Income Inequality

(sorry see Link below for chart)

The chart shows the growing gap between the top 1% (pink color) and the other 99% between 1917 and 2008 in the USA.

Chart from Henry Bloget at Business Insider also points out the significant rise of the wealth gap between 1981 and 2008 of the 1% vs. the 99%. Original data from Pro. E Saez UC Berkeley.

Kudos to Paul for turning us on to Business Insider.

Too see all the full sized charts - LINK

Download the charts, Post them on Facebook, send them to your friends, and/or drop some off at your local “Occupy ——” protest site.

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Stocks

What was hopefully supposed to be a confirmation day (= prices hold on to most of their gains from previous day) of a major breakout turned into a meltdown of broken eggs.

China’s GDP numbers last night – Headline – 9.1% Down from 9.5% and less than expected 9.3% Heng Seng (China’s stock market) down -4.3%

Bunches of earnings reports. IBM fell after its report yesterday and Goldman’s reports a HUGE loss.

• Our primary forecasting tool, the McCellan Oscillator fell dramatically to +37.84 (moderately overbought = NEUTRAL/Bearish
• Our secondary forecasting tool, the Put Call Ratio, rose to 1.18 = NEUTRAL
• For more on these two indexes click on STRATEGY section on top of page.

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Reading Tea Leaves

Mea Culpa - I was far less aggressive with my Short the market call than I should have been yesterday. “Because of the OMG MO – Short term traders may be successful in shorting rallies.” but I also stated “there is no clear buy of sell signal”

For longer term Investors - There is no buy or sell signal unless we had a confirmation day. Yesterday was supposed to be that confirmation of a price breakout from its trading range. It got crushed. Therefore no upgrade to CAUTIOUSLY BULLISH and no clear buy or sell signal.

For short term traders - Again my bad the MO has worked - “Over the last 3 years the MO at OMG levels has always meant at least a 5% decline over the next week to month.” This should have been a RISK ON trade yesterday instead of “Because of the OMG MO – Short term traders may be successful in shorting rallies.”

Today – Reading Tea Leaves - Expect at least a 5% decline from highs.

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Paul’s Corner

It’s 7:30 AM Tuesday and Barr is waiting for my email with today’s words of wisdom from Paul’s Corner. Let’s see what should I write? The dollar is up, more news from Europe, markets sold off yesterday, China’s GDP fell for the third straight quarter, ain’t nothing new here folks, same old stuff we have seen for the past few months and the market hasn’t changed, so do we really need a new Paul’s corner for today? Maybe I’ll just copy and paste last week’s edition, things haven’t changed.

Ok since I’m being lazy here what does Dave Steckler have to say? From his blog last evening:

Well, it was nice while it lasted. Last week’s action sent the equity indexes up 5% or so but today the Dow Industrials fell almost 247 points to close at 11,397.68. Volume was below average.  The S&P 500 Index dropped 1.94% and the Nasdaq Composite shed 1.98%.

Germany shooting down hopes for a quick fix to Europe’s debt crisis was blamed for the sell-off today but as we’ll see, the charts show it was not unexpected.  Oil and gold/silver prices all fell but Treasuries gained strength as prices rose and yields fell.  The U.S. Dollar rose.

Read  Dave’s full blog, Link

Well Dave that sounds like last week’s blog and the previous weeks blog, so hum, it sounds like we are  stuck in this nasty sideways trading range.

How about Ron Brown’s morning report?

At this point, it is a one day pullback on light volume.  The shift to the downside was dramatic for the Force Indexes and the % shift down for the small caps.  The VXX shot up over 10% which shows just how nervous this market is.

The NASDAQ fell back into the trading range and gave up 2%.  I’ll be watching tomorrow to see if this was just a slight pullback, or if the market fall back further into the trading range.  If selling continues on heavier volume, that will be a signal that the market is probably heading lower.

Gee whiz same here, just more of the same stuff we have seen for months now. But wait, notice both Dave and Ron suggested light volume on yesterday’s sell off,  this is good. Just maybe the market has reached equilibrium. Just  maybe.

I can’t add much to what the masters of market analysis have said other than I did order a hamburger with out cheese at the local diner last evening and it came as ordered, no cheese! So just maybe this market is finally getting ready  to go. If you care to play, be careful with your capital, your grandchildren are counting on you for not screwing up with their inheritance.

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Investors411 LONG Term Investments

Each day Paul (change setting from profile to activity) offers up to the minute commentary on the markets & YSL #5 in the Comment section of the blog. Catch his Paul’s Corner every Tuesday and Thursday.

Our Hedge Investment - Theory – Technology will do better than financial sector over time. Thus hedge is set to hopefully work well in both up and down markets.

• Short Financials – Investors411 will use ultra short SKF (opened at 78.91 – now at 76.51).
• Long Technology - Investors411 will use ultra long QQQ (tech’s) QLD (opened at 81.13 – now at 86.55)
• @ a 2+ % gain on this trade so far

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Long Term Outlook

3 to 6+ months

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.

The Cleaver Family from 60′s sitcom Leave it to Beaver.

RIP – Middle Class America

The middle class in America is being systematically wiped out of existence in America by Americas growing wealth oligarchy. Say good bye to The Beaver

Editorial is from Business Insider features 22 statistics showing America Middle Class is headed toward oblivion. This is documented & substantiated evidence that the middle class is being wiped out by the rich oligarchy in the USA. Many many thanks to Robert H for finding this article.  Here’s just a few of those stats –

• 83% of all US stocks are in the hands of 1 percent of the people.
• 66% of the income growth in the USA went to the top 1% of Americans from 2001 to 2007
• 36% of Americans contribute nothing to retirement
• 61% of Americans live mostly paycheck to paycheck in 2009 vs 43% in 2007.
• Bottom 50%of Americans own less than 1% of nations wealth.
• 40% of Americans are employed in low pay  service jobs.
• Competition China garment worker makes 82 cents an hr. Cambodia 22 cents an hr.
• 35.4 is the ave. amount of weeks it takes to find a new job.

The list goes on & on, but you get the picture. Send this to your friends

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!

Index	Percentage	Volume
Dow	+0.97%	down
NASDQ	+1.19%	down
S&P 500	+1.16%	down
Russell 2000	+2.24%	-

Technicals, Fundamentals & Analysis

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

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

Another typical light/decreased volume rally that has become the norm for the Black Box traders that control the markets.

Major indexes are cutting through support levels like a knife through butter. = Bullish

For only the 8th time in history the Dow has seen triple digit gains over 3 days

Significant Indexes-

• McClellan Oscillator (MO) rose  to +97.25 [+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. 79.25 = BEARISH
• US Dollar –  The dollar  fell  -0.46% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar just broke a major support level yesterday = 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 7 day+8% rally and is at 1841 = bullish

Reading Tea Leaves-

The Black Box/High Frequency traders are on a buying rampage. You can’t call it a parabolic climax buying spree because of the lack of volume. Then again the BB/HFT have shatted all the former technical rulus about volume.

Because support levels have fallen, any small dip will now probably be bought into by non Black box traders.

Both the dollar and the BDI have clearly reversed their trends.

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

Sticking with overall strategy. But its looks more and more like a trade.  Looks like the original SDS (Short ETF trade) is going to loose $)

Instead of catching a downside move in a bear market , its turned into a downside move in an overbought bull market. This also makes the chances for success less and you have to be a more nimble trader instead of investor.

Strategy - From Monday - 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.”

SDS (ETF the shorts the S&P 500 at 200%) was bought at 32.50 Nibbled with just a 2% of portfolio position.

From Yesterday

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.

Paul & Monitor in the comments section and several of you privately are anxious to reinstate the June 2 2010 YOUR Stock List – Using the old list as a starting point – will try to put a list of a dozen stocks together to buy on a dip.

Right now EWZ is the leading ETF candidate.

Long Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!