Elizabeth Warren

Fireworks Again

23 Comments yesterday. WOW. You tied a record. Most on politics. It ended at midnight with Yankee Bob on Fascism. You can scroll down to the bottom HERE to read them all. Some strong opinions, and let’s try to be civil.

I told Jim J I would publish his list of candidates to donate to Monday or Tuesday. You can be sure Tea Party candidate that JS (not me) called a “Whack Job.” will not be on it.

Elizabeth Warren

Bravo Elizabeth Warren has been chosen by Obama to set up the Consumer Protection Agency and start running it. The Right Appointment at the Right Time editorial by Simon Johnson.

Poverty Rate Rises

Poverty is on rise. Republican response to their fellow Americans “Let Them Eat Cake” or repeal all of health care. There are many parts of the health care bill I oppose, but repealing the whole thing is just wrong. More on the poverty rate in the US declining for a decade – The Lost Decade from WSJ

Back in 2008 Investors411 warned that the economic meltdown was “far, far, far, far, far, worse” than what people expected. One forecast you hate to have come true.

Digging In Heals

You may think of him as Darth Vader (Democrats – Larry Summers and Chris Dodd constantly compete for this title) But when he speaks its usually policy. Larry Summers – “Maintaining tax cuts for top wage-earners should take a back seat to other more pressing measures, White House economic advisor Larry Summers said, in a signal the administration could be digging in its heels on the issue. ”  From CNBC – All right Larry – something positive. Darth Vader title goes to Senator Chris Dodd for 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!

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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. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day – Baltic Dry Index – From Investopedia

“A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed)

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.”

US Markets – It’s a ghost town out there as volume remains pitifully weak.

This is the third Friday of the month when options expire. Almost always this day lacks technical significance unless a major fundamental surprise occurs.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.31% yesterday.  Falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -3.63% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. Fourth down day in a row with rate of fall increasing. After 8 week bull run trend changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell again to +22.38 yesterday. Note while zero is the center of this chart the 50 DMA is at 19.33 That’s a support level. = NEUTRAL

Reading Tea Leaves

If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise.

However, it’s hard to put significance on an options expiration Friday. Perhaps Monday will be the key.

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)

Current positions –  EWS (Singapore).

Same basic outlook for traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble

Investors – Wait for a bigger drop in MO before going long.

Also if, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Crunch Time/Elizabeth Warren

Perhaps the best result of the Financial Reform Legislation could be  a strong Consumer Protection Agency. Over the past few years Investors411 has beat the drums for the stand and policies of Elizabeth Warren. She would be an ideal choice for the agency, but has strong opposition from influential Senators like Democrat Chris Dodd (He approved the big financial bonuses for bailout TARP shadow banks) WaPo thinks there is good shot she will get the job.

Matt Taibbi

The Rolling Stone’s Matt Taibbi has an excellent editorial on “Wall Street’s Big Win.” The win, of course, is the new financial reform package that became law. Taibbi nails Republicans and Democrats (including Dodd) who gutted financial reform legislation.

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 for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Individual companies may be doing well, but earnings season is basically over. The focus now turns to economic news and from China to the USA (talk of GDP growth being revised down in USA from 2.4 to 0.2 in 2nd quarter) the news has not made investors happy.  We’re not falling over the cliff, but even the BB/HFT traders need some series of economic fundamentals to hang their hats on.

Therefore, don’t see bulls getting out of the corral until the market becomes more oversold.

Same story of bigger volume on down days that has been the hallmark of US indexes for many moons.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose 0.42% yesterday. This confirmed a massive +1.84% move the day before. Very bullish for the dollar but for stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +2.48% yesterday. Has broken up through 50 day moving average & upside momentum slowing. Overall trend  = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -38.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

The dollar is the key index to watch. The larger currency market is almost  dictating what happens to US stocks. You can follow (or invest) in it by watching the dollar bull ETF – ticker symbol UUP. If UUP goes up, stocks go down and visa versa.

The dollar closed at $82.64 and the first significant resistance level is the 50 day moving average at $84.06 ( 50 dma is falling each day). So there is a ways to go before we reach this point.

Positions

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

Current positions - NONE

From earlier this week - “The Bulls seem to be loosing control.” The MO has fallen to -39 & we are approaching the -60 oversold level.  The lower the MO goes the better the chances whatever long position you take has of making at least short term gains.

A number of you have asked or are investing in stocks with high dividends.  This gives you a second revenue stream – the dividend that is in some cases higher than what you can get in CD’s. The problem of course is will the stock go up or down. Here a list of top ten dividend stocks from an author in at Seeking Alpha.

FXI, EWZ, EEM, EWY, & EWS are the courty ETF’s recommened for consideration when conditions are appropriate. Also GLD on dips.

Also considered are ETF’s that mirror or do 2 or 3 times what major indexes do.

YOUR Stock List last generated on this date (scroll down) Have not gone over these recently.

More agressive traders could start to buy the dip. Longer term investors may want to wait for stocks to move lower.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Sherod Brown – Senator from Ohio – A new major player in financial reform

Rules based vs. No rules Capitalism

The 2008 worldwide economic meltdown, cause even Alan Greenspan to realize that markets needed to be regulated. Let’s look at -

Three Major Entities in this drama.

