The Problem/The Sky is Falling/The bailout

In 2008 it became apparent to many that shadow financial institutions had become over leveraged by placing bets on mortgages (credit default swaps).

• Our unaudited Fed engineers a deal to save mortgage giant Bear Sterns and it merges with JP Morgan. No one knows what $ the Fed promised to make this happen. JPM later gets big chunk of TARP funds. Other smaller mergers happen.
• Lehman Brothers goes Bankrupt in Sept. 2008. Lehman claims lots of assets, but by the time they fell apart they had $613 billion in Debt and could only raise $1 billion in cash.
• Lehman debt spreads throughout the world, people realize how over leveraged all the other shadow financials must be, housing prices plummet, and stocks begin to fall. SPX goes from 1500 to 666.
• Treasury proposes TARP. Treasury/US government (the only entity in the world with power to stop fall) proposes to buy up bad debt and sell it later.. Paulson/Treasury later changes this to loaning shadow financials money $700 billion. ($50 billion or less has not yet been repaid)
• Stocks keep falling and QE1 introduced. Fed prints and dumps a trillion plus more dollars into economy. Finally stocks stabilize and start to move up There’s more but lets take a look at what happens if these actions do not take place

What If Absolutely Nothing Was Done?

You lived through the panic after the Lehman collapse. Now add this – What if the second largest mortgage company Bear Sterns collapsed on top of that? Add perhaps 3 time larger insurance giant AIG collapsing. It’s debt all owned to other shadow financials who themselves were up to their eyeballs in over leveraged debt. They too collapse like Lehman.

• The weekend before TARP, a run on AIG had started across the world. AIG who insured the shadow banks goes down then one bank collapsing after another because their collateral is no longer solvent. People panic and media adds to the frenzy. Everyone realizes. Lehman was just the tip of a giant iceberg of debt.
• Belly up goes AIG, BAC, Citi, Major European banks, GE, Fannie and  hundreds/thousands other major/minor financial institutions. No one knows which bank has how much debt, so people take their $ out of all banks. Fear grows hyped by the media.
• Stock market goes far lower than SPX 666
• Bonds of these banks collapse. Even with just Lehman’s collapse BAC bonds went from 100 to 82 before recovering. (An institution I am treasurer for owned these bonds)
• Financials, Fannie & Freddie bonds were the backbone of many money market funds (Think Fidelity, Vanguard etc) They or their insurance agent go belly up as the bonds become more worthless. You may have received a negative return on your money market fund depending on how are the panic had spread.
• Home prices plummet way way way way down.
• Not knowing which banks are shadow banks panicked investors pull their money from all banks. You know how suseptable your fellow Americans are to fear and fear mongering. Worldwide run on banking results. – a financial armageddon.

So a worldwide financial meltdown was averted.

That’s the good news now for the bad.

• How deep is the shadow financial hole? Fed engineered Mergers, TARP, QE1 now QE2, POMC and an UNAUDITED Fed who can had loans money at their discount window and/or use some other opaque means to fill the over leveraged gap of the opaque shadow financials.
• All of this cash used to fix the problem creates imbalances in the economic system that magnify the trillions gone into filing the shadow bank hole. Beyond my understanding, but nobel prize economists like Joe Stiglets and others get it.
• By 2008 we had already created a huge debt by going to war, cutting taxes, pork spending etc. So this new debt was built on more debt.

The UGLY

• There is no regulated financial derivatives exchange.
• We did not return to the old laws that prevented over leveraging in the past or end too big to fail. Congress passed are weaker measures.
• Dopamine When you get high the dopamine centers of your brain are activated. You get addicted to this pleasurable feeling. Sometimes like running its a heathy addiction. But with drugs or greed you keep needing bigger doses to obtain the same high. Physiologically those that run the shadow banks are not going to change their ways unless there is enforcement.

I left out stuff and will be back to Obama’s negatives next week

Mantra - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors.” Looks like next Wednesday Fed meeting is the big event.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.”

Elizabeth Warren

Fireworks Again

23 Comments yesterday. WOW. You tied a record. Most on politics. It ended at midnight with Yankee Bob on Fascism. You can scroll down to the bottom HERE to read them all. Some strong opinions, and let’s try to be civil.

I told Jim J I would publish his list of candidates to donate to Monday or Tuesday. You can be sure Tea Party candidate that JS (not me) called a “Whack Job.” will not be on it.

Elizabeth Warren

Bravo Elizabeth Warren has been chosen by Obama to set up the Consumer Protection Agency and start running it. The Right Appointment at the Right Time editorial by Simon Johnson.

Poverty Rate Rises

Poverty is on rise. Republican response to their fellow Americans “Let Them Eat Cake” or repeal all of health care. There are many parts of the health care bill I oppose, but repealing the whole thing is just wrong. More on the poverty rate in the US declining for a decade – The Lost Decade from WSJ

Back in 2008 Investors411 warned that the economic meltdown was “far, far, far, far, far, worse” than what people expected. One forecast you hate to have come true.

Digging In Heals

You may think of him as Darth Vader (Democrats – Larry Summers and Chris Dodd constantly compete for this title) But when he speaks its usually policy. Larry Summers – “Maintaining tax cuts for top wage-earners should take a back seat to other more pressing measures, White House economic advisor Larry Summers said, in a signal the administration could be digging in its heels on the issue. ”  From CNBC – All right Larry – something positive. Darth Vader title goes to Senator Chris Dodd for now.

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!

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Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day – Baltic Dry Index – From Investopedia

“A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed)

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.”

US Markets – It’s a ghost town out there as volume remains pitifully weak.

This is the third Friday of the month when options expire. Almost always this day lacks technical significance unless a major fundamental surprise occurs.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.31% yesterday.  Falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -3.63% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. Fourth down day in a row with rate of fall increasing. After 8 week bull run trend changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell again to +22.38 yesterday. Note while zero is the center of this chart the 50 DMA is at 19.33 That’s a support level. = NEUTRAL

Reading Tea Leaves

If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise.

However, it’s hard to put significance on an options expiration Friday. Perhaps Monday will be the key.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

Current positions –  EWS (Singapore).

Same basic outlook for traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble

Investors – Wait for a bigger drop in MO before going long.

Also if, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Iman Rauf of NYC Islamic Center

Confirmation of 5% Doctrine

Last Friday Investors411 led with Gail Collins’ 5% Doctrine. The Islamophobic fear mongering that was started over the NYC Islamic Culture Center has spread. The Florida minister’s didn’t burn the Koran, But  two other Ministers actually burned Korans on 911 ( includes video) By in large the American media has kept this quiet. Others are attempting to do so.

The Iman, who has said the doors of his Islamic Center will have rooms for other religions to pray and will honor the 60 Moslems & other Americans who died on 9/11, said canceling building plans will have the same kind of negative impact the Koran burning would have had by the Florida pastor throughout the world. General Petraeus is 100% right in his call to protect the troops and NOT to burn Korans.

Bottom Line –  from Steve Clemons – Do Muslim Lives Matter?

Elizabeth Warren for CFPB

Another  editorial by MIT prof Simon Johnson on why Elizabeth Warren would be  great for the position as first head of Consumer Financial Protection Bureau.

Every time the Dems call/email me asking to contribute money. I reply when Warren gets appointed then call me. See the debate on contributing $ for the November elections in comments section of blog.

Quote For the Week

“The Jews have lived an existence that is much harder than ours. Nothing compares to the Holocaust.” Fidel Castro in criticizing Iran’s so called President Mahmoud Ahmadinejad. Odds by Intrade of an overt US or Israeli air strike on Iran – Bid 24.0% Ask 24.4% by end of next year

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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!

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Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term of the Day – Double Dip Recession - From investopedia “When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.” This is perhaps the major worry on Wall Street and Main Street.

Rally with pathetic volume on Friday. Low volume rallies have been the reality for major US indexes for many many moons. BB/HFT’s dominate and the # of retail investors are diminishing. As explained in past Investors411, this forces anyone who wants to invest to look at US stock markets differently than in the past.

Example – Low volume rallies would send technical analysts jumping for the sidelines or out of stocks.  Now, they are a wave to ride until we reach oversold positions (see MO below)

What’s up for this week – “A Dash of Insight” (a pun – but you have to know about the author) on the week ahead by Jeff Miller OK so most of you will skip reading this, but if you want to have an understanding of the different types and health of trees in the investment forrest its well worth the read

High Dividend stocks – Investors411 has recommended High dividend stocks as an outperformed in troubled times because they have two potential streams of income for long term investors – Appreciation in price and potential dividend. Here’s an editorial on 5 potential high dividend stocks

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, rose avery minor +0.01% higher Friday. Dollar in 4+ week long trading range. For stocks = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose a very minor +0.23%yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. It also often makes long slow moves in one direction (see chart for patterns)  Right now chart pattern = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to +43.43 yesterday. Clearly above zero and within 17 points of +60. So we are nearing overbought levels, but still= Neutral

Reading Tea Leaves

We slowly moving toward oversold territory, while the dollar is moving sideways. The trend is bullish,but when we get to overbought (@+60 on the MO) this trend should change.

Right now good news gets a favorable reaction from stocks.  The more overbought we get the less that same kind of good news matters. For right now the Bulls rule.

NB – I’ve been too cautious for long term investors over the past few months when we reached key turning points (+/- 60 on the MO and not invested enough or sold enough. There are some key negative fundamental factors in the Europe & The USA to be concerned about balanced by the continued dynamic growth of emerging markets. (more later this week)

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

Current positions –  EWS (Singapore)

Short term traders - From Friday – “There’s some wiggle room before overbought levels are reached, but its mighty narrow.” Looks like potential rally today may run us out of wiggle room.

If stocks to rally today and we reach or come close to +60 on the MO. Any further rally would be time to sell some of your long term positions.

Paul R has an excellent strategy for this he has mentioned in comments section of blog. Especially good for any traders when conditions get oversold – “tighten your stops.”

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Crunch Time/Elizabeth Warren

Perhaps the best result of the Financial Reform Legislation could be  a strong Consumer Protection Agency. Over the past few years Investors411 has beat the drums for the stand and policies of Elizabeth Warren. She would be an ideal choice for the agency, but has strong opposition from influential Senators like Democrat Chris Dodd (He approved the big financial bonuses for bailout TARP shadow banks) WaPo thinks there is good shot she will get the job.

Matt Taibbi

The Rolling Stone’s Matt Taibbi has an excellent editorial on “Wall Street’s Big Win.” The win, of course, is the new financial reform package that became law. Taibbi nails Republicans and Democrats (including Dodd) who gutted financial reform legislation.

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!

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Individual companies may be doing well, but earnings season is basically over. The focus now turns to economic news and from China to the USA (talk of GDP growth being revised down in USA from 2.4 to 0.2 in 2nd quarter) the news has not made investors happy.  We’re not falling over the cliff, but even the BB/HFT traders need some series of economic fundamentals to hang their hats on.

Therefore, don’t see bulls getting out of the corral until the market becomes more oversold.

Same story of bigger volume on down days that has been the hallmark of US indexes for many moons.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose 0.42% yesterday. This confirmed a massive +1.84% move the day before. Very bullish for the dollar but for stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +2.48% yesterday. Has broken up through 50 day moving average & upside momentum slowing. Overall trend  = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -38.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

The dollar is the key index to watch. The larger currency market is almost  dictating what happens to US stocks. You can follow (or invest) in it by watching the dollar bull ETF – ticker symbol UUP. If UUP goes up, stocks go down and visa versa.

The dollar closed at $82.64 and the first significant resistance level is the 50 day moving average at $84.06 ( 50 dma is falling each day). So there is a ways to go before we reach this point.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions - NONE

From earlier this week - “The Bulls seem to be loosing control.” The MO has fallen to -39 & we are approaching the -60 oversold level.  The lower the MO goes the better the chances whatever long position you take has of making at least short term gains.

A number of you have asked or are investing in stocks with high dividends.  This gives you a second revenue stream – the dividend that is in some cases higher than what you can get in CD’s. The problem of course is will the stock go up or down. Here a list of top ten dividend stocks from an author in at Seeking Alpha.

FXI, EWZ, EEM, EWY, & EWS are the courty ETF’s recommened for consideration when conditions are appropriate. Also GLD on dips.

Also considered are ETF’s that mirror or do 2 or 3 times what major indexes do.

YOUR Stock List last generated on this date (scroll down) Have not gone over these recently.

More agressive traders could start to buy the dip. Longer term investors may want to wait for stocks to move lower.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Obama’s Victories

It may be over the top  to call the events of yesterday Obama victories (credit/blame should be spread), so lets call them birthday presents.

Bottom line -  We should have done better, but it could have been a whole lot worse.

• The BP oil gusher in the Gulf looks to be completely capped. Also, victory for oil industry who now proves they can stop leak at 5,000+ feet.
• SEC gets record settlement against shadow bank GS, legislation to prevent what GS did is included in financial reform legislation, but GS wins by preventing a whole lot of bad PR by going to trial.
• The biggest birthday present is the Financial reform bill passes congress. (Senate, 60 -39)
• Another big victory is Republican leadership, like in health care, promising to repeal it all instead of saying well keep this part because its good and eliminate that.

Here’s the lead NYT editorial on Financial Regulation. Some relevant points.

• “Since January 2009, the financial sector has spent nearly $600 million to weaken reform” – they scored many victories.
• “the margin of victory was really about partisan politics and not the bill’s content.” Majority of blame here is on Republicans, but NYT does not mention Democrats are not without partisan transgressions.

Investors 411 has beat the drum for a tougher bill and it to be more inclusive of transparency in government agencies. However, we got more out of this than we did out of health care legislation. Both are steps in the right direction that need amending.

The next big battle is who heads and is on the board of resolution authority and consumer protection. Geithner is opposing Elizabeth Warren as the new head of Consumer Protection Agency. Warren is perhaps the #1 hero in the accountability, transparency and reform of Wall Street.

YOUR Comments

Sorry I’ve run out of time. However Ewanapat has a fabulous link to a controversial article on Ron Paul/David Stockman . This continues the debate over Barney Frank & Ron Paul stated by SE

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

Mantra for week “Earnings Season begins this week. - How markets react to news has usually been the key. If a stock shrugs and goes nowhere on good earnings news you know there’s trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.”

• 2nd Weak volume flat day in a row = Mildly bearish
• Stocks rallied into close = Bullish
• BP seems to have fully cap oil spill = Bullish
• GS settles with SEC, pays record $550 million fine, but avoids prolonged bad PR = Bullish
• GE reports lowers forecast. Down @2% in pre market trading - Bearish
• GOOG reported earnings and was down @4.5% in pre market trading (7:45 EST) = Bearish
• BAC reports and is down @4.5% this AM = Bearish
• Fin/Reg is over. No ore questions what will legislators do. = Bullish

You can check pre market trading here – Just type in ticker symbol

Significant Indexes-

• McClellan Oscillator (MO) fell to +43.48 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. The Black Boxes have not allowed the MO to rise above 80 since 3/09.  Now close to overbought position = mildly bearish
• US Dollar –  The dollar fell a massive -1.04% yesterday [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. This inverse relationship is part of their algorithmic system. There was a delayed reaction the last time the dollar fell over 1.00% – The next day we had an almost 3% rise in stocks.  For stocks =BULLISH
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China. BDI is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop in almost 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a much decreased -0.53% yesterday. The decrease could be the start of the BDI finding a bottom – a bullish sign, but too early to tell. Fundamentally the 60% drop is very BEARISH

Reading Tea Leaves

From yesterday “is Black Boxes push markets slightly higher. Reasons – dollar probably continues to fall  & momentum higher at close yesterday.”

Today – Yesterday’s huge drop in the dollar gives bulls something to rally on. See analysis of events above. Is the BDI turning? – another sign of hope. The MO is at 43 and there is some wiggle room till 60 and a lot of distance to major resistance at @80. Bad earnings news from giants GE, BAC & GOOG will hurt budding rally.

Wow  - an enormous amount of cross currents impact US stocks differently. Looks like a roller coaster rally. Watch UUP the ETF for the dollar – if it keeps falling stocks go higher.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Updated over weekends Investors411 holds ONE position at this time

Same strategy still holds. Our one small short position SH seems to be in some danger today. Short term  traders may  get in trouble with short positions today.

Behavioral Economics

Nobel Prize winner Daniel Kahneman is “widely regarded as world’s most influential psychologist” who is also the father of Behavioral Economics. “The Riddle of Experience vs. Memory.” is a very powerful & worthwhile video presentation on understanding why/how your perception of happiness and pain are impacted by memory vs. experience.  The Q&A at the end is especially significant.

From stocks to politics reality is one thing but how you experience that realty determines your action. Investors411 has reference Kahnenman in the past and will in the future.

Millions in America are addicted to pompous windbags screaming and ranting. Kahneman has scientific and logical insight into something that might actually help make you HAPPIER.

Make Markets Be Markets

In less than 18 days we handed out almost $800 billion to financial shadow institutions. In 18 months of the Bush & Obama administrations we have done nothing to fix the problem. The Roosevelt Institute featured a conference on financial reform with perhaps our best hope for some sort of protection Elizabeth Warren as one of the feature speakers.  Lots of other significant personalities attended

Health Care’s Last Stand

Here today’s NYT Editorial on health care – “Congressional Democrats can either move forward legislation to fix this country’s broken health care system or throw away a once-in-a-generation opportunity.”

Many of you over the past year have posted comments on this. Including the last one from Popeye (a public option supporter) who thinks “we are kicking a dead horse”

Personally, this legislation does not “fix” health care – it is way too watered down. But, the NYT is right – you will see no significant reform for a generation if it does not pass.

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. (No changes this weekend)

Another day that saw stocks rally and fold at the end of the day. Investors are selling into the rallies because the general market conditions are oversold. = Bears taking over.

The big data point is tomorrows jobless number.

Investors clamored to buy Greek debt. Good news for Greece and European Union. But this problem is far from over.

Overbought markets can be very sensitive to bad news.

Significant Indexes

• McClellan Oscillator fell to +54.74 yesterday We are now just below +60 or Overbought territory. Still time to seriously consider selling into any rallies.

Positions

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

• recently bought (added to) EWZ (Brazil) was sold at 72.00 Sold the shares bought on 2/11 for 65.75 Still holding onto shares bought last year at 59.5.  @+6% profit
  
• IMAX – Sold 1/2 the shares when it hit stop/loss order at 13.4.  @+6% gain. Wish I had sold earlier into the rally as I suggested.

Investors411 has sold the rest of TYH. & 1/2 of MOO, EWZ & IMAX. Will sell more positions if McClellan rises significantly. Plan to buy if it drops. Will probably buy some at $NYMO (McClellan Oscillator) reaches zero.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

New Mexico

Move YOUR Money

The  state of New Mexico’s house voted 65 to 0 to move their money ($2 to 5 billion) from the big shadow banks to the local community banks. So why can’t YOU Write your state legislatures. Tell them what New Mexico did.  Tell them what YOU did. You can make a difference.

Elizabeth Warren Calls Out Wall Street

part 2

Great follow up by James Kwak editorial on how the Big Shadow banks will try to block Warren and reform. Obviously the entire Federal government failed to stop the Shadow banks bring this country to its knees.  All the TEA party people, Rush Limbaugh, Glenn Beck will rise up to  scream oppose to any attempt by the Feds to better protect the common working man and woman – They will call it socialism, big government, and stifling the markets.

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.

Technically, Volume. out #1 confirmation factor, seems to be turning in favor of the bulls.  For the last few days rallies instead of price declines seem to begetting the bulk of the volume.  While its too early to claim victory on this price roller coaster a bullish trend is developing. Perhaps the single biggest basis for this potential bullish trend are US equities are oversold (see below)

Fundamentally -Looks like rally may be starting and European countries are going to protect potential defaulting countries. Short term positive – long term negative. Here’s the question – Will Greek workers be happy with austerity demanded by German banks? Is Greece like the Countrywide Bank (first of the big USA banks to fail) of the USA?

US trade deficits just got bigger -$40.2 billion – for last month. A bigger than expected number probably due to strengthening dollar. Bearish stat

Significant indexes – Forecasting tools for market direction

• McClellan Index fell to -37.14 =Approaching Oversold. We’ve passed -60 or oversold levels twice. When the  McClellan Oscillator gets past those levels its a signal to buy.  The more we are over -60 the better at least a short term buy will come out successful. -37.34 is a better entry point than +37,34, but not as good as -60 and beyond.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells – Revised positions over weekend) – These are positions I actually own

SELLING & BUYING

These are YOUR selections

Stock Watch List

NB – I feel much more confident with ETF’s because they reflect global trends than individual stock. Too many things can go wrong with individual stocks. Click on ticker symbol for chart

Caution – You have to be careful that the dip does NOT break trough a major support level. Then the dip becomes toast

• SEED – A China related stock. Broke down through support levels and created lower low. Trend broken. removing from list
  
• AAPL - Formed a double bottom trading pattern @ 190 - a buy the dip opportunity
  
• CAAS – Broke down though 50 day, but has some STRONG volume up days. A China play that will follow FXI. Tempting
  
• PCLN – Fell below 50 day moving average. Formed a double bottom bullish trading pattern. A buy the dip opportunity
  
• F – Oversold, and well down from highs. Has formed a base at 10.5  - a buy the dip opportunity
  
• DRWI - Big exporter to China -  Sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip .
  
• ENOC – New – Reduces costs for utilities 50 day MA acting as support Potential buy the dip
• IMAX – Great long term chart – Poor short term chart. Lower highs and lower lows  Investors411 has a 2% of portfolio position in this stock. Sell at least 1/2 into next rally

YOUR new Stocks (sorry several of you sent multiple lists and I picked what looked best)

• GS, Often considered the #1 Shadow bank seems to have formed base at @ 150 Tempting.
• CSCO, Techs new leader Moving up despite rocky market a by the dip
  
• SHOO, Great long term chart. Pulled back and is forming a base. Would like to see a bigger base, but tempting
  
• ICON, Did NOT form lower low over last two weeks as markets toasted a buy the dip
  
• VPRT Another stock that weathered recent pullback well a buy the dip
• DGIT Thinly traded, but potential winner – just broke above its 50 day MA a buy the Dip
• CTCT Rebounding stock, has a of good volume up days has breakout potential
• VCI Good volume, good chart Somewhat overextended A buy the dip underway
  

Bottom Line – We are oversold and ready for at least a short term run – Investors 411 opened a 5% position in TYH (3x financials) Friday at 117.14  TYH now at 123.56 Sold 50% at 124.85 on Friday for +6% gain.

Big Mistake here was not to commit more $ TYH to trade.

I’d much rather buy while the McClellan Oscillator is -37 than +37. But, the lower the McClellan goes the better the buying opportunity.

Lots of the above stocks have technical potential IF there is a rally

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

The Best Editorial of 2010

Elizabeth Warren in the WSJ

Here’s The WSJ editorial link- in case my link does not work – here’s the  http://online.wsj.com/article/SB10001424052748703630404575053514188773400.html

Below is the full editorial

“Wall Street’s Race To The Bottom”

By ELIZABETH WARREN

Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don’t trust them, the whole system breaks down. Yet for years, Wall Street CEOs have thrown away customer trust like so much worthless trash.

Banks and brokers have sold deceptive mortgages for more than a decade. Financial wizards made billions by packaging and repackaging those loans into securities. And federal regulators played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families. When they weren’t selling deceptive mortgages, Wall Street invented new credit card tricks and clever overdraft fees.

In October 2008, when all the risks accumulated and the economy went into a tailspin, Wall Street CEOs squandered what little trust was left when they accepted taxpayer bailouts. As the economy stabilized and it seemed like we would change the rules that got us into this crisis—including the rules that let big banks trick their customers for so many years—it looked like things might come out all right.

Now, a year later, President Obama’s proposals for reform are bottled up in the Senate. The same Wall Street CEOs who brought the economy to its knees have spent more than a year and hundreds of millions of dollars furiously lobbying Washington to kill the president’s proposal for a Consumer Financial Protection Agency (CFPA).

Within the thousands of pages of print in the “Restoring American Financial Stability Act” now before the Senate, the consumer agency is the only proposal that would help families directly. Even those most concerned about the role of personal responsibility concede that it is hard for families to make smart decisions and to compare products when the paperwork on mortgages, credit cards and even checking accounts has morphed into reams of incomprehensible legalese.

The consumer agency is a watchdog that would root out gimmicks and traps and slim down paperwork, giving families a fighting chance to hang on to some of their money. So far, Wall Street CEOs seem determined to stop any kind of watchdog. They seem to think that they can run their businesses forever without our trust. This is a bad calculation.

It’s a bad calculation because shareholders suffer enormously from the long-term cost of the boom-and- bust cycles that accompany a poorly regulated market. J.P. Morgan CEO Jamie Dimon recently explained this brave new world, saying that crises should be expected “every five to seven years.”

He is wrong. New laws that came out of the Great Depression ended 150 years of boom-and-bust cycles and gave us 50 years with virtually no financial meltdowns. The stability ended as we dismantled those laws and failed to replace them with new laws that reflected modern business practices.

The reputations of Wall Street’s most storied institutions are evaporating as the lack of meaningful consumer rules has set off a race to the bottom to develop new ways to trick customers. Wall Street executives explain privately that they cannot get rid of fine print, deceptive pricing, and buried tricks unilaterally without losing market share.

Citigroup learned this the hard way in 2007, when it decided to clean up its credit card just a little bit by eliminating universal default—the trick that allowed it to raise rates retroactively, even for consumers that did nothing wrong. Citi’s reform resulted in lower revenues and no new customers, triggering an embarrassing public reversal.

Citi explained sheepishly that credit cards were now so complicated that customers couldn’t tell when a company offered something a little better. So Citi went back to something a little worse. Without a watchdog in place, the big banks just keep slinging out uglier and uglier products.

With their reputations in tatters, the CEOs have decided to go on the offensive in Washington. They might have had some thoughtful suggestions for how to better shape a consumer agency. Instead, they have unleashed lobbyists who are determined to do anything to kill the consumer agency.

The latest lie is that the CFPA is “big government.” The CEOs all know that the current regulatory structure, which they support, is big government at its worst: bureaucratic, unaccountable and ineffective. Thjavascript:;e CFPA will consolidate seven separate bureaucracies, cut down on paperwork, and promote understandable consumer products. In the process, it will stabilize the industry, rebuild confidence in the securitization market, and leave more money in the pockets of families. Complaining about short, readable contracts and efforts to slim down bureaucracy only further diminishes the banks’ credibility.

This generation of Wall Street CEOs could be the ones to forfeit America’s trust. When the history of the Great Recession is written, they can be singled out as the bonus babies who were so short-sighted that they put the economy at risk and contributed to the destruction of their own companies. Or they can acknowledge how Americans’ trust has been lost and take the first steps to earn it back.

Ms. Warren is a law professor at Harvard and is currently the chair of the TARP Congressional Oversight Panel.

Please, Take this editorial and let it multiply. Email it to all your friends, Post it on your Facebook page, use Twitter or whatever kind of social media network to give Warren’s contents a larger audience. Opposition to this is going to far larger than the obvious Shadow Banks & their lobbyists , but from within the White House to the wealthy right wing olliarghs who are threatend by individuathat dare to speak out like Elizabeth Warren. Warren is already headlining on the Huffington post and here.

The usual of Investors411 will return tomorrow – I’m spending the rest of the AM spreading Warren’s message

Barr

Elizabeth Warren – fighting to save the Consumer Protection Agency.

Wall Street vs Main Street

Wall Street is toasting Main Street. You’d have thought even after the huge financial meltdown that almost shattered banking worldwide the situation would change. It hasn’t -beyond preventing a worldwide meltdown. The situation in the USA has not improved. Back in 2009 Investors411 emphasized that economic problems – especially financials were “far far far far far bigger than first imagined.” This is especially true for the USA.

Because of globalization, and almost no financial rules governing shadow banks – what’s good for Wall Street is NOT going to be good for Main Street. Unfortunately, Americans are looking for quick solutions from politicians that cater far more to Wall Street.

The bottom line - America has grown for decades into a two tiered country -Wealthy vs Poor. This divide is increasing.

Matt Taibbi vs. David Brooks

These are two editorialists often quoted in Investors411 – Taibbi’s reply to a Brooks editorial Some real fireworks here.

Consumer Financial Protection Agency

Elizabeth Warren’s fight to save Main Street from the Shadow Banks headlines the Huffington Post blog. Ironically in the tight  Senate battle in Massachusetts the Republican has promised to  be the 41st vote to block this and health care.

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.

This was our second big volume decline within 4 trading days.  This time the volume was even more significant.  Usually somewhere between two and four of these “distribution” days where a lot of investors are running for cover signals a reversal in overall market outlook.  So we could have a substantial reversal (5 to 10%).

Intel’ s, The chip making giant, earnings report was the spark for the reversal. The stock itself was down @ 3%. But what set the stage for the reversal was the weaker than expected monthly jobs report.

Bulls do have amo on their side for US stocks (NOT the economy) to move higher.  The outlook for a quick economic recovery is looking  bleaker and that means the Fed will keep interest rates lower longer, Money (unless you want near zero rates) has no where else to go but stocks. Also, and meaningful health care reform is either going to collapse or be extremely week.  This will give a huge boost to stocks (not economics) that profit off health care.

• McClellan Index at -10.33 = Just slightly oversold.    @+60 or overbought territory & @-60 or oversold. This Oscillator has broken through strong BEARISH support @ zero (see chart). This is in the short term for stocks. NOTE -That if stocks  reach -60 or more this would be a BUYING opportunity.
• Baltic Dry Index – The BDI has moved higher for the last three weeks.  This is good news for world trade and especially China.
• US dollar – The dollar had been dropping for over 3 weeks and this had helped stocks. This all changed last Friday as the dollar soared +0.61% For more on all charts see STRATEGY sections
  

FEARLESS FORECAST – Bears paw prints are everywhere. Volume is starting to confirm the downside move. Between June and Nov. of last year 6 times the McClellan Oscillator reached -60.  It has stayed above -30 for over 2 1/2 months now. This does indicate a bullish stock bias. But we are long overdue for some sort of downside move. Forecast = Down week. However, the case for any meaningful reform from health care to financials (shadow banks) grows weaker each day.  This should temper any stock toasting

The Massachusetts Senate election will have an impact on stocks. Basically the Stock market likes gridlock and if the Republican wins the Dems will loose their 60 vote majority in congress and nothing will get done for at least the last 3 years of the Obama presidency. This means no meaningful regulations. It is a debatable point that Democrats alone would enact reform.

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

Proposed schedule (sorry, again, limited time this AM – took the Red eye flight from California) Will cover Stocks & ETF’s tomorrow.

NB – Investor411 is going to make few moves unless we get to very oversold or overbought positions

Weekly schedule remains – (Since Monday was a holiday  charts were the focus of today)

• Tuesday and Thursday – Stock Watch List
• Monday Fearless Weekly Forecast and focus on multiple charts
• Wed. & Friday – ETF’s Watch List

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = CAUTIOUSLY BULLISH

Consumer Financial Protection Agency

The Consumer Financial Protection Agency that passed the House is the most important piece of legislation out there that will impact YOUR future. Sorry Health Care legislation that may pass, while important, looks too weak  to make a significant impact.

TARP oversight administrator Elizabeth Warren (she’s invited on everything from ultra right wing shows like CNBC’s Larry Kudlow to ultra left wing shows like MSNBC’s Rachel Maddow) believes a single Consumer Protection Agency “absolutely” … “would” have prevented the financial collapse.

Right now, there are 7 different agencies that big business goes to. They shop around to find the agency that gives them the best deal or least regulations. This 6 minute video is well worth watching. (a 14 second add precedes video)

This is the moment or the tipping point. “David” (you the consumer & bailout taxpayer) vs “Goliath” - (the shadow financial Industry with their insiders and powerful lobbyists) according to Warren.

Sorry to disagree with Popeye and those who think that there is little difference between Republicans and Obama/Democrats, but, in this case all Republicans voted against a Consumer Financial Protection Agency in the House. Stewart (see comment section) – is right Republican’s just don’t get it.

Put off Economic Forecast Conclusion because CPFA just too important

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 last weekend.

Another flat low volume day as markets await US monthly employment report on Friday .

The Fed released its minutes yesterday showing a diversity of views .

“A few” wanted to expand liquidity – “buying mortgage securities from Fannie Mae and Freddie Mac might need to be expanded,” One member thought it should be “scaled back.” and it looks like the majority have a wait and see attitude.  Data this week showing a decline in home sales after a 9 months of increases gives “a few” a much stronger case. The employment report also impacts this. Translation for stocks = More liquidity is short term positive and a possible long term negative because it could bring inflation.

• McClellan Index at +28.73 = A bit overbought. This means we have some wiggle room for US stocks to move higher before they reach @+60 or overbought territory – a time to lighten up on positions. There’s a long way to go till we reach @-60 or oversold – a time to add to positions.

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%

Results for 2008 -13%

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = CAUTIOUSLY BULLISH