Europe

• The Bears Case - Europe (the world’s largest economic block) has a huge fiscal crisis with no apparent solution.

.

• Technically APPL’s chart is much better than AMZN. The later in free fall.

• Exit strategy – Exit 1/2 the trade with  5+% gain. Let the rest ride.

More in comments section or tomorrow’s blog.

Unfortunately the Tea Party and Republicans  have a NO COMPROMISE stand on cutting only areas like social security, education, medicare etc  that target the middle class, seniors and the poor.

Democrats are willing to compromise on these issues as long as wealthy Americans also share the burden. For every $3 in tax cuts you tax wealthiest Americans and mega corporations $1.

The above inspired by

• Sunday’s blog on OWS
• Matt Taibbi rebuttal to David Brooks

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The Big Lie

.

Springtime For Europe Then Reality?

We have another major solution to the Eurozone Crisis. German stock market up 4.84% at 8:20 EST and climbing.  So favorable reviews from Germany should transfer across other stock markets . Globalization at work. NYT’s #1 story today. Two biggest points.

• Greek’s default grows from 21% to 50% on bonds
• A $1.4 trillion bailout package to protect banks from  bad debt of all the debtor countries in Europe.

Zero Hedge (libertarian view) negatively dissects some of the details. - A Farce, & Springtime For Europe then Reality - Citigroup’s conclusion, does a good job at outlining what happened and next steps.

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The Lobbyists Dream Candidate

The lobbyists in Washington have chosen their Dream candidate - Mitt Romney

• He’s raised more lobbyist money than all the other Republican candidates put together
• 6 times the amount Obama raised from Wall Street

Mitt just had another Washington lobbyist fund raiser in DC and the invite list included the “Dozen” Biggest of K Street  lobbyists who run our government. Link and Link and LINK

Obama was the last presidential candidate that K Street showered  a just bit more $ on than the challenger  and the negative results are evident. This time around its not even close.

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STOCKS

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Reading Tea Leaves

• Our #1 technical forecasting tool, the McCellan Oscillator, is at +67.29 - overbought = Bearish.

• Our secondary indicator, the Put Call Ratio is at 1.01 = Neutral.

• The PCR is telling us that the professionals who use the Puts and Calls are Neutral. However, since the 50DMA of the PCP is not at 1.00, but much higher at 1.17 Sentiment = Moderately Bullish

As stated before the events in Europe trump this like they did after the 2008 meltdown.

Then, the MO fluctuated between +110 to +20 for two months. At that time there was the start of a set of solutions led by our Fed and Treasury that lite a fire under stocks for two years.

The MO should reach OMG overbought levels today (over +80). This may slow down the stampede and create some dips to buy.

• Now, it seems like the perception of investors is that  the proposed solution in Europe will do something similar tot he stimulus of 2009

• Stocks, especially financials should do better, but just like 2008 people/taxpayers will suffer in Western Democracies.

• The 25% of global growth this year that comes from China(Time magazine) is critical to bullish trend developing.

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Paul’s Corner

3 Days of Ian Woodward

This past weekend I had the great pleasure of attending the fall HGSI Workshop in Palos Verdes Ca. The workshop featured lecture by Ian Woodward and Ron Brown from HGSI. Let me give you a few of the details.

Ok ok, I can hear the moaning, “Oh no here comes more Ian Woodward and HGSI talk”. Please folks humor me, read on!

Ian and Ron’s discussion lasted for three days. Interspersed throughout the weekend there were several guest speakers who added to the value of the workshop.

Ian showed us his research behind HGSI investing and Ron gave live market demonstrations how to maximize using HGSI.  This meeting really helped us understand the undercurrent of the market. Ron and Ian showed us how to get insight using HGSI and related tools in a predictive manner.

Fred Richards – an HGSI contributor, Harvard Economics Professor and longtime expert investor gave us a great overview of the world economic stage and what to expect going forward.  Fred is a great CANSLIM type investor with decades of experience and great stories. A friend of his when growing up was William O’Neil of Investor’s Business Daily.   It was wonderful hearing Fred and by good fortune I sat next to Fred at dinner Saturday evening. Ian bought dinner for all at a wonderful Mexican restaurant

LINK

Chris White demonstrated his new software EdgeRater 5.0.   Chris demonstrated how using HGSI, one can do an end of day update across the market of index, ETFs and Stocks in just a few key strokes.  Perhaps the greatest benefit of using EdgeRater with HGSI is EdgeRater takes many of the tools developed by Ian and Ron and automates them in EdgeRater giving us a predictive look into the markets.

LINK

Chris Wilson an HGSI user demonstrated his techniques for Pairs trading.  Using HGSI and a non-proprietary set of tools using HGSI, Chris broke new ground with a technique based upon the changes in RS over time between an equity and a comparative index or ETF.

Dr. Jeffrey Scott, an HGSI user, presented stocks for consideration of our next JIRM index, our early warning indicator of a failing market.  For background, check out Ian’s blog, posted on the HGSI website: Stock Market: Doom and Gloom or Plain Sailing? September 25th, 2011.This exercise gave us early insight we are clearly seeing rotation into unusual leaders such as SBUX, KMB and MCD. This rotation reflects the current fear in the marketplace.  This was an excellent lesson in chart reading and fundamental analysis. We ended up selecting 19 high quality leaders in this exercise. Only attendees have this list and if you wish to see it you have to attend a work shop.

LINK

For me the highlight of the workshop was a brief lecture by Gil Morales (author of Trade Like an O’Neill Disciple) to review his tidea on current market conditions and update us on pocket pivots.  Gil was supposed to give an hour discussion but it soon turned into 2 ½ hour lesson of correctly shorting a stock. Gil also painted a concerned picture on the market and gave us some names to consider shorting.  Gil was an analyst for Investors Business Daily. He uses HGSI to scan for pocket pivots. A pocket pivot signal gives a very early signal that a stock is getting ready to break out. I have studied the signals for months now and they do appear to be a very good early indicator.

LINK

My wife joined me on this trip and we took some time touring Pasadena, Hollywood, Beverly Hills and Bellaire. She really enjoyed buying clothes! I was a great weekend.

We all like to talk about our best stock trade. The investment I made this past weekend with respect to time, air fare, hotel, Seminar cost has to be the best stock investment I have ever made. It was an outstanding weekend.

If any of you are serious about developing your trading skills, Ian’s next workshop is scheduled for March 24-26. I encourage you to join us.

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Positions

SPY – (ETF tracks S&P 500 or SPX) bought at 122.5 (See Monday’s blog for details)

Your Stock List#5 - Mea Culpa – Holding stocks through earnings season is always dangerous. 5 of our 14 stocks took  some big earnings hits (one on an analysts downgrade) So Paul & I have decided to drop TSU, RES, CROX, GMCR, & CPHD. Their positions will be closed at end of day. LINK to entire list (scroll down)

Future considerations – SSO (ETF that is @2X SPX) Buy on dip. Investors411 uses a buy the dip strategy in markets that are trending higher.

Bottom Line - It looks like a trend is starting. This is a significant bailout in Europe. There will probably be more. Little discussed China is the key to global growth and this trend developing.  The greatest risk is at the start of a trend, but also the biggest reward. Obviously the trend is NOT solidly in place.

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Long Term Outlook

3 to 6+ months

CAUTIOUSLY BULLISH

Investors411 has 5 different valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.

We are the 99%

Police in Oakland,  broke up the Occupy Oakland Protest.  Police used “flash grenades,”  ”tear gas.”& “riot police.” Officials used the same excuses and methods other officials to break protestors  in Egypt, and other Arab Spring countries that were fighting for jobs and democracy. Exception – There were no deaths

Photos of the incident and, are on front pages throughout the world. Just like in the Arab Spring.

Links/Photos/Videos - Al Jazeera, Britain, Huffington Post, Woman in wheelchair tear gassed

Here’s What We Are Fighting For

Reading Tea Leaves

Same as yesterday - Right now the news out of Europe trumps everything – Their financial Stocks move higher = so does everything else. Pro’s are bullish (PCR) takes some of the sting off how overbought we are (MO).

The major editorial yesterday said it all. Conclusion –  Europe is the same as the USA in 2008. If gains are allowed to be privatized by financial companies  and the risk socialized by the people the financial stocks involved will push stocks higher in the shorter term.  It will be more poverty for the middle classes who will pay the bill.

