Bubble’s Bursting

YOU feel like you’re standing in a room and looking around with everyone else to see if anyone else notices there’s a massive time bomb about to go off and no one is doing anything about it. You watch politician’s babble about cutting waste, foreign aid or welfare recipients and realize that’s what’s been done for 20 years and there’s less than 2 or 3% of this budget left to cut. Here’s the naked reality

• Medicare & Medicaid are going to explode in cost as baby boomers reach retirement
• Social Security payments are going to explode too. Each of these entitlements alone dwarfs political babble about cutting waste etc.
• Military/weapons spending exploding higher and now is the #1 government spending category
• Tax cut advocates are screaming for more and crashing planes into buildings
• Our shadow financial system has drained trillions in further resources and remains in the shadows.
• Health care cost are exploding out of control
• Massive private debt (credit card,housing,job loss etc) is driving many Americans into despair.
• Massive debt crisis in US  trade
• Housing bubble has burst

When you consider all this it seems like a miracle that Obama has kept the American economy & the stock market afloat.  Politicians on every side think more their own power instead of getting something done.  You get so sick & tired of listing to politicians blaming others and calling for “a dose of reality” instead of sitting down together and getting something done. Meanwhile – Tick Tock, Tick Tock, Tick Tock – BOOM.

Investing Bottom Line – These financial liabilities and our inability to solve them are why it is  no longer safe to buy and hold US equities.  The potential of financial bubbles growing and bursting are just too great. Our government just too polarized. It’s hard to see a decade without continued financial meltdowns.

Death Toll = 1000 in Afghanistan

Obama has joined Cheney/Bush and continues to try to nation build in Afghanistan. US on Feb 19th reached 1000 casualties.  Obviously, the surge of American troop here has a lot to do with upcoming wars in Iran (Afghan. & Iraq surround Iran) and Pakistan (Afgan also boarders Pakistan).  We’ve seen our military budget double over the last decade and its continuing to grow perhaps faster than Medicare, Medicaid and Social Security will.

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 , Strategy , and Overview for changes made over weekend.

US Consumer Confidence plunged yesterday. The monthly index had just hit a 16 month high and it plunged yesterday. Simply put Consumers are worried about the economy. They make up @ 70% of GDP.  After a solid 3 month rise the unexpected fall from 56 to 46 could means the consumers fell like they took it on the chin last month. This is bad news for the US economy, but many US stocks are rebounding because of Asian and Emerging market growth.

There is obviously a disconnect between US stocks and the US economy US Stocks can rise without the US economy because many of them rely on profits from abroad.  But, Europe is in trouble and emerging markets alone are not big enough to carry the res of the world.

Markets fell as volume rose. Volume was slightly above average. Would have expected more volume. Surprised that US markets did not fall further.  Another indication that many long term investors are simply not interested in stocks = Bearish signal

Two Major events today. Toyota’s embattled CEO & Bernanke in front of congress

Significant Indexes

• McClellan Index fell to +18.33. + or – 60 is our overbought/sell or oversold/buy levels.  +18.33 is approaching neutral or 0

Positions

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

Sold another 1/3 0f TYH at 131.35 for a +6% gain. I’ve also set what’s called a stop/sell orders  on

• recently bought (added to) EWZ at @ 2% above what it was bought for
• 1/2 of MOO, a longer term position.
• The remained of THY

This is just protecting gains before they turn into losses

McClellan Oscillator is not close to buy or sell position.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Climate/Energy, Cap and Trade, or Waxman-Markey Bill

photo from Treehugger /flickr

Tom Friedman here weighs in on the climate/energy bill that goes under the  many different names used in the above title

It’s easy to agree with Friedman who thinks that the Republican Party is becoming the party of “sex scandals and polluters.” Earlier this week Investors411 went over two significant reasons to back this bill – It fights global warming and reduces pollution.

Another fact on pollution smog increases the chance of premature births by 128% here

Here’s reasons 3 and 4

Changes Mindset and Produces Jobs .

Friedman-”if this bill passes. Henceforth, every investment decision made in America — about how homes are built, products manufactured or electricity generated — will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable.”

What all this innovation means is new industries and jobs, jobs, jobs.

Stops Groveling to Petroleum Dictators

This is one significant step toward alternative energy and away from dependency on oil. The USA has reached peak oil decades ago and our domestic oil production is more than 1/2 of what it used to be link here The era of cheap oil  is over. New technology will squeeze oil out of shale and dig miles beneath the ocean to make up some of the loss but this gets very very expensive.

Oil production is dominated by a cartel and dictators whose butts we have to kiss to get the supply.  Look how cautious the world is on condemning “Supreme Leader” & Iran because they have oil. We spend trillions on the military to fight oil wars and ensure oil supplies. Why not encourage alternative energy instead? It would save lives, save future trillions in military wars, promote democracy and lead us toward energy independence.

Bottom Line – Reality is this Bill is a small step and watered down. But we have to take the first step now

Iraq

Most recent polling data on Iraq withdrawal here

• 73% favor withdrawal 26% opposed
• 52% violence will increase, 32% violence stay the same, 15% decrease
• Almost 66% believe we should NOT go back if violence increases.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals and Fundamentals

Volume was still well below average. Up slightly for NASDQ & Dow, but moderately for S&P 500. Volume is still giving no clear sign of market direction.

How markets react to news is another significant forecasting tool. Yesterday consumer confidence numbers for last month came in more negative than expected and that according to most sent stocks down. Reacting negatively to bad news is a bearish sign

Of course this could get balanced by the markets reacting positively to good news. This would = a neutral market.

All this makes Thursday’s (I stated Friday earlier this week-number of different sources making conflicting statements – ) monthly unemployment numbers the major fundamental catalyst for the week.

Technically the consolidation pattern continues.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI up for second day in a row. Long term Bullish although consolidating right now.

$USD - The Dollar rose +0.39% . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up= markets down. We are in a month long consolidating pattern after a multi month fall Long term Bullish pattern that is consolidating (neutral)

This correlation pattern could break down in the future, because oil is bought in dollars and oil also goes up as dollar goes down.  Higher oil prices are a danger to fragile economic recovery

VIX – Measures Volatility in S&P 500.   The less volatility means the better investors are feeling. Yesterday the VIX rose 3.94% yesterday. This is a moderate move higher.   Longer term 4 month trend down and we are near Sept. 08 lows. Bullish long term trend for stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING