Investors 411 Blog

Class Warfare – Editorial

The most important stat this week (see yesterday) was from Bill Mahr reminding us 1% of the USA had 8% of the wealth in 1980 when Reagan took office. Now that 1% has 23% of the wealth

There is class war fare raging out there as the rich and the uber rich have through excess GREED dramatically altered America’s financial & economic structure. They are toasting the middle and lower classes.  In other countries like China and Brazil wealth is growing among the middle and lower classes. Unless we can fight back and change this dynamic America will continue to fall.

One of the major trends in history is when the majority realize just how badly they’re getting screwed by an oligarchy and they fight back. Sometimes like in the heath care debate after all the shouting tea baggers people start to realize just how expensive health care has become and the wonder why other people abroad are living longer from infants to seniors. Why does  it cost so much less for a better quality of life/health in similar countries abroad?

Bottom Line – Capitalism is the best economic system we have on the planet right now, but it need regulation and if left to itself = people are people and GREED runs wild if we don’t enforce regulations.

Your Comments

Popeye joined D .& Sherwehe on trillions going to fight wars instead to other causes? Check out the comments and join the debate.

Several of you have privately mentioned that I’m too tough on Obama. Sorry I think he deserves it. Others want me to focus more on health care – will do.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.15%	up
NASDQ	+0.04%	up
S&P500	-0.28%	up
Russell2000	-0.34%	-

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

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

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Fearless forecast on earning season  from yesterday -“Expect other indexes to follow gold & Brazil. ” (Both gold and Brazil have broken out to new highs.)

Intel again hit a top and bottom line home run in their earnings report and forecast. Shadow financial - JP Morgan this AM seems to have also done better than expected. INTC up 5%+ in post market trading and JPM up 3%+ in pre market trading. Revenue for these companies is coming in better than expected. Its a regulatory and interest rate utopia for shadow banks/financials right now.

Perhaps even a bigger positive was the fact that tech giant Cisco bought a major telecom nuts and bolt company and actually went up. Almost always companies go down when they make multi billion dollar purchases. See Cisco buys Starent LINK A huge chunk of what happening is all those phones being sold in growing China market (and elsewhere) that seem to do everything including cleaning the kitchen sink.

CSCO fundamentally seems like a decent buy for those interested in stocks

Sure looks like he rally will get extended. Watch volume. Resistance levels Dow 10,000 could fall today and other major will probably see new yearly highs.

Put on your Rally caps and watch volume – Today should be the day that we know if the money on the sidelines is willing to start to get back into stocks.

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 40% (I haven’t done the math) off its high (early June) Before that it gained almost over 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI nine day rally flattened out yesterday. It fell a -50 points yesterday and closed at 2646 . Even though a reversal seems eminent, we have technically achieved a higher high =  Bullish for stocks & world trade

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

The dollar reached a new yearly low (barely) last week and fell -0.45 % The dollar closed at 75.82. We have developed a support level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB – Earnings will probably trump the dollar as the #1 influencing factor for the nest two weeks. But the falling dollar is the main driver of stocks right now and we have a long way to go till we hit last year’s $71 low.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Our positions in gold GLD and Brazil EWZ are clearly out preforming US markets and our China/smaller S. Korea position. The later two are approaching new highs. Would buy more of GLD & EWZ on dips. On a purely fundamental basis financials should lead any rally and are therefore a decent short term trade

Added XLF (financials) yesterday (10%) of portfolio at 15.15. For traders I’ve also been playing FAS (3x financials) Bought the dip yesterday at 84.00 with a tight stop. Bought small position in MVIS (mentioned many times over last few weeks – recommendation sent in by one of you) – I missed the dip when away, so bought in advance of expected good earning reports.

Big banks and techs continue to be recommended areas. QID is an interesting play (2X NASDQ 100)

When/if the SPX or S&P 500 hits/gets close to resistance area of  1200 – would take some off the table. Long term ETF’s for China, Gold, & Brazil continue to be the best bet to buy on dips.

Right now GLD is the best position to buy on slight dips. – The G7 nations bill themselves as the world’s most powerful economies, but in the end the vast majority are turning out to be the biggest debtor nations – especially the USA. This growing debt is driving Gold fundamentally and technically it has broken out from a two year long resistance level.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

This is the Moment

Huffington Post photo

You can make a difference. I joined to make a difference in the health care reform not for me (I’ll soon be on Medicare) but for my/your kids, grandchildren and the future of America. Hope you will too. LINK HERE

Just in case here are some more facts on health care in America.

• The illusion that we have the “best health care system in the world” – link here
• Among the developed countries we have the 10th highest death rate of cancer patients. link here
• Staggering health cost prevent 38% from getting access to heath care access vs. 11% for Canada and 6% for the UK link here
• I know he’s theatrical, but his facts check out. Here’s Michael Moore’s SICKO blog link here

The public health care component proposed does not go far enough to really make me happy. But, its a start.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.42%	up
NASDQ	-0.91 %	up
S&P500	-0.29%	down
Russell2000	-0.83%	-

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

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

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Big news is JOBLESS FIGURES for July that come out on Friday. Anything over -400,000 will be bad for stocks. The “cash for clunkers ” program will improve auto sales for the next month or two. Senate just approved more funding. Unfortunately after the Ford Focus the next 4 top selling cars in the program are foreign. Link here

Tech giant  Cisco CSCO (see chart) marks the end of major earnings reports for the quarter. There were some positive comments about the economy from the CEO here

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3051 down last five days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly,

In a nut shell the BDI is

• short term – Bearish trend starting
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning – The BDI falling through its support level at 2975 would be very bearish. BDI fell 109 points yesterday. The rate of decline is growing. At this rate we will reach critical support today.

.

$USD - We broke that major support on Friday and dollar took another big hit Monday Tuesday the dollar inched forward +0.19% Yesterday the dollar gave back those gains -0.23% Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008

What this means for stocks – The dollar has a long way to fall before it hits major support. Y esterday’s close - $77.56 Therefore, stocks (and oil prices that are tied to the dollar) have a long way to rise before this support level is reached .

Falling dollar is Bullish for most US stocks

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The problem here is investors are buying the smallest of dips. We’ll keep adding until the dollar and the BDI fall to their major support levels. The Dollar dropping is key to this rally and it has a long way to go before reaching major support levels. The BDI is close to breaking support and this will impact all exporting economies.

• Sold all EWS (Singapore ETF) at 10.25 . This was bought at 9.4 (see positions section of the blog) The net gain on this trade that was @6% of portfolio was @+8%
• Sold all of EWY (South Korea) at 41.75. This was bought at 39.9. The net gain on this trade which was @5% of portfolio was @ +5%
  

If job numbers are bad, but not a disaster, ill buy QLD Friday when stocks fall. Also considering add more EWZ (Brazil) on dips ASAP. This again depends on the jobless numbers.

Perhaps I’m wrong, but the downside risk (markets are also way over bought) outweighs the upside gain right now. Also the BDI sure looks like its going to break support levels and make a lower low. That’s bad for world trade especially Singapore and S. Korea that depend on it.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!