My read of the Tea Leaves is stock will keep erratically moving higher. If we close below 1225 support level on S&P 500, Long term Outlook will change back to NEUTRAL.

Our financial system desperately need  regulation, regulators,accountability & transparency. But few care about long tem solutions.

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Demystifying and Discussing

Simple Option Strategies

By JS

LEAPS

Today I’ll discuss investing in LEAPS ( Long Term AnticPation Securities).  Leaps are longer term options, for up to 2 years or more.  Today, you can by LEAPS that expire up to January, 2014.

Why buy out that long? Because it gives you a longer time to have your investment work. Many times my calls expire before the stock moves enough for my investment to pay off. I’ll watch my call expire worthless and then see 2 or 3 months later, (or a year later)  I made the right call but the wrong timing.

Example:  On June 20, this year, CSCO was $15.01.  It had reached a pretty good low. I’ve followed it since the mid ’90′s and felt it was way too low; they had lots of cash, little debt, and products that were necessary for the internet, especially with the cloud becoming bigger.

However, this market was very unstable at that time (even now). I could have bought 100 shares for $1500, but I wanted a bigger return, so I bought  LEAPS:  -CSCO130119C17.5, costing $1.33 per share or $133 per contract. I was able to purchase 10 contracts ( or 1000 shares) for $1330.

Today the result of this trade:

• Buy 100 shares :   $1501:    price today:   $17.50, or $1750,  a profit of $250 or 17%.
• Buy 10 contracts:  $1330:    price today:      $2.54, or $ 2540, a profit of $1210 or 90%

This option is still alive till Jan, 2013. My question (to me) is: is 90% enough or should I take my profit and run. In this market, I think I’ll take 1/2. If I had purchase shorter term options, one to 3 months out, I would have lost all or most of my investment. Also, the reason the price of this option was so low was that CSCO is not on many buy lists.

Note: this column is based on closing prices of Monday, Oct 24.

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Long Term Outlook

3 to 6+ months

CAUTIOUSLY BULLISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.

Bankstas At War

European Theatre

Just like the 2008 mortgage debt crisis we have a sovereign debt crisis in Europe. The major question is who is going to end up paying the bill? Will risk be again privatized by banksta’s with their politicians and socialized by the people?

The Big Picture – One reason why the NYT is the world’s most respected newspaper is they come up with outstanding charts and information “A Spectators Guide to the Euro Crisis”

800 LBS Gorilla – Hidden Derivatives Market

The NYT chart shows what happening on the surface. The real picture is full of smoke and mirrors because, just like the 2008 meltdown, the 800 pound gorilla in the room is the opaque, unregulated, derivatives market. Remember – Warren Buffets calls CDS’s (derivatives) “Financial WMD’s.”

Quite simply, once again, who knows what the exposure any major financial company is?  Remember – how interconnected  AIG was? MIT Economist Simon Johnson does.

Do they make a calculator big enough to measure the profits that banksta’s made off the European countries with debt problems in the opaque $500 trillion derivatives market?

Whose going to pay? The too big to fail interconnected (both globally and politically) banksta’s, the bond holders, or the people. The prevailing powers in Europe are now suggesting a 50% haircut for bond holders of Greek debt. (the most pressing problem country)

The austerity measures (raise taxes, fire workers, sell national treasures) imposed on Greece, already with 18% unemployment, would put the country into a long depression and benefit the financial elite who will pickoff Greek assets at fire sale prices. Bankstas war against people by Economist Mark Hudson quantifies this.

We have a broken globalized financial system that benefits a few at the expense of many. Banking used to promote growth, not make hidden bets (CDS’s) on repackaged debt. Profits gets privatized and risk gets socialized.

*******

Two groups with very different solutions passionately recognize privatizing the gains and socializing the risk is tearing down the financial stability of western democracies.

Poverty creating casino capitalism is being fought by both Libertarians (Ron Paul) and the Occupy Wall Street believers. (the 99%)

______________________

STOCKS

Why the Rally – The perception by major market movers that in Europe the gains is being privatized and the risk socialize. Best measurement of this would be German financial companies- Thought to have largest exposure to European debt. Second best German stock market – Up 1.5% at 8:15 this AM.

• Our #1 forecasting tool MO rose to 91.33. OMG overbought levels. The highest in 3 years. = BEARISH
• Our #2 the PCR rose to 0.96. Shows pro’s who trade Puts and Calls are not very worried = Bullish
• See Strategy section of blog for more on MO & PCR

Reading Tea Leaves

Same as yesterday – Right now the news out of Germany trumps everything – Their financials move higher and so does everything else. Pro’s are bullish (PCR) takes some of the sting off how overbought we are (MO).

Traders - rallies in the AM, should be met by selling in the PM.  Because  like the MO and virtually every oversold/overbought indicator like it is so high.

Investors – Technically we have broken out of this summers trading range – That’s bullish and the long Term Outlook is now CAUTIOUSLY BULLISH. More often than not we retest breakout levels. However, Investors411 is nibbling on the SPX. (Any ETF that tracks this will do) It was chosen because it tracks the S&P 500 and is relatively safe.

JS suggests the SSO and The Critic suggests FAS (although she has a Put/Call play on this.)  Both are good but involve more risk.

Paul tells us there is great risk out there – he’s right. Paul is at a HGSI stock seminar in CA this week.

Bottom Line - The only other time the MO was so high and did NOT see at least a 5% fall in stock prices within a week or two was back in 2009.  Right now the insiders seem to be seeing the same dynamic happening. -

Privatizing Gains and socializing risk works for short term gains – but in the end if you keep putting more and more people in poverty at the expense of a wealthy few the end result is revolution

______________________________

Long Term Outlook

3 to 6+ months

CAUTIOUSLY BULLISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.

• HFT’s Investors411 uses a broad definition of HFT’s to include all programed trading using computer algorithms.  Here’s an old 2009 Jon Stewart parody on HFT’ that is informative and fun.

Danger Will Robinson

Danger Danger!

Its time to bring out the old robot from the old Lost in Space TV series who would shout with all his bells and whistles going off that when was approaching danger - Danger Will Robinson Danger Danger. This is the highest alarm Investors 411 has of a possible impending meltdown

Stocks and more specifically our over leveraged, under regulated, “free market” shadow banking system is in big trouble.

The problem came out of Europe as the ECB (central bank) made a loan of  $500 million to one of its members. After markets closed our NY Fed made a loan of $200 million to a Swiss bank. Obviously some major banks in Europe are having insovlency problems and investors panic first and ask questions later.

Its a globalized banking world and everything is interconnected and hidden in the shadows. Remember after Lehmann went belly up so did Iceland’s entire financial system. Many US banks are deep into European debt.

The problem is the books are so shady, the regulators so few and the problems so large that PANIC is starting to unfold.  This is a libertarian and often alarmist web site, but I think its facts are correct. LINK Other stories CNBC LINK & CNBC LINK & WSJ LINK

Yesterday Investors warned that the German markets were down -3.47% at 8:45 EST. Today they are down another -3,68% at 7:00 AM this morning. German marks down  -25% this month. The US market futures down

Cramer and Hobbs from CNBC argue if this is like Lehmann’s

The major support level for the benchmark S&P 500 is 1101 It’s at 1125 in Futures trading at 7:20 EST. Down from 1141 closing. If 1100 falls you could see HFT’s accelerate the panic.

The one ray of sunshine is if the 1100 support level this holds, its bullish. But whose going to want to hold bank stocks over the weekend if the European banks are down another 5 to 10 % today?

Protect YOUR money – Downside risk is clearly much larger than any upside gain.

Barr

PS Just for fun, and we need a distraction today  - Almost 15 million viewer have watched this video about The Crazy Nastyass Honey Badgers by Randell

PPS – sending this out early as a head up.

• My favorite way of looking this is to choose a handful of stocks and buy when the MO dips. The lower the better.

• Paul often comments on these stocks in the comments section of the blog.

• This new list will replace YSL#4 in the POSITIONS section of blog today

Obviously we can’t guarantee anything and you take this advice at your own risk

See Paul’s Corner at bottom of blog for

YSL #5

• Dividend Stocks – Because may of you like dividend stocks for the long term – Here, from Seeking Alpha is 3 favorite high yield dividend plays, It include one favorite AGNC at 18.8% dividend.

Sure Looks Like Bears are coming back

It’s on its way

YOUR Stock List #5

• Four times, together, we’ve  roasted and toasted our benchmark S&P 500 LINK (scroll down for results)
• Four times YOU sent in entries for YOUR stock lists
• Four times  Paul & I have gone over them and picked potential winners (we added a few too)

Now its time for YOUR stock List #5 (YSL #5) and we think its the best yet.

Tomorrow in Paul’s Corner

YSL #5

_________________

• Warren Buffett on Charlie Rose LINK – If you can hold the US debt ceiling hostage, you can hold it hostage to anything from abortion to the latest war.

• Warren Buffett in NYT “Stop Coddling The Super Rich” LINK

One early poll means almost nothing but Rasmussen Poll: Rick Perry 29%, Mitt Romney 18%, Michelle Bachmann 18% and Ron Paul 9% But it does raise an eyebrow.

Perry is a larger than life “gun toting, flag waving, bible thumping, Bernanke bashing, Tea Party loving, patriot.”

If I were Mitt Romney I’d be really concerned that if Bachmann of Paul drops out their vote will go to Perry and not him.

_______________

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

Index	Percentage	Volume
Dow	-0.67%	low
NASDQ	-1.24%	low
S&P 500	-0.97%	low
Russell 2000	-0.93%	-

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• A weak volume rally followed by a weak volume decline – Just the kind of situation HFT’s in the past have used to extend a weak volume rally. News out of Europe did cause a drop, but interday we rallied off the lows.

The 3 Legs – Europe, USA & Emerging Markets

• Never forget our mantra - High Frequency Traders Rule US & European Equities- These entities make their decision in microseconds and are not based on long term trends. They account for low volume rallies and other atypical technical market behavior.

• The McClellan Oscillator (MO) fell to +9.99 (-30 somewhat oversold, -60 oversold, -90 OMG oversold)( +30 somewhat overbought, +60 overbought and +90 OMG oversold) Chart shows we are almost dead center in the middle of oversold and overbought territory. There’s wiggle room for stocks to move either way and mojo is with the bulls. = Neutral

• Reading The Tea Leaves – Short term momentum still with the bulls. Fed’s low interest rates till mid 2013 and relatively low levels of the dollar mean profits for globalized American companies should hold steady. Momentum still with the bulls till we reach oversold territory in the MO

Longer Term Outlook

weeks, month, months

• Repeat - May 20th forecast still stands. The May 20th summer forecast has come to pass and now we wait to see the Fed’s next move.

• The Fed’s promise of low interest rates through 2013, has brought the Long Term Outlook for US Stocks close to NEUTRAL. Any announcement of a type of QE #3 would push the outlook even higher.

______________

Current Positions

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

YOUR Stock List #5 is done and except for some last minute tweaking and waiting for an earnings report. It will be published on Thursday in Paul’s Corner.

NLY - Annaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide. NLY is the only position in Investors411 hypothetical portfolio

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF) Obviously a MAJOR mistake to sell and take meager +3% profits. Like a millions of other people who see worldwide economic problems ahead – waiting to buy another dip. Mea culpa – The small two day dip was a decent  entry point and I missed it. Why Gold

Disclaimer - Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on about half of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some (about 80% of thisposition has been sold) SDS & TZA (ETF’s that double and triple short the market) as hedges.

________________

The Fed’s promise of low interest rates through 2013, has brought the Long Term Outlook for US Stocks close to NEUTRAL

________________

Long Term Outlook (for US Economy)

BEARISH

_______________

Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

19 months ago in his 2010 State of the Union Barak Obama made perhaps his biggest mistake.

He did not focus on  the clear and present danger of jobs growth (which would have lowered the deficit) instead he focused on deficit recuction through cutting programs and raising taxes.

Perhaps he thought the other side would compromise in good faith. Perhaps, as some believe, he’s just a tool for the corporate oligarchy and in the end would make sure the folks who finance elections would get what they want.

On the battlefield General Petraeus in Iraq compromised with the terrorist who had fought Americans and brought them over to the other side = a compromise. But is the USA compromise to conservatives is an abortion – Tea Party Patriots – Don’t compromise.

Thanks to Jim J (for finding) and Erin Clouse (editor of the Brookline TAB for posting) this editorial from which the following points are drawn. The Tea Party and all the Republican candidates have take taken oaths NOT to compromise. The Tea Party -

• - It badmouthed the economy and the government at every opportunity, undermining the confidence of consumers, businesses and investors both here and abroad. And yes, the confidence of credit rating agencies.

• - When President Barack Obama and House Speaker John Boehner got close to making a deal for $4 trillion over 10 years, the tea party caucus yanked Boehner’s chain, and he pulled out of the talks. The grand bargain was dead.

• - Tea partiers spread the myth that a default wouldn’t be so bad, further feeding the perception that a powerful political bloc couldn’t be trusted to be responsible with the nation’s finances.

• - The tea party drove the debate — its leaders say so with pride and most pundits agree — to an unsatisfactory and unpopular conclusion: the debt ceiling reluctantly lifted, a last-minute deal nobody likes, a scant $1 trillion in deficit reduction, no reforms to taxes or entitlements, a disgraced and dysfunctional Congress, and a December date for another battle over the same turf.

As most of you realize, progressive are almost always willing to compromise – to look for a win win situation, but a conservative shoots first and asks questions later. Their world is black and white, heaven and hell, you’re either with us or against us and best your either a patriot or the enemy.

Click on picture below for enlargement  of latest (no compromise) brown shirted Republican to enter race

_______________

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

Index	Percentage	Volume
Dow	+1.13%	down
NASDQ	+0.61%	down
S&P 500	+0.53%	down
Russell 2000	+0.23%	-

_______________

Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

Gert Frobe from James Bond movie Goldfinger

Over the last two weeks almost every serious investor learned about gold or GLD. Two of the three legged stool that hold up the world economy wobbled over the last two weeks and investors rushed in fear to the shiny sparkle of gold.

The Three Legs

• USA – Total incompetence in congress. The far rights  strident refusal to compromise has set off warning bells from the stock market to Standard and Poors. Every European solution has included a tax cut on the wealthy, but NOT the USA which is dominated by Tea party Ideologues. Consumer confidence in the USA is near an all time low while retail sales is still blissfully chugging along. See chart below show a massive disconnect.

• Never forger our mantra – High Frequency Traders Rule US Equities – These entities make their decision in microseconds and not on long term trends.

• The McClellan Oscillator (MO) fell to-8.20 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). Chart shows we are almost dead center in the middle of oversold and overbought territory. There’s wiggle room for stocks to move either way = Neutral

• Reading The Tea Leaves - Stocks are moving on headlines and that move is exaggerated by all the HFT trading.

From Friday’s Bottom Line - Technically because of the retest of the low and strong momentum higher HFT’s will take markets higher.  Headlines still rule and HFT traders can react instantly and with great volume to headlines.

Investors411 has been on a hot streak with daily calls and let’s see if we can make it 4 in a row  - Momentum carries markets higher today. It’s been relatively easy to get out of massively oversold territory, as we get more and more overbought the going for the HFT’s will get tougher and tougher.

Longer Term Outlook

weeks, month, months

• Repeat - May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this. As predicted the 15+ % drop has come to pass this summer Best read of tea leaves is a 1 in 3 chance for a bear market (20% drop from highs)

• Long Term Outlook Listed Below. Major long term trend (monthly) lines that have been broken. LINK. However, we are close to climbing back to NEUTRAL (see 50 day moving average on monthly chart), The Fed has promised long term low long term interest fates till 2013, and that’s significant for US economy. If the Fed does some type of QE #3 – this could also get us back to CAUTIOUSLY BULLISH LINK

____________

Look for Paul’s Corner every Tuesday and Thursday

______________

Current Positions

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

YOUR Stock List #5 is done and except for some last minute tweaking and waiting for an earnings report. It will be published on Thursday in Paul’s Corner.

NB – With the exception of NLY & GLD (both profitable and remember NLY’s 3 to 4% dividend) Investors411 held no long positions for most of the summer and especially August.

NLY - Annaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide. NLY is the only position in Investors411 hypothetical portfolio

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF) Obviously a MAJOR mistake to sell and take meager +3% profits. Like a millions of other people who see worldwide economic problems ahead – waiting to buy another diptobuy. Also sure looks like GLD had its climax run and could be settling. We’ve had a two day dip and will buy if day 3 of a dip occurs.

Disclaimer - Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on most of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some (about 80% of thisposition has been sold) SDS & TZA (ETF’s that double and triple short the market) as hedges.

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Long Term Outlook (for US Economy)

BEARISH

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE