Investors 411 Blog

Crossroads – Nation Building

Violence in Pakistan

The Huffington Post has become a major focal point in opposition to expanding in Afghanistan.  Site founder Arianna Huffington has an excellent article “Why Joe Biden Should Resign. ” LINK Biden has opposed the Afghan buildup in favor of a focus on Pakistan. Three of you have chimed in on the blog and agree that since Pakistan has Nuclear weapons, many more al Qaeda and affiliates it makes sense not to focus resources (financially 30 to 1 ) on Pakistan instead focus on Afghanistan. 41 were killed yesterday in a coordinated attack on Pakistan Police stations. LINK

Looks like we are going to have a do over election in Afghanistan LINK and then send in more troops for another long costly war.  After that Pakistan, perhaps Yemen, the Sudan, Iran, then back to Iraq.  The LOOOOOOONG war in Afghanistan means nation building in a country whose #1 export is opium not oil.  How are we ever going to get out of debt while spending trillions nation building?

Seems like Obama without Biden is going down the same path as Cheney/Bush .  From an editor in London, Simon Tisdall – “With friends like the US, Pakistan doesn’t need enemies.” LINK Another from Paris by William Pfaff LINK Another from Paris by William Pfaff LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+0.47%	down
NASDQ	+0,05%	down
S&P500	+0.43%	down
Russell2000	-0,10%	-

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

Last hour rally lifts stocks. Always bullish to close at highs of day. Volume falls. We held onto Dow 10,000 and that’s psychologically bullish. Holding Dow 10,000 into weekend important

Google hit and IBM missed earnings reports. Last night GOOG was up 3% and IBM down 3% in after hours trading. GE and BAC missed this AM.

Good news is NOT having the positive impact it had last quarter. How markets react to news is our #2 confirmation factor. It has turned BEARISH

Warning – Financial sector seems ready for at least a light correction. 1120 on the S&P in technical terms a 50% retracement number. If you don;t know what this means – just think the S&P is at 1097 and there is a big boulder in the road ahead to 1200.

Famed investor George Soros this AM is quoted on CNBC saying  “the US will be a drag on worldwide economic recovery”

Rotation/Sector Rotation

What happens in a bull market is different sectors take over leadership. Leadership rotates. So far in the US – energy, tech and financials have lead. Many foreign markets have broken out before the Dow and other indexes reached new yearly highs. (Brazil, Chile, Australia, Mexico, Germany plus more) The US sector now in the lead is energy. Rotation is what the bulls love to see. It’s like a relay race where another runner picks up the baton or carries the markets.

The supporting themes that juices everything is a falling dollar,  the huge stimulus packages around the world, & bailed out shadow banks/financials.

Oil prices have now also broken out over $77 (new yearly high) and if they go north of $80 Main Street is going to get hit and Wall Street will eventually feel it too.

——–

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 two days ago and has fallen 99 points. It shot up a significant +91 points yesterday and closed at 2688 =  Bullish for stocks & world trade right now

——-

$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

Stocks went up so guess what happened to the dollar – The dollar reached a new yearly low two days and steadied yesterday at +0.04 % The dollar closed at $75.50. 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.
• A slow decline in the dollar = good a rapid decline = bad .
  

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

Positions

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

I will try to revise this section to make it clearer – Open to any private suggestions – just went over it today.

Recommendations-

• Buy GLD on dips.
• Our other positions have gone way up and are NOT worth chasing at this time .
  
• If you are a stock picker or short term trader do not chase hot stocks – wait for a dip. Everything seems overbought. Financials on dips still decent plays. Looks like dip is coming.
• Traders – Bought small position in CSCO a few days ago
• Traders – NVS (Novartis) 11+% profit so far. Usually would take profits now or at least sell 1/2, but going to wait till swine flu hits.
• Having reached a higher high on major indexes, you start to think more about how much to hold and how much to sell.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Dow 10,000

Yesterday the Dow closed over 10,000.  Some major facts that cheerleading American corporate media has ignored about Dow 10,000

• The Dow was at 10,000 ten years ago. Buy and holding stocks over the last 10 years has really LOST money. A whole lot more than you think
  
• If you adjust for inflation the Dow is really at 7,537 – you lost 25% of your purchasing power. Thanks to one of you who sent in this LINK
• If you compare the Dow to Gold (in some ways this is like showing how far the dollar has fallen in value relative to other countries) “It cost about 30 ounces to buy the 10,000 Dow last time. Now it costs less than 10.” The  loss in purchasing power becomes even bigger.

Therefore, relative to the rest of the world and inflation major US companies/the Dow has taken a huge fall over the last 10 years.

Relative to this years Dow low 6470, Dow 10,000 sounds mighty good .  Financials have lead this Dow/Stock Market recovery from 6470 to 10,000.

• JPM * (see below) just announced multi billions of dollars in better than expected profits. So will other shadow banks
• These financials are giving big rewards to top executives who still look for ways to make bets on money (Credit Default Swaps etc) and are building up hoards of cash in order to have collateral on these hidden bets.
• Obama and his Wall Street administration have even made it less transparency for shadow institutions – mantra, we now have NO mark to market accounting.
• The banks are not making loans to small businesses like they’re supposed to and the gov’t instead is making those loans/gifts – cash for clunkers, tax cuts, $8,000 first time homeowner gift etc.
• These big shadow institutions are here to stay. LINK according to Obama’s administration “the genie is out of the bottle.” Looks like these huge unregulated institutions are here to stay.

Therefore shadow banks, the creators of “financial weapons of mass destruction” (Warren Buffett quote) rule. Obviously those who robbed you and brought the world to its financial knees are being rewarded. Investors411 has screamed about the injustice and future doom of continuing the  hidden financial system, but it has contributed significantly to the Dow reaching 10,000.  Like greedy little pigs we are again building a financial system on illusion.

Investors411 recommends the following  (see overview for more)

• Traders – Play the financial stocks (shadow banks). They rule. Ride the wave. Dow 10,000 means lots of wealth has been again created for upper middle to ultra wealthy. Some of this will get spent and help the American economy and the blackmail shadow banks have is if they go under so does the stock market . Never forget we are only building another hidden asset bubble
• Long Term Investors – Do what everyone else is realizing buy Gold GLD (see past Investors411)
• Long Term Investors – Buy countries that create wealth by manufacturing real goods or producing real commodities – China & Brazil

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.47%	up
NASDQ	+1.51%	up
S&P500	+1.75%	up
Russell2000	+2.00%	-

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

“Expect other indexes to follow Gold & Brazil. ” (Both GLD and EWZ have broken out to new 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.

Volume showed a wee bit of new money did come into the market, but let’s see if it gets sustained. CNBC and everyone who has money invested in Wall Street is cheerleading for that money to return (see above editorial)

So we’ve had at least a one day rally, but more importantly we’ve fundamentally had top line (sales) growth from Intel and some minor companies.

* JPM , Perhaps the #2 shadow financial institution also hit an earnings home run. Remember, instead of TARP money going toward the elimination of bad debt (credit default swaps) all the Bush and Obama administration have done is shovel money at them and allow them less transparent accounting. Most likely shadow banks/financials are hoarding funds because their real debt from the financial crisis is still huge.

Google & IBM are the next major tech to report after markets close today.

——–

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 two days ago and has fallen 99 points. It fell a -49 points yesterday and closed at 2579 . Even though a reversal seems eminent, we have technically achieved a higher high even though the BDI is falling.  Another 100+ point drop well start to get a little concerned and the line in the sand support level is 2163 =  Bullish for stocks & world trade right now

——-

$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

Stocks went up so guess what happened to the dollar – The dollar reached a new yearly low fell a significant -0.46 % The dollar closed at $75.47. 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.
• A slow decline in the dollar = good a rapid decline = bad .
  

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

Positions

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

See comments section of blog for a complete update on positions.

EWZ – Brazil up +4.05 % yesterday is starting to go parabolic.  It’s going up way too fast as investors are chasing the stock.

GLD – Remains a solid buy the dip opportunity (even small dips)

XLF, UYG & FAS (big financials/shadow banks) are also buy the dip opportunities . UYG is riskier and FAS is most risky. Traders could see a buy the dip opportunity today.

Sold FAS yesterday for +8% profit

Your (Monitor’s) Questions – See comment section of blog

INTC did fizzle yesterday – up only +1.66% vs our positions in China (up +3.55% ) and Brazil (4.05%) Technically, Intel had gone up almost 40% last quarter and a whole lot right before earnings – so the higher price was already built into the stock. China & Brazil have not had the same huge run up, although Brazil is reaching the same overbought position that INTC.

For US and other countries to move forward we’ll have to see other companies show top line sales growth.

Outlook is still CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!