Investors 411 Blog

IMAX arc and camera

The Country is Headed in the Right/Wrong Direction

From Pollster.com a compilation of polls Note the trend.

Going Green to the Extreme

The Far Left has its own extreme views. Example – Lisa Hymas – Going Green is a reason NOT to have kids.  Her editorial - Say it loud: I’m child free and I’m proud. Money quote

“the single most meaningful contribution I can make to a cleaner, greener world is to not have children.”

Sorry Lisa, almost everyone feels completely different about kids than you.

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	+0.43%	down
NASDQ	+1.12%	down
S&P 500	+0.79%	down
Russell 2000	+2.00%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made each weekend

Another rally day in falling well below average volume. = Bearish

Stocks rallied despite a significant rally in the dollar, oil prices at new highs, and the 10 year treasury bond hitting 4.00% yesterday (see chart on right side of blog) = Bullish

This chart of the benchmark S&P 500 at top has something called the RSI (Relative Strength Index) It is another indicator like the McCellan Oscillator that show when a market is overbought.  In this case overbought= over +70. The SPX now stands at +73.96.. In fact all major US indexes, according to the RSI are overbought.

There many different ways to technically measure buy and sell points (overbought & oversold). The RSI is one and it, unlike the McCellan says we are overbought. Right now the McClellan is working better than the RSI because we haven’t yet crashed and burned. So, for now, Investors411 is going to stay with the McCellan because its working.

When to Hold ‘em and When to Fold ‘em

Stocks – Investors411 has historically sought long term positions (hopefully years or many months) that follow trends. For a List of those trends click on Overview at top of blog. Unfortunately, along came the September 2008 meltdown/recession and those trends got interrupted or broken.  So shorter term positions became more desirable.  The lack of transparency clouding invstments and technology making everything quicker has impcted trends and markets.

Let’s look at two recent buys. IMAX & DWA One worked the other did not. Why.

IMAX – Up 40 to 50% since purchased.

• First there was a fundamental reason to buy IMAX. New technology trend in 3D is emerging and people are willing to pay more for the IMAX experience. Technically the long term chart also looked good.
• But now IMAX’s RSI is at 79.14 (well into overbought territory) and it is the furthest it has eve been over its 50 day moving average. There are a lot of other warning signs but I’m trying to keep this simple.
• Why hold fundamentally – the technology  trend/ demand is still in place and growing for 3D technology. More Imax theaters and a move into TV is emerging. Some potentially block buster 3D movies like Iron Man 2 and another Shrek are coming out.
• Why hold technically – For longer term investors, even though this stock is overbought, it is melting up in weaker volume. If there was a big volume rally (going elliptical) it would be time to sell.
• Technically IMAX is ahead of itself and you’d love to see a sideways consolidation. Yep, you could see a sudden dip, but right now there are plenty of investors wishing they had bought and they will purchase the first dip.

So for now Investors411 will stay put with IMAX and even nibble some more on a dip.

DWA – Lost -4%

• Dreamworks, DWA, looked like a perfect complement to IMAX. Proven kids films and a handful coming out in 3D would increase profits. So Investors “bought the dip” before the Dragons film was release. Technically a not great, but reasonable long term chart.
• What happened fundamentally – Dragon’s did not live up to expectations, in part because of the success of other 3D films (Titans & AIWL) Too many 3D films competing for too few screens. Good for IMAX and bad for DWA.
• I never like losses to exceed 7% (This came out of an old Investor’s Business Daily trading strategy) DWA did go up almost 10%, but Investors is looking for longer term holds or trends it was held.
• What happened technically – A downside move in heavy volume that broke a support level. So both technically and fundamentally there were reasons to sell.

Realize that there are lots of sharks that know more than you or me. What we can do is identify a trend and use some simple technical signs in trading. If the trend and the technicals covered are collapsing or going elliptical in big volume you fold ‘em. If the McCellan goes too high you fold ‘em.

Some of you use other ways to protect stock purchases like selling covered calls and using exponential moving averages.  These sophisticated investors like Paul R. know what they are doing. Most of you just want something to buy and hold that goes up or outperforms over a longer period.

CAUTION – There is nothing out there that’s a sure thing and everything has become riskier since the Lehman collapse and inability to fix the problem.

Significant Indexes

• McClellan Oscillator rose significantly to +19.12 yesterday.  [+60 or above = Overbought = sell. -60 or below = oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. – This downward trading pattern has been broken. Moving toward overbought territory
• US Dollar – rose a significant +0.51% yesterday. [Anything over +/- @0.50 is significant.]

As stated before -What the dollar does over the next few weeks is critical to stocks and economics around the world. Falling dollar good for stocks & rising dollar bad in the short term

Positions

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

Limited time this AM – Will try for YOUR Stock List tomorrow. FYI – one recommendation CREE was up over 10% yesterday.

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Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Chimerica

Without all the emerging market growth over the last decade (especially the last 5 years) my guesstimate is that the USA would have been in a recession well before the end of 2008 & you could shave at least 3% off USA GDP. Gravity (see comments section) worries about the China bubble bursting. We all do. We need China’s cheaper products, to sell to her growing markets, & China buying US debt. China needs our import market & our technology to grow – hence a symbiotic Chimerica. Many are worried including Ferguson

It was Harvard’s Niall Ferguson who made the term Chimericia popular. His editorial What Chimerica has Wrought

The money quote from this editorial (his book The Ascent of Money is better – both WSJ & NYT favorable reviews) and the reason we desperately need to fix our financial system -

“Why should the rest of the world ever again take seriously the American free market model after this debacle?” a leading British journalist recently asked me.This crisis, he argued, is to economics what the Iraq war has been to foreign policy: a fatal blow to the credibility of U.S. claims to global primacy.”

If this relationship breaks down it will have a very negative impact on stocks world wide.

Health Care

What an amazing turn around on the polls over health care  which had been viewed negatively by most Americans.  Gallop/USA today poll shows Obama/Pelosi heath care plan 49% = good & 40% = bad

John Sovjani (see comments section of blog) has opened a debate over who pays for heath care and Popeye has responded with deficit reduction, but wants public option.   The Devil is in the details on who benefits and who pays. You can be sure Both Democrats and Republicans will continue to lie and exaggerate about health care solutions. This is because both parties correctly see heath care as something they will gain or loose voters over. Remember

“Ronald Reagan famously argued that Medicare would mean the end of American freedom”

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	+0.95%	up
NASDQ	+0.83%	flat
S&P 500	+0.72%	up
Russell 2000	+1.08%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend. (No changes this weekend)

Party On - This rally is all about the FED whose continued statement has been “interest rates are going to stay low for an extended period of time.” This was reinforced by two fed governors yesterday (Yellen & Lacker)

How markets react to news is our #2 confirmation factor and bad news does not seem to slow the rally train (see yesterday’s blog).

In the short term – until the McClellan Oscillator reaches oversold or some unexpected major economic event occurs - party on

Significant Indexes

• McClellan Oscillator rose to +23.97 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. – Investors411 manta is its much better/safer to buy when stocks are over sold and sell when they are over bought. When the $NYMO is around zero those who can accept more risk can nibble on stocks & ETF’s.
  

Positions

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

From Monday - “If stocks do not take a hit Monday, on worries over potentially more stringent rules in financial sector, we have one strong bull market and get on the train.” After a two day rally, stocks should technically dip this AM and those risk takers may find a better entry point.

For Shorter Term Traders

Bought TYH (10% position at 155.00) – Will sell 1/2 for 3 to 5% hopefully  today – placed stop/sell order at 155.05. However may

Bought ESRX at 102.00 (2% position) – Not waiting for a dip was probably a mistake in the short term here. (more on this sector tomorrow)

Bought DWA at 41.44 (a 2% position) – Think 3D “Dragon Film” which opens soon will be box office smash. & technically Dreamworks was bouncing off its 50 day moving average.

Would have loved to added to IMAX when it was below 15.5, but missed out on dip – Now at 16.61. Will buy a dip. Note – Hope this whole sector is a long term trade- This includes DWA & other 3d stocks mentioned yesterday.

Check out yesterday’s stock list – Led by SHOO lots of those “buy the dip” stocks are on fire.

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Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

What Would You Cut?

Everybody’s answer or mantra is Waste . But then their minds go blank in describing what waste and how much of the budget that would impact. (extremely small) So lets look at the 2008 budget and you tell me where to cut.

Remember the defense budget has/is exploding higher. Because of our aging population, the next two biggest expenses (Medicare,Medicaid & CHIP) and Social Security are going to expand rapidly. Also debt is going to grow. That’s over 70% of the budget. Let’s take a look at the Safety Net programs that have declined for decades. Would you cut.

• Tax credits on children for moderate/low taxpayers
• Supplemental income for elderly and disabled poor
• Unemployment insurance
• School meals for children, food stamps, housing assistance, aid to abused and neglected children etc.

These programs “lifted approximately 15 million Americans out of poverty in 2005 and reduced the depth of poverty for another 29 million people.”

So what exactly would you or your conservative friend cut? Show them the chart . I did and it left one speechless on what to cut. What would you cut? More info on programs

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	-2.01%	up
NASDQ	-1.12%	up
S&P500	-1.89%	up
Russell2000-	-1.76%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

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

Three major events for week

1. Bernanke reappointment – Now seems likely (from latest Lexus/Nexis news search) = Bullish
2. Obama State of the Union - Is Obama all talk about shadow banks . Too early to tell . If not = Bearish
3. Earnings – As almost aways doing better than expected.

Significant indexes

• McClellan Index at -79.33 =  significantly oversold.  (see Sunday’s Investors411 for more)

FEARLESS FORECAST – Oversold markets will rebound on the Bernanke news, but could get spanked if folks believe Obama has the guts to break up the too big to fail shadow financial institutions. Obviosuly I hope he does. The short term hit to stocks is far better than another possible systemic meltdown where taxpayers bail out big corporations.

We are way oversold so expect a Bullish week.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

As stated Sunday adding (10% to 20%) to positions because we are so oversold. See Sunday’s Investors411

Whenever I invest in an individual stock I try to set a 7% stop-loss.  That’s a price 7% below what I bought it for that Fidelity automatically sells the stock.

I’ve lost 7/8% on small IMAX & ENOC positions this year. Still own some IMAX bought at 12.9

Note – I’m far more comfortable with ETF’s than individual stocks.

ETF’s – I know its tough to take a chance and buy when everything is sinking, and may sink some more. Decided only to possibly risk 10% of portfolio.

• EWZ – (Brazil) Add 5%
• ? – Haven’t decided yet between EDC, ROH & TYH . All of these are high risk ETF that do 2 and 3 times the indexes they track – emerging markets and techs (Last 2) Would love to see further dip.
  

Will send out by email to group that has email address when I do invest .  If you’d like to get on this list send me an email .

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING