a no fly zone was to prevent a genocide. The USA/Obama policy is the removal of Ka Daffy. They are two different concepts. Obama’s action in the use of force against Libya without congressional approval was probably unconstitutional, but events on the ground called for immediate action before the collapse of opposition forces.

Japan –  It’s obvious to the whole world that the Japanese government has not been honest about the extent of damage from their nuclear problem. The Japanese people have been heroic. Radiation 20 km away from plant is 1600 times normal according to IAEA A significant potion of Japan is going to become a radiative wasteland like Chernobyl disaster in Russia.

Smoke and Mirrors of a

Manipulated Markets

Burn all the historic book on stock market analysis out there. Forget the analysis of of self interested talking heads on the tube. What we have in the USA is simply a manipulated market that has  radically altered what used to pass for traditional investing.

Forget the experts and/or brokers who are paid exorbitant fees for market analysis. Burn the book and blow away the smoke. Here’s new rule #1. When volume is abysmal US stocks move higher. Little else matters.

Low volume = a rally

Why when volume plunges does the market rally? Simply put – Its easier to manipulate. This allows those entities juiced by zero % interest rates, those benefiting from the Fed POMO program, and big US companies with hoard of cash to manipulate stocks higher.

One favorite way is through High Frequency Trades (HFT’s) that almost mystically make huge buy and sell offers for stocks appear, vanish and sometime buy. These automated computer programs seemingly vanish in high volume but reappear when volume dries up and drive stocks higher. Of course certain HFT’s are always around taking advantage of trade imbalances.

Bottom Line –  For all of you who trade or own stocks  This is a headline driven market and it takes a massive headline to overwhelm the manipulators. It took both the Middle East crisis & Japan Catastrophe to even put a dent in manipulated stocks.

Short term the tsunami of  liquidity makes this a manipulated bull market. Longer term there are some very negative consequences, but that’s another editorial.

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KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

• Lowest volume since Feb. 14th. Low volume = markets rally. The lower the volume the easier it is to manipulate the markets Therefore the manipulators –  the Fed, shadow banks, High Frequency Traders & others push stocks higher.
• The far less than 50% of the market that belongs to investors who make their decisions on stock valuations are currently focused on  - higher oil prices, a falling dollar, economic distortions created by Japan, & emerging market growth
• The following is becoming the dominant force in the US stock market. -If markets go down its because of fundamental reasons. When US stocks rise its because of manipulation.
• Since QE2 began in November there have been dozens upon dozens of low volume rally days. Sometimes huge rallies, sometimes small. That’s the new normal.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar fell again -0.42% Bearish longer term pattern. Major support level broken. Down 6 of last 7 days. For stocks = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to +6.32  Right in the middle – not overbought or oversold. = Neutral

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Reading The Tea Leaves

The USD and the MO are the two technical tools that have a track record of working in this manipulated US stock market. One is neutral the other bullish.

The dollar’s fall is good for stocks, but as mentioned numerous times before, falling too far too fast is dangerous. We haven’t reached those levels yet, but if the dollar falls another 3 to 5 % rapidly you are going to hear a chorus of very worried economists

What to watch today

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya. (diminishing factor, but still important)
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Trading below 50 day MA is bearish.
• Japan Rector Developments (diminishing factor, but still important)

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Positions

UWM – Will sell 1/2 at @5% profit and let the rest ride. Will sell/haves stop at 1/2 at price it was bought for

See yesterday’s blog for list of considered ETF’s

Will buy the dip to buy if we get one today. Of course if there is a catastrophic negative headline I’ll wait to buy. Perhaps last day before MO gets too high to buy.

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See “POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.”

If the majority of the major indexes again start to trade above their 50 day moving averages the long term outlook will change back to CAUTIOUSLY BULLISH. The Russell 2000 (small cap stocks) already is and the others are close. (See charts at top right of blog)

Focus today is on Quantitative Easing (sometimes referred to as QE 1, QE2, Fed POMO)

The following is a link to a three year chart of the benchmark S&P 500

Notice the strong correlation between quantitative easing and stocks moving higher.

• QE #1 starts in the spring of 2008 (along with FASB) and market move dramatically higher
• QE #1 ends at the end of the 1st quarter in 2009 – stocks move down.
• QE #2 announced in Nov. of 2010. Stocks move higher again (they start a month+ earlier in anticipation of more QE 2)

Since November 2010, the chart pattern has been bullish with low volume rallies. The Fed buys treasuries from (and gives them a 0% loan rate) shadow banks and they, wink wink, know what to do with the money – prop up stocks.

• Major Fundamental events (Japan & revolutions/oil prices) can only dent this steady march of low volume rallies higher.
• Every technical analyst realizes that low volume rallies for month after month are basically an impossibility.

So unless there is another unforeseen factor, stocks should again move higher till QE 2 runs out on June 30th. If stocks fall then QE #3 is possible. This is a bubble building manipulation that benefits the ruling wealthy class in the USA, so it should continue.

Bubbles pop and working class American’s will pay the cost or go under (inflation or monetary collapse). However, for now, stimulus (Obama tax compromise) FASB & 0% interest rates are still in place. So the future looks decent for stocks till the bubble bursts.

375 Days – START

Its now been 375 days since American inspectors have been allowed to inspect Russian nuclear weapons facilities. 5 months since the original treaty was signed. In that time 900  questions asked by Senators have received written answers on the next START Treaty. The treaty has been endorsed by everyone from the Joint Chiefs of Staff to Condi Rice to our NATO allies.

The globe realizes that terrorism is the #1 enemy.

• Russia has a far bigger internal terrorist problem than the USA
• Their country is one of the most corrupt in the world.

Doesn’t it make sense to better secure these weapons to protect not only our troops, but our own lives. “Trust but Verify” was the credo when this started and it should be today.  So why are so many right wingers doing everything possible to destroy this treaty and give terrorist  a potential bigger less transparent supply of nukes  to choose from?

• Tom Friedman quote in an earlier Investors411 mentioned they don’t want Obama to have success. Imagine putting politics in front of the safety of Americans.
• There are many on the right ,like their #1 spokesperson, Rush Limbaugh who believe Pelosi & Reid are the terrorists and the administration is like Al Capone’s
• There are those who want endless war with the rest of the world.
• There are those who realize that the military industrial complex desperately needs to kill this treaty because it will cost $10 or perhaps $100s of billion of dollars  in revenue. Just imagine the  fear mongered money  to be made if the world started to rearm with nukes. Big campaign donations at stake here.

There is a very powerful oligarchy who make a lot of $$$$$ from fear. They know how to manipulate the frightened sheep, even in obvious cases like this.

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KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Technicals, Fundamentals & Analysis

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

The Obama Tax compromised passed last night. It will have no short term impact on stocks, but an obvious long term impact because it raises GDP & deficits, and creates jobs. Reuters has an interesting  “all candy and no spinach” analysis “but at least it shows that President Barack Obama and Republicans can cooperate on fiscal issues.”

Investors are by the boatloads are getting out of Treasury bonds. This is really a massive move. The Tea Leaves here are saying these investors see an IMPROVING economy and that should mean inflation. Dave Moenning is a very credible analyst on why the “herd of investors” are getting out of bonds

“now that even amateur economists can see that the economy is improving and everyone and their grandmother is saying that it is time to “sell bonds and buy stocks,” no one wants to be caught with an oversized amount of government bonds on their books going into 2011.”

Reading The Tea Leaves -

The bears strongest case is the falling BDI – Lower trading prices show a slow down in in imports/exports. This translates into a right now very small drop in GDP for emerging markets. If it continues we have problems. Obviously housing, European debt & employment problems exist.

The bulls case – Fed Ex was the latest sign that American companies are improving (the herd believes this) + QE 2 juice + Obama compromise juice+ India & China growing at 8 to 10% GDP (a 1% slip not that bad)+ everyone panicking to get out of bonds (where does the $$ go – stocks)  = Strong set up for January earnings reports.

Relativity – The US dollar rises almost 1.00% two days ago and stocks loose some ground. The dollar falls 1/10th that amount and stocks rally more than the fell the previous day

Positions

• EEM - (Emerging Markets ETF) -1/2 positions sold
• #1 UWM - (2x small cap stocks ETF) – Sold last 1/2 bought at 38.75 sold at 40.34 Gain almost  +7%. First 1/2 of trade made +9% so total trade = +8%
• #2 UWM-
• #3 UWM

Mistake, at least in short term, to sell 1/2 UWM position early in day because the ETF was up 2% for the day. Still looking to buy dip/add to positions with leveraged ETF’s

New considerations

• EUO - an ETF that double shorts the EURO – Europe far more than the USA is taking fiscal medicine to solve debt crisis. More importantly they are becoming fiscally transparent while we remain opaque. So in short term Euro is going to suffer.
• PST - an ETF that double shorts 7 to 10 year treasuries. This would be a short term trade. The herd is stampeding to get out of Treasuries before years end.

The first would be, hopefully, more long term the second a trade.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” -

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KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Technicals, Fundamentals & Analysis

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

Major news yesterday and today is Spanish debt. Spain is a major country in the EU and if Spain goes down all of the EU get shaken to its roots.  This is making the Euro weak and therefore the dollar strong. This is important. Europe got hit by the 2008 financial meltdown and because of how their monatary system is structured its far harder to smooth over the bumps as our FED does.

Additionally the 10 year T bill yield is still rocketing ahead

Too early to tell if this is a much needed and healthy correction in stocks or something deeper. I suspect the first.

There is also plenty of reasons to be fundamentally bullish.

Reading The Tea Leaves -

Spain is Europe’s 4th largest economy and its 10 year T bill is trading at 5.53% (relative to ours at 3.52%). The posablitity in investors/traders mind of run away inflation in Europe and the USA is growing. Stocks have historically handled a beginning of inflation well, but if it gets too large everything suffers. The good news in all of this is deflation (a much more significant problem) seems off the table. Could go on for thousands of words but here’s the

Bottom Line – Quantitative easing over the past 18 months has kept stocks surging and stabilized our economy. Europe is having a major negative impact on us and it looks like right wingers and others are going to challenge or put road blocks in front of our FED.(I’m all for more transparency, but these guys want to destroy the FED – lead by Ron Paul.)

Right now quantitativ easing is NOT having some of its intended effect of keeping the dollar lower and the T bills/bonds yield low.

This is going to make for a bumpy ride and perhaps  changes investment strategy.

• EUO – an ETF that double shorts the EURO
• PST – an ETF that double shorts 7 to 10 year treasuries.

Of course, this would be a buy the dip situation.

Positions

• EEM - (Emerging Markets ETF) -1/2 positions sold
• UWM – (2x small cap stocks ETF) – 1/2 position sold
• UWM-
• UWM

Putting stop on 1/2 of  last UWM position at what it was bought for. 40.94 or sell 1/2 for minor 1% gain near open. 2% trailing stop on the rest.

Very Interested in UCO – double oil ETF, but still waiting for dip.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

Reading The Tea Leaves -

There are still too many bearish signals out there to to balance the fact that we are approaching the 50 day moving/support level average for the major US stock indexes. The MO is clearly in oversold territory at -86.89 but has fallen beyond -130 ONLY twice in the last three years

There’s a shot because of the low MO and support levels for the major indexes is in front of us that bulls could make a stand. The problem is that just about everyone else who I skim for analysis is full of doom and gloom.  In fact, more are starting to talk about a double dip recession.

Bears are approaching the 50 day moving average with HUGE momentum so the Long Term Outlook was changed to NEUTRAL

The Wild Card is the High Frequency Traders that dominate the stock market (50 to 80% of trades) I get the feeling they are “pumping and dumping” HFT and other entities push or pump panic traders/investors in one direction then when it reaches a fever pitch go/dump in the other.

So being totally out of the markets, I think there a chance to nibble on another big dip. At a -120 MO I’d take a bite.

Additional reasoning -The rising dollar is playing a major role in falling stocks. The USD is trading above its top Bollinger Band. Translation its gone up too far too fast. So if the tracking ETF for the dollar the UUP goes up  and stock dip this AM, I’ll BUY

This trade will evaporate if we go sideways for a few days. But at least a snap back counter trend rally is very possible right now.

Investors411 has No long positions at this time. Even our YOUR Stock List is under construction.

Traders. Potential for a buy the dip trade exists today.(see above) Would use riskier TYH (3X techs) & EDC (3X Emerging Markets) rather than less leveraged ROM (2x techs) & UWM (2X small caps) to start. Reasoning – I’ll take a quick 3 to 5% profit on 1/2 and let the rest ride. The more leverage the quicker you get to the profit/stop loss

Investors. -87 on the MO is mighty tempting. I do think there is more downside to come. If you can take the high risk  EEM or one of the various other specific emerging market countries is what I’d choose. You’d love another  Dow down 100+ points before nibbling.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.”

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Why The Bull Are Stampeding?

Massive Manipulation & Economic Mega Tends.

History

• Globalization mega trend provides cheap and now educated labor force. Energy rich (mega trend) countries benefit from rise in prices due to dwindling supplies and growing globalized demand.
• To keep up with emerging markets US financials (shadow banks) cheat and over leverage the system. US consumers also encouraged to acquire massive debt. Instead of calling this keeping up with the Jones’s call it keeping up with the Wong’s.
• System wide  meltdown for countries believing in casino capitalism - commonly called free market capitalism.
• Attempts to bring transparency to markets failed. Attemps to make too big to fail over leveraged shadow financials go out of existance – failed.. At best weak guidelines set in place. Another opaque financial system begins to build.
• Some Americans realize that jobs are going overseas and and a wealthy oligarchy and major US companies are making a ton of $ off this system, that also brings lower cost goods to USA.  No jobs, Gordon Gecko’s in control,privatized gains & socialized risk, Main Street screwed, 1 ib 7 Americans now in poverty – everyone angry.

Now

• China as well as some other emerging markets manipulate their currency. Paulson/Bush & Geithner/Obama throw hissy fits, but do little/nothing. Why - because major US industries and industrialist are making a killing (From WalMart to Apple to Caterpillar) off of slave/cheap labor in emerging markets that are manipulated to stay low relative to USA. They make $ off of China’s manipulation.
• US Fed dumps trillions of dollars to financial institutions in USA that further finance casino capitalism. This too is obvious currency manipulation. Dollar falls (less valuable because more $ are printed) and stocks move higher.
• Most recently added – Fed dumping or printing money scheme is the PMOC (see below) Fed promises to do whatever it takes to keep US economy primed.
• Potential Gridlock in congress means shadow system that benefits Chinese dictators, Oil rich countries/dictatorships, a wealthy oligarchy continues. Manipulated by fear, vanishing American middle class is for the most part clueless as to what’s happening,

Stocks

• The return to casino capitalism and flood of money into US markets means manipulators (hedge funds, BB?HFT’s, Sovereign wealth funds etc.) are overjoyed.
• Retail investors sense another bubble building, but don’t understand what’s happening. Why are jobs not coming back? – Obviously they are going abroad.
• Stocks of the big companies/industries that profit from abroad and emerging markets soar because the manipulators are pouring money into them.

Bottom Line - We retail investors are just insignificant players in a massive attempt to manipulate the forces of globalization and dwindling energy supplies. Of course another bubble is building. Manipulation now has long term consequences. As long as you understand how the money flows you can invest accordingly.

Thanks, for the complements on the market calls this weekend. All I’m doing is watching money flows described 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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. CNBC’s Jim Cramer -”BB/HFT make up 80% of trades.”

US Markets

Another massive rally in weak below average volume, which is also well below last years volume.  The rally is real but it is being run by BB/HFT’s, Sovereign Wealth Funds, Hedge Funds and other manipulators. It’s also being juiced by our Fed that is and promises to PRINT or “do whatever  it takes to keep the economy going.”

The single most important new factor to look at is our Fed’s PMOC pouring more and more $$$$$$$ into the economy. Another 3.8 billion last Friday.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell  -0.77%,  The inverse correlation between the dollar & stocks seemed to have broke down earlier this week, but Friday made up for all that.  Trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell  - Friday. Two week BDI fall. After 8 week bull run trend seems to be changing to = Bearish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to +11.14 yesterday. Location= NEUTRAL

Reading Tea Leaves

The MO – is our #1 forecasting & when to buy/sell tool. Even after a the huge rally Friday the MO is still just above zero and just below its 50 DMA at 15+. Clearly Neutral which gives the bulls room to run even higher.

Thursday the MO reached -20 and , as predicted, this was a major support level.

The Dollar – broke down though major support last week. Even though the daily inverse relationship between a falling dollar and a rising US stock market did not match up the weekly did. It was a/the primary cause behind the bulls taking charge..

Tea Leaves – It the past year whenever the dollar has taken such a large move up or down it usually takes a few days to consolidate or move in opposite direction.  This time I’m not so sure.

Here’s the Bull’s formula – Fed prints/pumps money into economy. Huge financial institutions get that $ for almost nothing. Lots of the $ goes to stocks and eventually ends up abroad.  The more $  that get printed the more it forces dollar down and this too makes stocks go up. (US goods cost less abroad) Bulls run till we get overbought.

Positions

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

(I do manage 6 accounts that have other positions)

Longer Term positions -

• EWS (Singapore) 2% trailing stop loss on 50% of position/ 4% trailing stop/loss on the rest.
• USO (price of oil/commodity).
• SSO (2x what S&P does- this ETF is more a trade that may turn into an investment) I now have a 3% trailing stop on this trade.
• TYH (3X technology) Bought at market open for 33.48. For today have stop/loss at 33.49.

I would be buying some of the individual stocks on YOUR Stock List, but just do not have the time. See Paul R’s comments.

Also as someone just wrote in this AM buying most of or the whole list of ETF’s or YOUR Stock List (also consider high dividend stocks) is a way to go instead of picking a few from the lists. (more on this later – see comments section of blog)

I know everyone just wants to buy and hold for years. Just can’t recommend holding for longer than a cycle of the MO (McClellan Oscillator).  Mostly a cycle from oversold to overbought (@-60 to +60) lasts from one to three months. Sometimes shorter.

Remember, we are now in a bullish cycle and therefore, elevated the buy/sell criteria a bit on the MO. (see past investors411) Watch the dolar and its invese relationship to stocks.

Traders

From Friday – “This is again one of those no guts no glory moments.” Bulls still in charge and have lots of room according to MO to move higher. Buying dips of stocks/ETF’s that are not too overbought on dips.

Investors

From Friday – Those of you with little exposure to stocks “may want to nibble.” You can still nibble on the dip if willing to accept risk.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Bulls & Bears

The case for a rising or falling stock (not economics) market

The Bears

• At best unemployment in the USA has stabilized around 9.5%. The stimulus that has caused the reversal will soon run out and employment will grow.
• Housing prices have at best stabilized. 90+% of mortgages are now in some way backed by the US government  (Fannie & Freddie)
• Not only is the middle class in the USA shrinking, most people are saving more than they used to. Money flows are therefore diminishing.
• The European bank stress test was at a best a PR exercise. US banks are not loaning like they used to. They’d rather make more profit in other areas and are still in after shock from the original crisis.
• European Union with the world’s largest GDP, has many shattered economies (PIIGS &  Eastern Europe) and the others are no better off than the USA.
• The US has an exploding military budget $1,003,000,000,000 ($1.03 trillion) last year. If you count all our military expenditures it is over 60% of the world’s military budget.
• Iraq ‘s March elections created a stalemate with no government. The two leading candidates lavishing praising Hezbollah’s founding ayatollah and meeting/praising  Sadr (anti American ayatollah in self imposed exile in Iran) to beg he joins their side in new government.
• Afghanistan – WikiLeaks has just released 90,000 documents showing “devastating portrait of the failing war.”
• China, the leading emerging market has a housing bubble.
• Stocks are overbought according to the MO (see below)

The Bulls

• The dollar is falling and close to breaking out of chart pattern to downside. Lower dollar = higher US stocks because US goods will cost less overseas.
• Oil prices near breakout to new 3 month highs. Higher oil shows greater consumption = bullish, but not if you’re a consumer.
• Shipping prices have rebounded and are moving higher. See BDI below.
• According to International Energy Agency China surpassed the USA in energy consumption in 2009.
• Most US companies that reported better than expected profits cited emerging markets (China specifically) as where they were growing the fastest and creating jobs.
• China will spend $738 billion over the next decade on clean energy. = growth. The USA can’t get a weak climate or energy bill passed congress.
• Unless you want to invest in some European bonds (example Greece) there is almost nowhere to go besides stocks to get more than a couple % growth for your $.
• Black Box/High Frequency Traders dominate the market and they are ONLY concerned about short term results. They can go long or short.
• Weak banking reform means shadow banks can again get over leveraged.= more profits=higher stock prices till another crash.

I’m sure I missed some. To see the positions Investor’s411 is taking see Positions below and also click on POSITIONS at top of blog.

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!

Technicals, Fundamentals & Analysis

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

Mantra -The Black Box/High Frequency Traders control the vast majority of trades.

The NASDQ volume was slightly above average, but the other major indexes had a typical light volume rally that has become the norm for the Black Box traders that control the markets.

News on the earnings week ahead

Significant Indexes-

• McClellan Oscillator (MO) rose dramatically to +79.48 [+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. 79.25 = BEARISH
• US Dollar –  The dollar  fell  -0.16% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – 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. At bottom of trading range. = Neutral/Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a 6 day +7% rally and is at 1826 = bullish

Reading Tea Leaves-

The McClellan Oscillator at +79.46 shows stocks as being overbought. I’d be just a little more cautious about using short ETF’s too early because of the strong bullsh sentiment right now among Black Box traders. But, its clearly time to think about using those ETF’s that short major indexes. Click on POSITION at top of blog for more info.

The MO has not been above 80 since the big spring rally in April of 2009 – then it reached @ 105. In early Jan. of 2009 it did reach 120.

Positions

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

Updated over weekends Investors411 holds ONE position in SDS at this time

Strategy – From Thursday - The same as before - If/as US major indexes become more overbought the more ETF’s that sort the market will be purchased. Starting out with SH. Then the higher above 60 the MO goes, the more SDS (200% short the S&P 500) and other even 300% short ETF’s will be used the higher the MO goes.  See POSITIONS section at top of blog for more. Therefore what is happening is a series of trades (Short ETF’s) the more overbought the market becomes.

The same entry/exit strategy applies. Considering dropping exit/entry point to 4 instead of 5%. See Friday’s Investors411 for more. The following trades were made Friday.

• SH (ETF that shorts the S&P 500) was sold for 51.26 – a -2% loss. The other 1/2 of SH was sold earlier for a 3% gain
• SDS (ETF the shorts the S&P 500 at 200%) was bought at 32.50 Nibbled with just a 2% of portfolio position.

Reasoning - The majority of technical analysts seem to be bullish, the BDI has reversed its 8 week fall & the dollar is right at its major support level.Therefore they may be room for 3 week bull rally may continue. We could reach a high above 100 on the MO. However the MO chart has not gone over +80 (where it is now) since April of 2009. Translation – There is some greater risk in this trade than if we had long term bearish outlook. However the more overbought thing get the safer the trade.

Longer term investors may want to wait to see of the MO goes up another 20 points before nibbling. Please recognize that right now this looks like it may only be  a trade  and NOT a long term investment

EWZ (Brazil) an ETF Investors411 owned for years is again outperforming and is a buy the dip opportunity.

GLD – (Gold) has come down off its high and any further dip Investors411 will buy.

The Long Term Outlook has been changed to NEUTRAL from Cautiously Bearish As explained/predicted Friday, the benchmark S&P 500 broke through the first of 4 different resistance levels. Another 3% move higher and the remaining 3 levels will fall.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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The Illusion of Democracy

In the USA we have an Illusion of Democracy. What we really have is a rich oligarchy that buys votes through money any lobbyists. Lets use two blatant examples.

• The Billionaire ultra right wing Koch Brothers - JAB a few days ago sent a link to a site that quantified and qualified the $50 million they have spent to influence the American public’s vote. These right wing zealots with their $50 million sure have vastly more of an impact than you do with your one vote.
• Let’s look at politicians who get this money – Great site to see how much your representative (Dems or Reps) is bought and by whom is OpenSecrets.org. Today’s focus Senate minority leader Mitch McConnell.  His leading contributors are shadow financials (securities & investment) at $1,147,924. Republican leadership just met with Shadow Financial and other Wall Street leaders on financial reform. Even ultra right FOX Business news carried the story

From the Tea party workers to the leadership of the Senate (include lots of Democrats in this) the truth gets distorted by the vast financial resources and screamers in & reported on by the media.

Yes, along with JAB I still boycott Exxon, and have now added Koch Industries (Georgia Pacific -paper products) to my small protest.

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

I really try to make this stock section as simple as possible, but I certainly hear your public (see comments section) and private pleas to make it simpler.  Over weekend I’ll put together some simple rules, strategy and sources

Big volume + Big rally = Bullish Outlook

UPS – world’s biggest package mover clobbers expectations. = Bullish

Weekly jobless claims worse than expected – two weeks in a row – Bad for economy, bad for Obama politically, but neutral for markets.

Reading the Tea Leaves – Add UPS to JPM & INTC results yesterday and you get the financial and technology sectors growing over expectations. Add more packages are moving across the globe. Add the Dollar dropping and McClellan Neutral (NOT overbought)  Everything at least till the McClellan gets overbought says Bulls will continue to stampede.

Its time to buy the dip and ride this rally till we enter overbought territory on the McClellan Index.

Significant Indexes

• McClellan Oscillator rose to +19.34 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still in NEUTRAL territory – technically neither overbought or oversold.
• US Dollar – fell   -0.42% yesterday. [Anything over +/- @0.50 is significant.] Mantra – right now The Dollar Rules Remember, dollar down almost always = stocks up. The dollar broke though its 50 Day Moving Average support level and next significant support at @$79.5. Dollar closed at$ 80.19

Positions

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

Right Now, as I read the tea leaves, it looks like the beginning (first week+) of earnings season is going to be a bullish period and it would be good to be invested in those stocks/ETF that are going to move the highest.

Example, Yesterday Investors411 added a 10% position in TYH the ETF that does 3X what the tech stocks do. Price 174.1.  Originally, had planned to hold this for a small gain (3+%) but it now looks safe to hold till the McClellan Oscillator hits or gets close to overbought territory.

Depending on your level of risk – Buy dips (1 to 3% = dip) of following ETF’s – You can also check out YOUR stock list.  but as Pail R suggests – watch out for when earnings reports ate (google company and you will find date or your trading platform should provide this)

List from MOST risky to LESS risky

• SOXL – 3x semi conductor stocks – Warning very thinly traded.
• TYH – 3X technology
• UWM – 2X small cap stocks
• ROM – 2X technology
• SSO – 2x S&P 500

I will be adding another 15%+ of these on dips.  Remember once we enter overbought territory its time to sell or lighten up. Set a stop/loss at a level you feel comfortable with. 7% maximum loss is what I use.  Once a stock goes up I usually raise the stop. There are more sophisticated ways of doing this, but I’m keeping it simple.  Investors411 will be exiting these positions as we come close to or over +60 on McClellan Oscillator.

Remember its a short term trade. It’s natural for their to be a dip today. If markets fall over 50% of yesterday’s gain in bigger volume this strategy is in trouble.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING