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Financial Amnesia

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Old FT Front Page

Since the Editorial boards of the vast majority of US financial journals have yielded to their advertisers or the corporate oligarchy, few papers/jorunals stand out.

One is the Financial Times.

This AM the FTimes is running a story accusing   Wall Street of  “collective amnesia” Investors411 readers know that this collective amnesia is purposeful and enacted so profit can be further privatized and the conseuences (risk) can be further socialized.

“Financial amnesia disarms individuals, the market and the regulator,” … “It causes risk to be mispriced, bubbles to develop and crises to break.”

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Politicizing Science

Michael Mann

We have had an all out attack on science that perhaps stated with trying to prove Cancer had no relationship to cigarette smoking.  They were, for the most part unsuccessful then, but that was decades ago.

Now, Cherry picking data and using a massive political and media machine a corporate oligarchy tries convince an American public that the opposite of science fact is true.

Michael Mann in a TED/PSU lecture/video clearly proves how its done over climate change.

The same kind of McCarthyism is happening in the USA with everything from climate change to evolution to financial meltdown

Quite simply

Ethics and morality are being assaulted by

GREED

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The Dark Side

Ron Paul

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Mitt Romney

Last week Investors411 went over the bright side of Ron Paul. This short video shows the dark side.  The new Iowa front runner proclaims 15 things that are “unconstitutional”

Here’s a sample from Right Wing New’s John Hawkins on the national Republican front runner  “Why Mitt is unelectable.”

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STOCKS

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Wall Street Bull and OWS Symbol

Jeff Immelt/CEO of GE

Prius of Power

The giant American conglomerate GE plans to open a hybrid -solar, wind, and natural gas - energy plant that can supply energy for 600,000 homes by 2115. “Imagination at work!”

Jobs, cleaner energy, no nukes – Bravo GE -Just where is this American company putting this energy plant?

Wait for it. Wait for it. Wait for it - ……………………………………………………… Turkey. Remember the head of GE, Jeff Immelt,  is also the head of Obama’s commission on fixing unemployment in the USA. Thanks Jeff. Great choice Barack

YOUR Comments

Yesterday, in the comments section of the blog you (JS, EW Paul & Popeye) had a lively debate (scroll down) on Germany and Unions. Also lots more on stocks.

Media Matters

The HUGE preponderance of scientific evidence supports human causation as a major factor in climate change.

Yet in the period from Dec. 201o to April 2011 76% of the appearances of guest were against human’s as a cause for climate change. This of course was led by the FOX news outlets.  In a contest of Scientific vs. Media saturation who wins?

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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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Index	Percentage	Volume
Dow	-0.18%	Flat
NASDQ	-0.97%	Up
S&P 500	-0.42%	Flat
Russell 2000	-1.19%	-

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Technicals, Fundamentals & Analysis

• The McClellan Oscillator (MO) chart fell to -63.83.  US Stocks are oversold. A “snapback” oversold rally is possible.

• MO did reach -90 in March and - 130 last May after the end of QE #1.

• Reading The Tea Leaves -There is a high probability that we will reach -90 to -130 on the MO this summer. Still holding to May 20th forecast for this summer.

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Paul’s Corner

Oh The Pain and Agony!

This market keeps ticking off, and it’s extremely over sold, we should have a decent bounce any day now. Yup any day now! Any day now fer sure! Although volume was up yesterday we still haven’t had a high volume blow off of a day. OPEC didn’t help at all today and Bernanke’s comments Tuesday seem to have put a few nails in the coffin.

Market internals aren’t getting any better, the only  groups up bedside the VIX were the oils.  60% of the S&P 1500 stocks  are below their 200 DMA, that isn’t good. The MO summation index has turned decidedly down and the MO has more room to fall. SOXS the 3X bear Semi ETF was up 6.1% Wednesday.

The Finance Equity Reits were top  in the high demand search.

Fin-Equity Reit (12.00%, 12 securities)

• American Campus Communities (ACC)
• American Capital Agency Corp (AGNC
• Annaly Capital Management  I (NLY)
• AvalonBay Communities  Inc. (AVB)
• Camden Property Trust (CPT)
• Digital Realty Trust  Inc. (DLR)
• Dupont Fabros Technology  In (DFT)
• Equity Lifestyle Properties (ELS)
• Equity Residential (EQR)
• Public Storage (PSA)
• Simon Property Group  Inc. (SPG)
• Tanger Factory Outlet Center (SKT)

A lousy day and why not, a search for the best stocks under $10 as selected by HGSI:

• BDE
• BNA
• CERP
• IMOS
• CDTI
• CLFD
• FTLK
• GENE
• KKD
• MHLD
• MDF
• NR
• QPSA
• SQNM
• HCKT
• TWER
• WSTL

I have no idea if any of these woofers are worth buying, some have decent charts. You are on your own looking at these stocks.

So what’s the market going to do today, futures are up this morning, is this a new morning in America? Let’s load up Quote Tracker and find out………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

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Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

SLV/AGQ (very roughly 2x silver) Sold 1/2 for +3% profit. Have a sell order in on balance for 3% loss. Considering selling into rally.

REMX - (Rare Earth metals) Investors has a 1/2 position in this ETF. Sold at/near open for 25.31 = -2% loss. Total for REMX trade = -1%

NLY - Annaly Capital Mgt. Ultra high dividend stock. Caution - NLY and similar stocks are going elliptical  in heavy volume – usually a sign of a climax run – simply put – so many buyers jump in that the stock runs out of buyers in the short term and takes a hit. We saw the same in silver a month or two ago. Another day of heavy buying would be a bearish short term sign. For NLY the 1.04% gain yesterday is HUGE.

IMAX – Imax Corp. (3D)  Sold at/near open for 35.65. -2% loss

TZA – (3 tomes short small cap stocks)

Bought 1/2 position in TZA (3x short small cap stocks) at 38.65 on Tuesday   Added another 1/2 position to TZA at 39.75 at/near open yesterday

Will consider adding another full TZA positions on a moderate market rally. Otherwise will add a 1/2 position in TZA on minor rally.

The US stock markets have stapled a message in the head of Fed Chair Ben Bernanke. - We are not going to buy until you give us more liquidity/stimulus.

The question becomes how low can you go?

Repeat - Therefore Strategy is clear -

• Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
• Sell long positions into any rally -

Disclosure - I own SLV, NLY, & TZA -

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA]need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

” it’s difficult to get a man to understand something when his salary [or portfolio or election] depends on his not understanding it.“ Upton Sinclair

Some Examples

• Shadow Banks – The largest financial meltdown in history in 2008 and more fraud revealed over phony mortgage documents – No one goes to Jail. No massive amounts of money go to fund regulators, no return to the rules that prevented the crisis. All the politicians from Obama on down look the other way because it is the Wall Street money that gets them elected.

• The Poor  The Children and The Elderly – Wall Street shows record profits and bonuses. GE and other corporate giants pay NO taxes. Taxes for the wealthiest in the USA have been slashed for decades and off shore accounts abound. Our Central Bank is flooding its members shadow institutions with money.  Who will Republican politicians sacrifice for financial gain? Not those who fund their elections.

• Climate Change – “So the joke begins like this: An economist, a lawyer and a professor of marketing walk into a room. What’s the punch line? They were three of the five “expert witnesses” Republicans called for last week’s Congressional hearing on climate science.” One scientist was funded by the billionaire industrialist Koch Brothers  (they also fund the Tea Party) but he reversed his position (Paul Krugman) and is now an outcast.

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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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Index	Percentage	Volume
Dow	+0.46%	down
NASDQ	+0.31%	up
S&P 500	+0.50%	flat
Russell 2000	+0.38%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• Yawn - Another low volume rally. Fed liquidity has a muzzle muzzle on the mouths of bears.
• Jobs numbers have improved dramatically -700,000 when Obama took office to +216,000 last month
• Now Bulls have two strong fundamentals – Jobs are recovering and Fed’s liquidity injections.-
• A jobs good number Friday started a rally that got hurt by rising oil prices (Libya and upcoming NIgeria elections) and falling APPL stock. So gains were tempered.
• New quarter and attention will turn to earnings.
• Emerging Markets are red hot right now and exploding higher – Rally leaders.
• Monday’s are often the best day of week for stocks.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar saw a huge rally collapse and ended  a wee bit lower -0.03. Chart pattern showing volatility/erratic so short term hard to call, but longer term bearish  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to +52.29. Over past three months The MO has had problems getting over +30. This is, therefore, the highest the MO has been since early September 2010 = Bearish

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Reading The Tea Leaves

• Technically, the MO is screaming oversold.
• Fundamentally Japan keeps getting worse ( more tons of radioactive water dumped into ocean -11500 tons today). Libya is a stalemate and looking like a quagmire. Great if your a weapons manufacturer, but bad if your the taxpayer funding them or worse if you’re getting killed.
• Europe still titters on the brink with the many PIIGS near default.
• Housing figures are deteriorating as is consumer confidence
• Our financial system is still corrupt and protected by the vast majority of politicians form both parties. – No one goes to jail
• Our markets are still manipulated by our Central Bank – by keeping dollar low, zero % interest rates, buying federal debt, and adding liquidity.

All the above would absolutely toast any other stock market. However we bubblisciously move higher.

When will the bubble pop?

The dollar is the key metric to watch. What’s holding the dollar up is that the other major currencies are also so bad – Europe and Japan.

What to watch today - Market movers – UUP still has most influential, unless others make some huge move.

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya not good.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows = Bearish
• Japan Rector Developments – This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting over extended.

Bottom Line – Fighting the Fed is a loosing strategy. They Rule.

Stocks are significantly oversold, but there are many in the wings waiting to buy the oversold dip. Now is not the time to buy most stocks wait for the dip

June 30th is the day POMO stops and this could pop the bubble. But, until then dramatic rises in energy or a fall in the dollar are the critical warning signs. Remember, A slowly falling dollar is good in the short term for stocks. A huge fall show lack of confidence in the USA.

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Positions

ETF’s currently Under Consideration.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. -

REMX (Rare Earth ETF) - Really believe this a good long term holding.  A risk, but, this area because of limited supply and big demand is going to outperform almost all other sectors. A buy.

DGP – (ETF is 2X gold) also SLV (silver). Breakout on worries of future inflation – Gold is moving inversely to the dollar - I’ve jaw boned this for way too long and waited for the right dip, but missed it.  This is a credible long term asset to have. I’d buy any dip. I do own both in other accounts.

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals -

RJA (Agriculture commodities Index)An ETN, not an ETF.

UWM (2x small cap stocks) TNA (3X small cap stocks)

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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.”

Iran Week Three

Two points of view

More Optimistic – Andrew Sullivan here (above photo from his blog)

More Pessimistic – Jaun Cole here

Unfortunately, think Cole has better insight.

Photo to left – Your editor in the fabulous Summer of 1951

Why the USA Is in Such Trouble

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One of my left wing friends lamented that the Mark Sanford debacle didn’t get enough media attention this week. Sanford is a Republican family values governor who hypocritically had a torrid long term affair with an Argentina "firecracker," then likened himself to the biblical King David.

Farrah Fawcett (an actress who fought a courageous battle against cancer) and Michael Jackson (music icon with some strange behaviors) died and they sucked up all the news coverage. He wanted the Republican toasting to be the story of the week. All these events were secondary.

There was one big headline last week and these three events will have far less impact on your life and especially those of your children. - The US House of Representatives for the first time passed a major climate and environmental bill. As a society we just don’t get what’s important. That’s why this country is in such trouble.

There are 4 reasons why climate/environment legislation is so important, but today let’s deal with reason #1

Global Warming and The World Is Flat Society

In every society there are the flat worlders who for some reason (mostly self interest or emotionalism) want the opposite to be true. Example: Smoking doesn’t cause cancer or the CIA orchestrated the 911 attacks. Usually you will find a mix of these two groups in Flat Worlders – one that makes a profit and the other, close minded followers.

If you search through any relatively unbiased media source like Wikipedia you’ll find that "the Scientific community has reached consenus that global warming is man made" and "Since 2007 no scientific body of national or international standing has maintained a dissenting opinion." Link

Unfortunately, American culture is locked in the here and now of the Stanford of Jackson stories. Just like  smoking causing  cancer,  global warming will not kill me now and Stanford and Jackson sell.

Nobel prize winner Paul Krugman puts it bluntly -  those who think global warming is a hoax are committing "Treason against the planet" Unfortunately there are Republican members of the Flat World Society who voted against this legislation because hey believe global warming is a "hoax."

Research, the latest from MIT , (an evil scientific institution that the World is Flat Society hates and ignores) are seeing an even more rapid deterioration than expected. There are imperfections in the climate change legislation, but to vote against it because you think science is a "hoax" puts you in The World is Flat Society.

Reasons 2,3 & 4 tomorrow & apologies to Tom Friedman who has a totally different meaning in his book The World is Flat.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.40%	up
NASDQ	+0.47 %	up
S&P500	-0.15%	up
Russell2000	+0.79 %	-

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Technicals & Fundamentals

Big spike higher in NASDQ volume. Other major indexes up, but below average. NASDQ spiked probably due to rebalancing of the Russell 2000. So, no real help from volume in making a prediction.

Big events of the week

• Madoff Monday – The financier gets sentenced
• Consumer Confidence Numbers on Tuesday.
• Gov’t employment numbers come out Friday (Market closed on Friday)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool.

BDI - The Baltic Dry Index measures the flow of goods (world trade). You have to get out of the box and stop thinking just of the USA. This is a worldwide integrated economic planet and this Index is perhaps the best forecasting tool. If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Look at the chart. (Click on the blue BDI above) You can adjust it from 5 years to one day.  You’ll see what looks like a recovery. Friday the BDI was flat and its started to trade in a range. This is better than the bearish fall over the previous four days. Right now the long term momentum is bullish and short term neutral

$USD - The Dollar fell-0.72% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX – Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling.  This is clearly a long term bullish indicator .

Reading the Tea Leaves

Last weeks  fearless forecast – Another down to flat week. All indexes except the NASDQ were slightly down. NASDQ rose 0.6% .

This weeks fearless forecast – A rally, but one that does not get to new highs. Volume, the #1 forecasting tool, is not cooperating.   Its hard to have confidence in the prediction because volume is not confirming the price move. Secondary indicators are more positive than negative.

Our Positions

Let’s take the 5% loss on SDS and sell it. SDS was bought as protection against a big downside move. For Mid Year Results see last Thursday’s Post.

Our Hedge (SDS & QLD ) is starting to work.

Our other new position IFN (India) is also off to a good start.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Tom Friedman, over the years has, perhaps, been the most quoted columnist in Investor’s411. No one is always right, but he sets himself apart by innovation. (also, 3 Pulitzer’s and many best selling books) Friedman’s column yesterday on socializing the risk and privatizing the gains for finance and the environment pulls two diverse problems together. Also today- other economic editorials & executions for sexuality.

Friedman

There a lot of meat in his NYT editorial “The Price is Not Right” chew on some of it.

After illuminating “creative destruction” he concludes  “Destructive creation” has wounded both the Market and Mother Nature. Smart regulation and carbon taxation can heal both.

Other Editorials

(If you have an editorial or comment you’d like to share post it on the comment section of the blog – Thanks)

Here’s  diverse group of editorials

•  Rally is Built on Sand? FASB Can Help – by  Chris Ciavocco (Ciavocco vs Reilly below)
• Banks Demand Perfume for Rotting Balance Sheets - by David Reilly – Bloomberg
• How the Financial Crisis Is Shaping the Corporate Model – NYT
• Automakers and Banks: A Double Standard – by James Suroweicki – The New Yorker

Executions for Sexuality

Here’s a story American Corporate media will ignor

Ahmadinejad said there were no gays in Iran and his fellow Shia who now dominate Iraq are having a mass execution of 100 supposed “criminals” many of them for the “crime” of just being gay. This is the supposedly wonderful democratic government we created in Iraq that is killing “gays by the batch” (story) “20 criminals” in each batch.

 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING