I took these two f lame throwing, anti big bank/financials photos from website CommonDreams

2010 Economic and Stock Forecasts

To make an overall forecast let’s look at the past decade and year & the mega trends So here’s the Good, the Bad, the Ugly Almost all the Bad emanates or is focused on the USA

The Bad

• Free Markets are NOT self correcting – This lesson has been taken to heart by many (see the good – yesterday’s Investors411 ), especially those outside the USA. Unfortunately , all you have to do is watch any of the cable business channels, read the WSJ, IBD or most business publications  to realize that they are fighting tooth and nail against any regulations and continue to have us (the taxpayers) pay for their greed. Even a new Consumer Protection Agency is being blocked by Republicans. Both parties are almost entirely owned/influenced/bought off by business lobbyists and their money.
  
• The Deficit -  Time magazine called it the Decade from Hell One reason is the HUGE deficits that started to build when Bush won in 2000. Frontline’s $10 Trillion and Counting chronicles how the deficit grew – cutting taxes, expanding  wars, huge spending programs etc. Once Obama got in office he added to the deficit to stimulate inherited stagnant growth. This only made the deficit worse. Add to this our love of credit and you have the potential for another decade that may be worse .
  
• Growth of Hate and Fear Mongering – "You’re either with us or Against Us" – The growth of hate goes far beyond the fact that we have far more violent crimes than any other industrialized democracy. We are taught to stereotype and hate everything – Europeans & Canadians (socialists), Mexican’s (illegal’s) Arab’s (terrorists) Russian’s (a threat) Chinese & Saudi’s (owning America) liberals (weak tree huggers) education (elitists) science (anti religion or anti business) and the list goes on and on. Hate and fear sells everything from products to politics and its growing.
• No Economic Progress – Nobel Prize winner Paul Krugman calls the last decade The Big Zero – No job growth (globalization a big factor), the Dow dropped from 11,000 to 8,500 under Bush, plus more in his editorial. The Dow has rebounded under Obama. However, that’s because Obama has kept the same  tax cuts, deregulation, expanding wars, and this time perhaps necessary spending  as the cornerstone of his economics. Another bubble is building . If your in the upper 1 or 2% economically this was the decade from heaven, but if you’re a working American you’re in a hell of a hole. It’s going to be a long time before we dig out.

Coming up - The Ugly – However, you can see why Investors411 has beat the US stock market Indexes for the past 5+ years by investing primarily outside the USA . (See below for this year’s results) Apologies – I did leave out 911 which was a horrific event and other acts of terrorism.

Coming up tomorrow the Ugly

YOUR Comments

• The Cynic comments on a very funny political Jib Jab video
• Stewart on Republicans. His comments are worth of entire editorial
• D on a web site that locates community banks. So get off your (skinnier ?) butts and out of those banks that caused the financial meltdown. (see yesterday’s updates)
  

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!

Index	Percentage	Volume
Dow	+1.50%	up
NASDQ	+1.73%	up
S&P500	+1.60%	up
Russell2000-	+2.35%	-

Investors411 record – 5 years of beating benchmark S&P 500 and most major US indexes

Technicals, Fundamentals & Analysis

Most Sections of blog have been revised (or are under construction for 2010) See Positions , Strategy , and Overview for changes

Significant rally in increased and a bit above average volume. A clear across the board day where some new money flowed into US markets.  Strongest bullish sign in several months . It would have been better if volume was larger.

• McClellan Index at +24.74 = A bit overbought. This means we have some wiggle room for US stocks to move higher before they reach +60 or overbought territory.
• The Dollar fell a significant -0.56% The inverse relationship helped stocks move higher .
• The Baltic Dry Index has moved up since 12/24 - Short term bullish , especially for China.
  

Right now this certainly looks like a market that has "wiggle room" to move higher into Friday’s monthly jobs report. The BDI is moving up and the dollar dropping should give bulls some additional ammo

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

Results for 2009 . + 35.5% See POSITIONS (scroll down) for details

Monitor (see comments on right side of blog) was right @ 60% of gains came from two positions in China (FXI ) and Brazil (EWZ )

It now looks like it was a big mistake to sell UWM last week. Oh well, nobody goes broke taking a profit, even a tiny +2%

Check out some of YOUR recommended stock picks made over the last  2 week. Some have broken out big time and/or moved significantly higher Use the calender at top of blog.

Short term traders (not longer term investors) may want to go long (something like EDC, TYH or ROM )  until Friday’s job’s report. See POSITIONS

Long Term Outlook = CAUTIOUSLY BULLISH

The 3rd Surge

Fareed Zakaria, editor of Newsweek asks – Do we need a Third Surge in Afghanistn? LINK

• In Jan 2008 we had 26,607 troops in Afghanistan.
• The first “quiet” Surge under Bush added almost 22,000 to 48,250 by the end of 2008
• The second surge in 2009 under Obama we added @ another 20,000 troops
• Now “generals” have turned up propaganda for a third surge of 40,000 to 80,000 more troops.
• The total surge in Iraq was only  20,000 troops.

Zakaria offers an interesting alternative strategy. You may or may not like Zakaria’s strategy. But, it is is certainly far less costly than nation building or colonialism throughout the Arab world . See link above.

Two huge bombs went off in Baghdad Iraq today killing hundred(s) (to early to tell how many died) LINK

Just a reminder that in Iraq the Shia slaughtered the Sunni’s (many who were terrorists) and million(s) fled or faced slaughter.  This had a huge impact on entrenching the new Shia dominated government. The new Iraq Shia led government is corrupt, sustains high unemployment, and along with Hamas and Hezbollah was the first to recognize Holocaust denier Ahmadinejad in Iran even while he was brutally crushed the “Green Revolutions.”

The two major Shia religious figures in Iraq with millions of fanatic followers -  Sadr, embraces Ahmadinejad and Sistan i remained silent about “Green Revolution..”

We are about to enter our second decade of nation building or colonialism in the Muslim world that continues to add trillions to our deficit .

US and world markets had one of those now rare winning days (see chart below) so lets take a look at the trends in American politics.

Hoping Obama Fails

Remember the Republicans all during the Iraq war accusing their fellow American’s and the rest of the world “you’re either with us or against us.” Now, radical right winger Rush Limbaugh who seems to have taken over the leadership of the Republican party is actually proudly broadcasting “he hopes Obama fails”

__________

Where’s Waldo

Has anyone seen or heard from the former president?

__________

Disintegrating Republican Chair

The Chair of the Republican National Committee is supposed to be a fellow called Michel Steele. Well he took on Limbaugh calling him and “entertainer” whose show was “ugly” and “incendiary” After a day of getting blasted by Limbaugh, Steel did a 180 and apologized. Almost every right and left wing blog is gushing stories on Limbaugh filling the void of leadership in the Republican party and the huge blow to the image of the Republican party.

Reminder – everything in light blue is a link to a different source – like the two above. Just click on them.

_________

Obama’s Mortgage Plan

Yesterday Obama/Geithner unveiled their mortgage plan to keep 9 million homeowners in their homes. Markets did move higher, in part on this news.(see below)

__________

A PHD from Oxford and Funny

If you think Phd from Oxford can’t be funny, political and relevant, then you haven’t watched Rachel Maddow Last night the commedian/poltical satirist was on Jay Leno. Maddow has a show on MSNBC at 9:00PM EST

__________

How to Bring Down the Deficit

Simple Stop empire building and approving hundreds of billions for  unneeded cold war weapons systems. We thought Obama was going to to take this on, but if  his slooooooooow Iraq withdraw plan is any indication of  the direction he’s he’s taking this country we’re in for Bush lite. American’s are so paranoid that we spend as much on the military as the whole rest of the world combined.

__________

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Stocks

-

Index	Percentage %	Volume
Dow	+2.23%	up
NASDQ	+2.48%	flat
S&P500	+2.38%	up
Russell2000	+2.85%	-

-

Technicals & Fundamentals

Finally a green day across the board for US and most of the world’s stock markets.  Maybe it was the 75 billion mortgage plan, the China stimulus plan or just what Investors411 has bee predicting and oversold technical bounce that moved stocks higher.  Most likely a combination of all three.

The monthly jobless report is big news (announced Friday) and its going to be hard to see stocks move higher today in front of the jobs report.  In this case traders (there are very few investors left) may sell the rumor (worse than expected jobs report) and buy the news (an in line with expectations jobs report)  This could extend Wednesday’s bullish reversal. I’m trying to be optimistic

All our secondary indicators remain mildly positive for the bulls. See charts of BDSI, Treasuries & Libor on right hand side of blog.  Of special interest is the Baltic Dry Sea Index that measures shipping. Seems like China is still importing and exporting goods.

The major problem continues to be investors realizing just how many trillions of dollars of wealth has evaporated as major financial institutions posted unregulated, fraudulent, over leveraged profits from what was basically an insurance scam.

Our government and these companies continue to hide their losses and few like Senators like Bernie Sanders seems to be wiling to go after them. (see yesterday’s update.  

Today NY AG Andrew Cuomo is going after Bank of Ameica/Merill Lynch for exorbitant salaries. This is flashy, but it doesn’t emphasize the size and scope of the damage done by financial institution over the last decade.

Long Term Outlook = BEARS RULE

See STRATEGY, POSITIONS, OVERVIEW  & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Mumbai

Obama can say I told you so – The center of terrorism is located in Afghanistan and Pakistan not Iraq.

Hopefully, India will not repeat the same mistakes the US did and over react. Still the best site/blog for information that is detailed and certainly is much more accurate in analysis than American Corporate Media is Informed Comment . You have to scroll down to Dec. 1. for India.

Green

If Spain can generate 30% of its electric power from renewable sources by 2010. Why can’t we do the same by 2020. = See Wikipedia

Deficits and the Future

Every right wing commentator and stock analyst loved to bash NTY’s Nobel Prize winning economist Paul Krugman (like other Nobel Prize winner he does make mistakes) But he was out in front of the current financial crisis. His latest editorial – LINK

Conclusion- "The best course of action, both for today’s workers and for their children, is to do whatever it takes to get this economy on the road to recovery."

"American’s Look for Next Bubble to Invest In."

The Onion headline from yesterday (above) Updates labeled the "shadow" banking system – the bubble folks were investing in last week.

In one sense the financial sector with all its toxic debt desperately needs investors. If it does not get investors the giant financials crash and the taxpayers will again have to bail them out with loans. The trouble here is who wants to invest in something that is not transparent and full of "toxic" debt.

Volatility

It’s almost impossible to recognize any trend when stocks take such huge moves. Fundamental economic factors like peak oil and globalization become less relevant in the face of a growing long term recession.

The technical series of lower lows and lower highs (on price charts) certainly is still in place creating one clear trend = Bears Rule

Stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Headline – Volatility

Index % Change Volume

Dow -7.70% -
NASDQ -8.95% -
S&P500 -9.93% -
Russell2000 -11.85% –

US Market & Foreign Markets

Technicals

US markets got clobbered again with another one of those major meltdowns. Volume the chief confirmation factor was below average. Friday was a 1/2 day so volume was obviously up relative to Friday.

The massive flight by Americans and foreigners to US Treasury bonds (See chart of 3MTB and other Treasury bonds listed below.) shows potential investors are willing to to put their $ in other places than stocks in some cases for a long period of time.

Still a massive sell off in weak volume means volume did NOT confirm the rally. Therefore, a wild swing in any direction is possible likely today and for the rest of the week.

Chart of the benchmark S&P 500

Chart of the Russell 2000

Chart of the NASDQ

Chart of the Dow

Fundamentals

Citibank and other financials led a rally – but no other indicators followed. You can have a technical rally for so long, but if major fundamental factors don’t follow the rally will run out of steam. Too many people were putting their $ in treasuries, not stocks. There are only a very limited amount of investors out there and most folks playing the markets are short term traders.

Its official – we’ve been in a recession for a year.

Auto makers are back in front of congress asking for $ this week.

Three Month Treasury Bill & LIBOR

Credit markets are the dog and the Stock Markets are the tail. Without credit the tail won’t wag.

Real progress WAS being made. The credit spreads are tightening and LIBOR has fallen from 4.8% a five weeks ago to @2 .2 LIBOR rates have flattened over the last three weeks. LIBOR is the rate banks charge each other, not businesses. LIBOR is the rate banks charge each other.

The 3MTB fell -50.0% yesterday and closed at a rate of 0.01% The Fed rate is 1.00% . A normal 3MTB would be just under the Fed rate. – The situation is beyond dismal.

PANIC REIGNS in the credit markets again (check out chart)

3 MTB chart

LIBOR chart (3 month)

Treasury Bonds

All yields fell dramatically from 3 MTB to the 30 year treasury bond. If investors are putting there money here for 3 months to 30 years they are NOT investing in stocks.The silver lining in this panic to find a safe place for money is people all over the world are choosing the USA. This is part of the $ we use for bailouts or loans.

{Now using data from Yahoo financial – In part because it also lists municipal and corporate bonds.}

These is simply NO confidence in the credit markets and a massive flight to US Treasury bonds at all levels. PANIC RULES

Baltic Dry Index

The Baltic Dry Index is a forward looking indicator that measures pre production materials that are shipped around the world.

Bloomberg has a good interactive chart on this. You can see how this measurement of goods shipped throughout the world has dramatically dropped. Its fallen over 90% this year.

Set range indicator to one week and you will see this chart has dropped from 825 to 715 or a drop of @ 13%.. So while stocks rallied 15+% last week the amount/ price/measurment of raw goods shipped around the world fell dramatically. This is a clear further indication that worldwide recession is growing.

Short Term Outlook

Reading the Tea Leaves – italics = same comments as yesterday.

PANIC RULES the credit markets and its hard to see money flowing into stocks while so many potential investors are putting $ in treasuries at ridiculously low rates. The Balitic Dry Index chart alsois a major concern

Going Out on a Limb – Dow at 8929. We could rally some more. But, its hard to see the major 9654 resistance level fall and perhaps some of the more minor resistance levels will reverse the rally.
Start thinking to adding SHORTS (see list of ETF’s that short) to protect any long term gains you made when stocks had their last major dip. Best guess – today up tomorrow down in wild swings.

Looks like adding shorts to protect gains was the right call – However in the short term (today +) Volatility Rule. There are no logical long term positive trends. Short term traders are going to swing the market up and down.

AS ALWAYS DO YOUR RESEARCH BEFORE INVESTING

Long Term Outlook – BEARS RULE
Changes to Bottom Line Section Bolded

Technicals – Series of Lower Lows and Lower Highs = Bears Rule

Reading tea leaves – Look for range between 7449 and 9654 for rest of year.

Fundamentals – Financial mortgage transparency problem (credit default swaps $50 to $70 trillion ?) is far far far far far far far far far bigger than anyone thought.

We are in a recession. How bad/long the worldwide recession will be is be is the major question. It’s looks like the recession will last through 2009 – perhaps longer Hopes of a more competent Obama administration have rallied stocks.

Asset Allocation/Recommended Sectors (long term)

50% to 90% Cash – This depends on your risk tolerance – Long Term Investors (up to 15+% stocks – only buy big dips) Wait for the next big dip to add 5 to 10%
Be Cautious and PROTECT YOUR MONEY (15% Longs ) when stocks rally

*5%+% US Index Funds
UWM (ETF that does 2x what Russell 2000 does) & QLD (ETF that does 2X the NASDQ ) DDM (ETF that does 2X the Dow ) SSO (ETF does 2X the S&P 500)

*5%+ Emerging Markets
EWZ (Brazil) should out perform other emerging markets in a rally and under perform in a fall – highest risk
FXI (China ETF)

*5%+ Alternative Energy
GEX(Alternative energy ETF) Obama administration will focus on this area

*5% Gold
GLD is the ETF for gold

Chief Strategy – Buy the DIPS of trending sector – This is not your fathers market-over the 8 Bush years the Dow has gone from 11,000 to 8,500 and uncertainty clouds the future.

The major trend now is volatility.

Traders who have a strong tolerance for risk jump in on dips and invest more. Sell or go short into major rallies. Long term Investors who can tolerate risk and are 100% in cash nibble just a little on big dips. (5% on each big dip) Do not buy into rallies.

Shorting – Three ETF that short 2x what the major indexes do.

TWM – ultra short Russell 2000
QID – ultra short NASDQ
SDS – ultra short S&P 500

As Always Do Your Own Research Before Investing