Photo from Common Dreams

Chris Hedges is a graduate of Harvard Divinity School and a 2 decade long correspondent for the NYT – also CSM, DMN, & NPR. The Acadamy Award Winning Film – The Hurt Locker opened with a quote from a Hedges’ book.

One can defend may things about capitalism. However, Hedges writes a potent editorial that starts -

“When did our democracy die?”

You may think this introduction is over the top, because the fact that I’m bringing you his words shows that the flame of democracy still burns. However,  Hedges does make many substantive points that are thought provoking.

• “When did the press, labor, universities, the Democratic part.. wither and atrophy”
• Is “corporate power” … “inverted totalitarianism?”
• Over decades – “a massive redistribution of wealth.”
• “These [corporate] elites do not have a vision [of democracy] . They know only one word—more.”
• The money quote -

“although the heads of state or elected officials in Congress have become largely irrelevant. Lobbyists write the bills. Lobbyists get them passed. Lobbyists make sure you get the money to be elected. And lobbyists employ you when you get out of office. Those who hold actual power are the tiny elite who manage the corporations“

What do YOU think?

Is Democracy Dead?

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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

• All eyes on silver trade yesterday and today as climax buying (LINK to definition) reached a peak yesterday and a meltdown in foreign markets this AM.
• Stocks continued to have abysmal volume, despite the fact that we are in the middle of earnings season.
• Low volume gives Fed’s quantitative easing more influence to move markets up.
• US dollar in clear long and short term bear run. – Good for stocks in short term.
• Good contrarian article on the possibility of a dollar rally. This would hurt stocks. Do see possibility of short term rally.
• News of the week  - Bernanke speaking after the Fed Meeting Wednesday (Thanks to EW for mentioning this in comment section of blog)
• What investors want to hear from Bernanke is more quantitative easing or QE 3.
• The big longer term news is the ramification if the dollar continues to fall (See editorial above)

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   -0.17 yesterday. Clear longer and shorter term bearish trend. For US stocks = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Fell to +10.47. = Neutral

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Reading The Tea Leaves

For Silver and Gold investors - Obviously  these commodities went elliptical or had a climax run. or a blowoff top yesterday. Translation – So many investors bought silver that it ran out of buyers. See SLV chart below and look at the big volume SLV on last Thursday & Friday and the record massive volume yesterday. Look at how far above its 50 day moving average (blue line on chart) SLV is.

Silver is the leader and gold went along for the ride. So it too is taking a hit in sympathy with silver.

Since its peak Sunday night SLV is down almost 10% as I write.

The fundamentals, as described yesterday, have not changed. However, we have to wait for the bears to take a bite out of gold and silver before getting back in. Simply too many folks pilled in too quickly. Perhaps the dust will settle today/a week/ a month/ longer. This is much harder to predict than a climax run. Because the fundamentals are so strong, I look for a shorter rather than longer meltdown.

For Stock Investors – It’s the middle of earnings season and volume was abysmal. That means the Fed’s quantitative easing rules and the bulls have the momentum. One very significant point is the dollar did not rally as silver fell from yesterday’s high. Perhaps it will today and this will negatively impact stocks. Sometimes there is a delayed reaction.

Bottom line is that the dollar down/stocks up trends are still in place, but may be in correction for the next day or two. Bernake’s, first time Fed chair speaks after a FOMC meeting, on Wednesday is a market mover.

For long term traders and everyone –  Arnold, the Terminator’s, famous words for gold/silver – “ I’ll be back” invested in silver/gold. We had a year’s run compressed into a month.

The learning part of all of this is sell into a climax run. Judging from the comments section lots of you did just that.

CONGRATULATIONS

NB – Check out chart of REMX. (Rare Earth Metals) It too had a climax run around New Years day. It reached a high of  @27, then and is now over 28. Consolidating gains after breaking out to a new high.

What to watch today - For shorter term traders – Market movers.

• USO - ETF for oil - Oil up = stocks down.
• UUP - (Tracking ETF for dollar) Remember - Usually the dollar is a contrarian indicator for stocks. Any major fall may give temporary help to US stocks, but a major breakdown also signal major structural problems with the USA.
• SLV – Went elliptical and in meltdown

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Positions

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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.”

Investors411 record – 4 1/2 years of beating benchmark S&P 500

Michael Jackson

Photo – Huffington Post

Jackson’s memorial service ("a variety show with a coffin") was carried by 19 networks and seen by 31.1 million viewers. Chris Hedge’s – The Man in The Mirror editorial has an enlightening view of American culture it begins like this.

"I n celebrity culture we destroy what we worship. The commercial exploitation of Michael Jackson’s death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever-changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture. And his fantasies of eternal youth, delusions of majesty, and desperate, disfiguring quests for physical transformation were expressions of our own yearning. He was a reflection of us in the extreme…"

You can read the whole editorial here

Chris Hedges is author of "Empire of Illusion: The End of Literacy and the Triumph of  Spectacle."

Iran

Friday could be an important day in the country that now has more jailed journalist than any other county. Rafsanjani , who is not an Ahmadinejad backer, is leading Friday prayers and the opposition has promised to flood the area. Story here

Huffington Post’s Nico Pitn ey still #1 in coverage here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

Technicals and Fundamentals

Note - Repeated statements in brown.

Markets staged a big time rally and volume increased, but it was still not above average. The major technical question becomes can we break the series of lower highs and lower lows? We have held and formed a strong support level at SPX 875 . The S&P closed at 901 and we need to close above @ 930 to take out the lower high or major resistance level.

After falling, as predicted, to the S&P 875 support level, the bulls have reinforced the barricades and held their position for the last two days.  The longer they hold out the stronger the bulls position becomes. Here come the bulls led by financial stocks that have been soaping up low interest money from the Fed and TARP programs. Loans are not pouring out of these institutions to struggling homeowners, but they are making a killing on the loans they do make, the government bonds and derivatives they sell/insure.  Not having mark to market accounting allows them  special accounting methods other institutions do not have.

Financials are probably going to continue their charmed existence, because t he Obama administration & the Fed has deemed the big ones too big to fail and they keep kicking the can down the road on any major fix of the problems that created the economic meltdown. Financials led yesterday’s rally  XLF up +6.4% – Increased, above average volume indicates Bulls Rule – rally to continue in financials.

Mea Culpa – The amount of the rally in financials has caught me a little off guard. I thought all the traders were already long this sector and the rally would be about 2 to 3+% not 6+%.

Earnings season is off to a good start. But technically markets were oversold and the 875 level held. Fundamentally, Still looking for Intel (reports after closing) to set the tone.

Intel’s earnings report (after the bell today) is still the key to any breakout. US markets have started to move higher on good news  So momentum is with the bulls

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell for the 9th day in a row.  However, the rate of decline has slowed dramatically & more each day  This chart works a little different from most other charts in that it is a lot smoother and less volatile. The fact that the decline rate has dramatically narrowed is a positive for bulls

Unfortunately, over the last six weeks we have a series of lower high, lower lows, and a broken support level. That’s positive for bears. Over the last six months we have dramatically risen off the lows – Long term Positive for bulls

In a nut shell the BDI is

• short term - seems to be turning bullish (emphasis on seems )
  
• mid term – clear bearish pattern
• long term - bullish pattern
  

$USD - The Dollar is still comfortably in its in its 5+ week long consolidation pattern between $79+ and 81+.

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Fearless Forecast – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week

Our Positions

The Hedge – Still little change in overall position QLD -5.11% and SDS +5.89% = a gain of +0.79% This trade may take a months to reach a 5% to 10% gain/loss.

Alternative Energy – GEX/PBW – Now completely out of this sector and looking for a way back in or a buy the dip opportunity. There are several fundamental factors going on here. Most importantly it looks like oil prices are moving lower and that will hurt alternative energy.  If we have a significant summer rally oil prices and alternative energy could rise and we will miss out on some potential gains.

Financials - For traders (not investors) there is potential buy the dip opportunities in the ultra long ETF’s not XLF but UYG (@2x XLF) and FAS (@3x ELF)

Foreign ETF’s – Still would like to see a bit more of a dip to buy more FXI, EWZ & IFN . For a short time, momentum may swing back to US equities, but the long term trend is clearly with these growing economies.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!