• Rules based companies – They create or deliver products – P&G, Chevron, Apple, UPS, GM, and even that wonderful artist who you should buy from. Sure, all companies have some sort of problems and may fudge or break the rules, but they produce and /or deliver products. Their profits are based on the products they produce, deliver and services they maintain. They use more transparent accounting.
• Shadow based financials – They profit from leverage – A needed commodity to foster growth – AIG, BAC, Lehman Brothers, GS, & Citigroup. This is the group that got itself over leveraged because it was unregulated. Instead of being leveraged 10 to 1 (loans to cash) many in this group reached leverage near 100 to 1 using unregulated credit default swaps etc. . So when Lehman collapsed the whole  financial & economic world went with it to the brink of financial collapse. This is the group that most want no rules capitalism or “free markets.” There are, of course, smaller banks that did not get over leveraged.
• Taxpayers – You benefit and support each group by buying their products or entering into a loan. All this is a necessary part of a growing economy. The problem enters when the profits gets privatized and the risk gets socialized you and your children  pay.  Now the Shadow banks that are fighting to stay in the shadows.

Major Political Players in Congress (for sources on lots of this see past Investors411 or OpenSecrets.org

• Chris Dodd (Dem. CT) – head of powerful Senate financing committee. The Senate’s important because it has the filibuster/ 60 vote rule. Senator Dodd snuck in the rule that bailed out shadow banks could get their executives bonuses. Democrats on his committee have created (weak – my opinion – see past references to Simon Johnson and Baseline Senerio) legislation to try to fix unregulated shadow financials
• Mitch McConnell (Rep) -Minority  leader of Senate. Met secretly with 25 Wall St. Shadow bank types and #1 contributor is financial institutions.  He’s trying to unify Republicans against the Dodd reform Bill.  The Republican line is “complete and deliberate misinformation.”
• Senators Kaufman (D -DE) & Sherrod Brown (D – OH) – have a strong bill forcing the elimination/downsizing of the too big to fail banks. They have some support, including Fed governors, but not enough. Dodd holds all the strings.
• Blanche Lincoln (D Ark) – has introduced a bill to regulate what Warren Buffett called Financial Weapons of Mass Destruction – Credit Default Swaps.

Obviously the Shadow institutions and their lobbyists want to stay in the shadows. Most taxpayers want reform. You do have a group in congress who say leaving everything alone, let them fail and bring on the second great depression.  This is all getting played out this week in congress.

Fed Governors have jumped on the  elimination/downsizing too big to fail banks bandwagon, but Dodd is a consummate political pro who is in bed with shadow financials – remember, he granted them bonuses. Most Republicans want a weak reform bill and have historically voted against regulations.  Many traders are also putting their money on/investing shadow banks by buying their stocks.

For the latest see Simon Johnson’s piece last night

Here’s my home town’s Bob Kuttner on the differences between Republicans & Democrats

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

Giant institutions are buying stocks on dips like the Cookie Monster eats Cookies.

Five straight rally days in a row. Markets moved higher in decreased volume. This has been a usual occurrence for stocks over the last two months. Historically, moving higher in deceased volume is indicates BEARS rule, but that’s not the trend. So we go with the trend = Bullish

You don’t need a weather forecaster to know which way the wind is blows. Even with 5 up days in a row the wind is still with the BULLS

Last Weeks Fearless Forecast – “Down Week”- Goldman Sachs, Greek debt spreading, fears of financial reform and even a volcano couldn’t hold the Cookie Monster down = Bulls Rule.

This weeks Fearless Forecast – The problem here is so many analysts see markets moving higher. Since the McClellan is not yet near oversold prediction is for an up week. Beast single reason for this call is stocks keep moving higher despite bad earnings news in giants like MSFT, AMZN and former tech darling QCOM.

Earnings reports hot and heavy this week & the Fed makes its usual announcement on Wednesday at 2:15 EST. For more see

For those interested in individual stocks here’s a list of best & worst of them who have reported earnings. Again from Seeking Alpha.

Analysis from Friday – If markets are down around noon expect the Cookie Monster to eat the cookies, vegetables and whatever is out there The Cookie Monster (huge institutions investing) stared to buy and eat stock at almost exactly noon.

Significant Indexes

• McClellan Oscillator rose  to +19.86 Friday.  [Basically, +60 or above = Overbought = sell. -60 or below = Oversold = buy]. More sophisticated investors can use the 50 & 200 day MA’s and adjust from there. StockCharts has a better version of the McClellan chart ($NYMO) LINK. - This is  still NEUTRAL territory, but moving toward oversold.
• US Dollar – fell a -0.30% yesterday after opening much higher. [Any move over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Is very important. Remember, dollar down almost always = stocks up and visa versa. The positive earnings reports are overshadowing the dollar which is in the upper end of a consolidating range between @$80.00 & @$82.20. Dollar at $81.41. If it moves to either side of that range it will impact stocks.

Positions

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

The McClellan Oscillator is NEUTRAL and moving toward overbought.  There is still a long way to go before stock are overbought (@+60). So technically there is some room for the rally to continue. However a better time to buy (less risk) or make a longer term investment is when stocks are oversold. (@ -60)

ETF Trends is a good resources for longer term Investors. I have it bookmarked. Here’s a sample on Emerging Markets

Traders will be interested in Paul R’s comments on side of blog concerning individual stocks.

Why are US stocks outperforming emerging markets?

• They collapsed further than emerging markets and especially the financial sector.
• There has been no reform of  the shadow financials and financials again have become becoming the dominant sector of US markets

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING