Investors 411 Blog

by Barr Jozwicki
August 11, 2011

The Path not Taken

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Compromise

American’s say they want compromise and legislators working together.

In fact 23 separate polls say the deficit should be reduced by raising taxes (this figure ranges from 76% to 59% vs 40% to 19% who say only spending cuts)

Yet we learned that greed and fear based Murdoch style journalism sells. Ideologues hate compromise and, as many of you are aware, almost all Republicans have made a pledge NEVER to compromise on taxes even for the wealthy. The path of No compromise.

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Historically,  countries have chosen the path of growing as their primary way out of recession. The Tea Party dominated congress has forced considerations of immediate cuts on a weak economy that will constrict spending.

We’ve come from loosing -720,000 a month to gaining +117,000 a month. Moving in the right direction, but still way too fragile a recovery to withstand the impact of a constricted economy. A few of many examples of making cuts sooner rather than later.

  • You constrict the economy = less jobs. One major reason for the recent growing deficit is so many people out of jobs, or in under paid jobs paying almost no taxes.
  • Cutting education and teachers – High tech is the future of jobs, slash them and there are fewer good paying jobs for Americans and deficits grows because fewer have decent jobs.
  • Raise social security eligibility age. If you raise the age for ss people will work longer and young workers will not find jobs.

By not focusing on the clear and present danger – jobs and our economy - we have done significant damage to our hopes for the future. We’ve again chosen the wrong path.

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow -4.62% big
NASDQ -4.09% big
S&P 500 -4.42% big
Russell 2000 -5.16% -

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

  • Fear, Fear Fear dominates the markets and many believe we are in a selling climax[translation - almost everyone whose going to sell has already sold] A climax sell off is when there is huge, increased volume behind the selling. This huge volume/meltdown has been the case for over a week.
  • Outflows from mutual funds (see below) also indicate a climax sell off. However, everything gets exaggerated because over 60% of all trading is done by High Frequency Traders. I would imagine even more than the 60+ is now being done by HFT’s because of the huge volatility. New HFT’s rule – Technical aspects may be secondary to headline driven markets
  • CAUTIONEven more mom and pop investors have left the markets in the latest meltdown. High Frequency Traders rule even more than before. This is what is creating the massive interday volatility (especially in options). Don’t be fooled into thinking these are normal investors getting back into the markets – its HFT’s taking a an ever bigger and bigger share of US equity trading. $16.94 billion in outflows from mutual funds last week almost equaled the record held by the week directly after the HFT induced “flash crash”
  • The McClellan Oscillator (MO) fell to -87.80 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). Were at almost OMG oversold levels.-88 is not as bullish as the -142 a couple days back.  But, technical outlook = Bullish
  • Reading The Tea Leaves - Stocks are moving on headlines and that move is exaggerates by all the HFT trading. The macro headlines are worries over Europe’s banking system and a downgrade of France’s AAA credit rating.

From yesterday Bottom Line… More often than not lows are retested before a rally.

Bottom Line - Lows were certainly retested yesterday.

So the stage is technically set for some kind of oversold rally. However, fear dominates right now and fear is driven by headlines. (Example – S&P downgrades France from AAA credit or bond yields in Italy/Spain rocket higher again.) Sorry I’m just not fast enough on a short term basis to predict headlines and how markets will react. HFT’s do this in microseconds.

Longer Term Outlook

weeks, month, months

  • RepeatMay 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.
  • Long Term Outlook Listed Below. Some major Long (monthly charts that go back over a decade)term trend lines have been broken (will go into this tomorrow) = Bearish

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Paul’s Corner

I’ve mentioned HGSI quite a few times as the software I use to research and evaluate stocks. It’s  a powerful and easy to use program.  HGSI usually features a webinar every month demonstrating the program and giving trading tips.  Their next webinar is as follows:

Join HGSI Power User Ray Ebert on on Tuesday August 16th from 8:00 pm to 9:15 pm EDT.  Ray will present  ” Prospecting and Trading Within a Weekly Timeframe.”

Ray has been using HGSI since 2009 and earlier this year was selected to be a “Spiker,” an elite-level member of SpikeTrade, a trading community managed by Dr. Alexander Elder and Kerry Lovvorn.  In his first quarter as a Spiker, Ray distinguished himself by winning first place for equity and 2nd place for points in the weekly trading competitions.

For traders/investors who are challenged with finding the time to trade regularly or who want to incorporate more structure into their trading routine, Ray’s presentation should be of great benefit.  He will share his disciplined weekly trading methodology using HGSI and other software.  He will also give examples of how he manages his trades and provide technical analysis of stocks submitted by the audience.

Registration   www2.gotomeeting.com/register/382039138

I encourage you to join in for some good trading tips!

So on another 500 pt drop yesterday, where did the money go? My favorite top 100 high demand search shows gold stocks  led the way with 25%, Oil & Gas Transporation 7%, Prec. Metals 7%,

Gold (25.00%, 25 securities)

  • Agnico-Eagle Mines (AEM)
  • Allied Nevada Gold Corp (ANV)
  • AngloGold Ashanti Limited (AU)
  • Aurizon Mines  Ltd. (AZK)
  • Barrick Gold Corporation (ABX)
  • Buenaventura Mining Company (BVN)
  • Coeur D’Alene Mines Corporat (CDE)
  • Eldorado Gold Corp (EGO)
  • Gold Fields Limited (GFI)
  • Gold Resource Corp (GORO)
  • Goldcorp  Inc. (GG)
  • Harmony Gold Mining Co.  Ltd (HMY)
  • IAMGold Corporation (IAG)
  • International Tower Hill Min (THM)
  • Jaguar Mining  Inc. (JAG)
  • Kinross Gold Corporation (KGC)
  • Minefinders  Ltd. (MFN)
  • Nevsun Resources  Ltd. (NSU)
  • New Gold  Inc. (NGD)
  • Newmont Mining Corporation (NEM)
  • Novagold Resources  Inc. (NG)
  • Randgold Resources  Ltd. (GOLD)
  • Richmont Mines  Inc. (RIC)
  • Royal Gold  Inc. (RGLD)
  • Yamana Gold  Inc. (AUY)

Oil & Gas Storage & Transportation (7.00%, 7 securities)

  • El Paso Pipeline Partners LP (EPB)
  • Enterprise Products Partners (EPD)
  • Magellan Midstream Partners (MMP)
  • ONEOK Partners  L.P. (OKS)
  • Plains All American Pipeline (PAA)
  • Southern Union Co (SUG)
  • Williams Partners L.P. (WPZ)

Precious Metals & Minerals (7.00%, 7 securities)

  • Endeavour Silver Corporation (EXK)
  • First Majestic Silver Corp (AG)
  • Hecla Mining Company (HL)
  • Pan American Silver Corporat (PAAS)
  • Silver Standard Resources  I (SSRI)
  • Silver Wheaton Corporation (SLW)
  • Silvercorp Metals Inc. (SVM)

Careful with the gold and related stocks, the CME raised margin requirements on gold

So what’s the market going to do today, is this a new morning in America? Let’s load up ThinkOrSwim………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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Current Positions

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

NLYAnnaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide.

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 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.

DisclaimerPersonally I own  a group of dividend stocks including NLY.  I have placed puts on all of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some 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

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September 2, 2010

Fear

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , ,

Fear

Each day two classrooms in the United States are emptied in the USA because these children are diagnosed with cancer.

Yet the brainwashing American media yesterday, from networks to blogs, focused on a “mentally ill, homeless and violent” man with guns and a bomb holding three hostages in Silver Springs MD.

Our culture has simple become conditions to over hype anything with guns, bombs and a potential terrorism because fear of terrorism sells politically and commercially. Your chances of dying from cancer, diabetes, heart attacks, or going brain dead from alzheimer are thousands of of times greater than a terrorist attack. Sure, we should be vigilant but we should also recognize reality.

Wikipedia reports that only 16% of the approximately 200,000 rapes a year in the USA are reported. How many classrooms are emptied because of the million women who get raped each year in the USA? Yet our American media growing trend is to focus on any potential terrorist related violence rather than rape.

Guess which country is #1 in the world in number of reported rapes so far this year?


——

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow +2.54% ?up
NASDQ +2.97% down
S&P +2.95% down
Russell 2000 +3.81% -

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. Jim Cramer -”BB/HFT make up 80% of trades.”

Quotes from yesterday - “Churning. “More often than not a big battle like yesterday between bulls & bears means a reversal in direction. In this case that would be a rally….Overall think the BB/HFT’s are setting up for a rally.

We had one big rally in slightly above average, but decreased volume. (sorry for  ”?up” above – couldn’t clearly read the NASDQ volume chart) This is your typical rally in a BB/HFT controlled market.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, of course, fell  a whopping -0.82%.  Because the BB?/HFT are obsessed with the inverse dollar/stock relationship, you’d naturally expect a huge drop in one gets a huge rise in the other = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.03% yesterday. After a 5 week rally the BDI has flattened out. Now starting to rise. = Neutral/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 +6.81 Now above Zero, & both 50 & 200DMA’s. Nowhere near +/- 60 so there is lots of wiggle room on each side, but momentum obviously with bulls. Therefore = NEUTRAL

Reading Tea Leaves

Monitor, a trader, in comments section of blog describes the MO forecasting tool best – “An observation – The McCellan Oscillator works!!!!! Plus or minus 60 seems to be a reasonable point where markets turn. If you like to take risks just go long or “buy the dip” when its under minus 40 and wait. Within a few weeks it will be at over 40 and sell”

It actually not all that cut and dry, but the general focus seems to be correct for a Long Term NEUTRAL market.

Mea Culpa - For long term investors there was a point over a week ago when the MO was below -60 & the Dow fell another 100 points which was a buy point.  Personally, as the record shows, I did buy some long positions TYH & SSO, but let the FEAR of loosing $ force me out of those positions with minor gains instead of holding onto those positions. My mistake.

Obviously another typical BB/HFT rally where short positions are forced to buy stocks to cover their positions. This gives added momentum to the rally.

September looks to be one roller coaster ride, now with an upside bias. There will be buying and selling points for both traders and investors. Stay tuned.

The obvious sub trend brought about by globalization is the economic deterioration of the US economically  vs the ecomomic rise of emerging markets and energy rich countries (peak oil mega trend – see Overview section of blog).

Will the emerging markets grow fast enough to pull the USA out of the Great Recession?

Positions

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

Current positions –  EWS (Singapore)

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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August 18, 2010

YOUR Comments

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , ,

Protesters in New York City oppose the plans for building a mosque near ground zero. | AP Photo

Photo from Politico of all white Tea Party activists – Queston should the USA have the same level of tolerance as Saudi Arabia or are we better than that?

Your Comments

Mainstream media (CNN & others)has chosen to give priority to right wing groups that believe we should ban all  mosques in the USA. Yankee Bob has returned to the comments section with a rebuttal -

Exactly right!

Fear is the Mind Killer! Prejudice is born of ignorance! We fear that which we do not know or understand! Enlightenment is much harder to attain. It’s easy to be afraid of what you don’t know or understand. That’s easy. Seeking the truth is hard!

Think of what prejudice has cost the world. How many Genocides? How many victims of Genocides, Enslavements, Victims of Prejudice  were denied their human rights. What does that mean as a social cost? Suppose Einstein had been murdered  in  a Pogrom before he gave the world his Theories. Suppose he had been denied his eduction because of a quota on student seats for Jews! How many potential Einstein’s were lost at Auswitz? Suppose Drs. Salk were denied becoming Drs because they were Jewish! The Dr that developed the procedure for blood transfusions that has saved the lives of countless millions,died after being in a car crash and was denied a transfusion because he was Black! What if he was in that crash before he developed his discovery. We have lost so much as a society because of the fear that ignorance inspires!”

Yankee Bob

JS has a lot more valuable information on covered calls in the comments section. Also Dave & Jim J (bonds) have some added information Kudos to JS for initiating and leading the discussion on an alternative method of investment

If you don’t watch the comments section each day your missing out on some of the best investment ideas and most passionate editorials.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow +1.01% up
NASDQ +1.26% up
S&P 500 +1.22% up
Russell 2000 +1.28% -

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.

Weak volume rally is typical US for the BB/HFT.  Although volume did pick up a bit as short positions scrambled to cover. Weaker dollar & rally abroad played a part in this.

NBThe US markets are , for the most part are being engineered by the BB/HFT and now the Fed has taken an even more direct role. Investors411 has beat the drum over the BB/HFT’s, so lets do the FED.

The FED – It was perhaps no accident markets moved higher when the Fed at 10:15 AM EST yesterday opened its window to start to buy Treasuries. Lower treasury rates pushes investors seeking higher yields into stocks. More important Zerohedge.com does a good job describing what happens when cash is given to potential traders. Future auction that inject cash to major traders will occur 8/19,24,26 & 9/1. So stocks should have an artificial boost on those days. At Zerohedge read anything with symbol POMO – Permanent Open Market Operation.

Bottom Line - You’re not getting the Fed’s money and we could see a little juice added to stock on the above dates. Plus the day before traders may rally in anticipation of new cash.

Cash rich companies are also buying back shares – they certainly are NOT hiring American workers.

Significant Indexes

  • The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar fell -0.38% yesterday. For stocks = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.09% yesterday. Has broken up through 50 day moving average. Overall trend still = 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 +3.14 Neutral

Reading Tea Leaves

Emerging markets due for a consolidation after a nice 3/4 day run. MO in neural and the FED injections of cash through 9/1 should keep the nasty Hindenberg Omen at bay at least for a while.

Positions

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

Current positions – EWZ & EWS

Each time we have a MO below 40 and a dip, I plan to buy.  First nibbles and the lower we go the more riskier ETF’s.

Same strategy – Will sell 1/2 ETF at @3 to 5% gain/loss and let the rest ride till the MO moves higher. Sold 1/2 of EWZ at 70.88 for @ +3% gain. Both EWZ & EWS opened and closed near the same levels. In the language of technical analysis this usually means at least a short term trend reversal.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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August 17, 2010

Fear is the Mind Killer

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , ,


6-25-martyrs

Photo of dead Moslem Freedom Fighters in Stolen Iranian election – Investors411 6/26/09

“Fear Is The Mind Killer”

Frank Herbert’s SF novel Dune was the first place this expression was used.

Fear mongering works especially in politics but it has long lasting and significant consequences.

Back in the 50′s President Eisenhower made a very unpopular decision to support sending a little black girl to an all white school. He sent in the 101 Airborne to protect her. This nation that grew strong because we grew united – all races & religions became more tolerant.

Now The major US news story being fear mongered is the possibility of a Moslem cultural center a few blocks away from the former site of the Twin Towers. Have we all forgot the events of last summer?

On June 21st Investors411 ran the following picture of Moslem Freedom fighter Neda Agha Soltan

Bloodgirl

How the Fear Mongering Will Spread

  • Fear monger advocates in the USA  blame ALL Moslems for the attacks NOT al Quaeda fanatics
  • Moslem Jihadist groups like Hezbollah, Hamas, al Qaeda will respond and “say see the USA is not about freedom” as word of the hatred of the Islamic Center in NYC spreads.
  • The blood lusting jihadist will hold up the example of the NYC Moslem culture center to all their potential recruits as an example of how ALL Americans hate ALL Moslems.
  • Fear mongering right wing polls in the USA will say Hamas, Hezbollah and Ahmadinejad wants a Culture Center. You’re either with them or us.
  • And so the fear will grow into a deadly spiral

The fear mongers on both sides will be political winners, and our Military industrial complex (weapons our #1 export and we are 43% to 60% of the worlds military budget) Osama Been Forgotten & company is laughing in his cave at the of thousands of new recruits he will enjoy.

The biggest losers are those who believed this country stood for religious freedom. Not just here but the moderates throughout the Moslem world, especially those moderates like Neda who fought and died on their own or with us in Iran, Iraq, Pakistan, the Sudan or anywhere in the world.


KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow -0.01% flat
NASDQ +0.39% flat
S&P 500 +0.01% down
Russell 2000 +0.92% -

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.

Pitiful volume and flat US market.

Covered Calls

We all owe a debt to JS for an illuminating presentation of a more conservative form of investing.  From the comments section of the blog –

“This is a strategy I use to replace CD’s bonds when rates are extremely low. My goal is to replace the income lost by such low rates. This is NOT a strategy for growth. This is a strategy to severely limit losses.
Example using today’s prices: buy CSCO $21.95; sell a COVERED call for January 2011 at strike price of $17.50. (this means you have sold the right for someone to buy CSCO from you for $17.50 anytime till 3rd Fri in January 2011. You will get $5.00 for selling this option. Why did you do this? Because they paid you a premium above current price for this option: $21.95 minus $5.00 =$16.95 (your net cost of CSCO. Math: 21.95 minus $5.00 =16.95, your net cost. Taken at $17.50 = $.55 profit after 5 months which equals 7.78% year. ( $.55 divided by 5 months =$.11 x 12 [ to get yearly rate] =$1.32 divided by your net cost [$16.95] =7.78%.

Positives: you beat CD rates; you have 20% downside protection (from 21.95 to $16.95). Even with all the fear out there, prices are not highly inflated, so 20% is decent protection.

Negatives: you MUST own CSCO till end of call date Jan, 2011. To sell CSCO, you MUST buy call back.
If CSCO stays above $17.50 all the way to $50, CSCO will be taken from you for $17.50. But remember, this strategy is for income above current CD rates.
Cost for this is: $8 to buy 1-1,000 shares, $16 to sell call, and if taken [you have really sold CSCO] $8, for a total of $24. To keep costs low, one should commit $10,00 or more for this.

Remember, this is income part of my portfolio; I’m trying to limit risk as much as possible. CSCO has to go below $16.95 (my net cost) to lose money. You must buy companies that have much cash and won’t go under. Also, after Jan 2011, I can sell another call.

Significant Indexes

  • The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar fell -0.50% yesterday. A fall of this magnitude should have translated into a rally in stocks. =
  • The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +0.81% yesterday. Has broken up through 50 day moving average. But upside momentum slowing shows possible trend reversal. Overall trend still = 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 -26.12Neutral

Reading Tea Leaves

You have both the dollar dropping significantly and most emerging markets in the third day of a rally. Yet US stocks have failed to move.

Somethings got to give. – Rally Ho. – Perhaps its short term, but it could be a sharp rally as short positions caught off guard. Remember I’m reading tea leaves.

NB – This rally is dominated by BB/HFT traders.

Positions

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

Current positions – EWZ & EWS

Bought  small positions yesterday in EWZ (Brazil) at 69.00  & EWS (Singapore) at 11.99

Will add resource rich Australia EWA in list of ETF’s

Each time we have a MO below 40 and a dip, I plan to buy.  First nibbles and the lower we go the more riskier ETF’s.

Same strategy – Will sell 1/2 ETF at @3 to 5% gain/loss and let the rest ride till the MO moves higher.

Long Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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June 29, 2010

Fear & Reality

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Afghan War

Karzai & Petraeus

Fear Is The Mindkiller

911 was a horrible & catastrophic event that needed a response. Since then just how many US citizens in the continental USA have died from a Muslim terrorist attack? There were a handful who died from Anthrax eight years ago, and when the Muslim army guy went berserk at Fort hood a dozen died. Total – maybe 20

So how many die each year in the USA from lightning strikes? – 90 Over the course of the last eight years(90×8) that’s 720 deaths by lightning vs. @ 20 from Islamic related terrorism within the USA.

You are 97% more likely over the last eight year to die from a lightning strike that a terrorist related event within the USA in the last 8 years. Yet we spend trillions on terrorism (consider all the TV shows, editorialists, fearmongering, wars in Iraq and Afghanistan, wounded care, etc etc etc. and nothing on lightning strikes.

Hell I’m far more scared of dying in a traffic accident, cancer, diabeties, a robbery or a lightning strike than I am of a Islamic terrorist incident.  So why spend trillions fighting on the other side of the world instead of spending that money on something useful like cancer research or deficit reduction?

Democrats in congress are blocking $3.9 billion in nation building aid to the corrupt Afghan government. Bravo!

Unfortunately apathetic and fearmongered Americans will do little to support those Democrats standing up to the US war machine and the Obama/Petraeus 3rd surge nation building plan. Nita Lowey is the chair of the budget committee that holding up this money. Give her a call and say Bravo.

Fear is the Mindkiller, and we live in world where we are manipulated into believing and spending $ as if your chances of dying from an Islamic terrorist are greater than those of dying from cancer or diabeties. Wake up to reality

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow -0.o5% down
NASDQ -0.13% down
S&P 500 -0.20% down
Russell 2000 -0.55% -

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

Technicals, Fundamentals & Analysis

Mantra for week” Any analysis of stocks has become an analysis of what the ”Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.” They make up 80% of trading and right now the huge currency markets are dictating their moves.

The Dollar War

Both side backed off in the dollar war yesterday. The green army (long stocks & short the dollar) ran out of gas after Friday’s gains. The dollar went up so stocks went down. So the red army (short stocks & long the dollar) gained a little ground and time to regroup.

The war, fought by the black boxes and currency traders is over the rising 50 day moving average/support level of the dollar.

The MO is NEUTRAL. No advantage for either side. (see below)

The dollar’s gain +0.54% (see below) is a very minor comeback for the red army that got crushed Friday. The red army its held gound and made minor gains. However, a rise of 0.54% should have translated to a larger for stocks = Neutral to Slightly Bearish

The monthly jobs numbers on Friday, and earnings season’s starting (second week in July) should draw some attention away from currency war.

Significant Indexes

  • McClellan Oscillator (MO) fell to -4.41 [+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.= NEUTRAL
  • US Dollar –  The dollar fell s yesterday +0.51% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The dollar has fallen for the last 3 weeks, but has consolidated (traded sideways) over the last 6 days as the 50 day moving average/support level moves higher. This is where the Black Boxes have focused their attention. Dollar at $85.71 directly above major support/ 50 DMA at $85.14. Monday’s rally = Bearish
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish) BDI is in free fall from a high@4200 to  2482 yesterday.(2501 to 2482 yesterday) This is a huge -40% drop in 6 weeks.  Often a leading indicator for stocks. Now just above a major support level (@200 points lower)Long term. = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekends

Have not yet had a chance to Update over last 2 weekend but there arNO positions held at this time.

Still watching DGP (ETF that’s double long gold) for a dip close to its 50 DMA) – Will buy.

Don’t plan any buying or shorting (ETF that short the market) until MO reaches overbought or oversold

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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February 23, 2010

Fear and Greed

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Holder

At. Gen. Holder defends American Justice System

Fear and Greed

These are the two basic factors that move stock markets and a whole lot more.  Of course they sometimes go under other names- sex, survival, desire, risk etc. but we are manipulated by them. (see yesterday’s update)

Let’s take a look at some work done by two Israeli scientists in 1979 Kahneman and Tversky that show how we all miscalculate data when confronted with simple financial choices.

Group 1 was given $1000 Israeli pounds and given a

  1. 50% chance of winning an additional 1000 pounds – 16% chose this option
  2. 100% change of winning an additional 500 pounds – 84% chose this option

Group 2 was given $2000 Israeli and given a

  1. 50% chance of losing 1000 pounds - 69% chose this option
  2. 100% chance of losing 1000 pounds – 31% chose this option

In this and other experiments K&T showed a striking asymmetry. Fear (risk) of a financial loss was about 2 1/2 times greater impact than a simiar financial gain. FEAR WINS BIGTIME.

Bottom Line – From Investing to politics to anything involving human behavior, almost all of us succumb to this fear biasThe trick or path is to overcome this fear bias and you will get better results. Of course, there are other cognitive traps. (see yesterday’s pop quiz)

Justice System Nails Another Terrorist

The headline says it all. The American justice system worked and we bagged another terrorist yesterday.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage Volume
Dow -0.18% down
NASDQ -0.08% down
S&P 500 -0.10% down
Russell 2000- +0.10% -

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

Technicals, Fundamentals & Analysis

See PositionsStrategy , and Overview for changes made over weekend.

Low volume and nothing really happened. Technically, the longer we remain flat the greater the chances of a fall. Difficult short term call here – but it looks like a small correction then another push higher into oversold territory.

ETF’s- Selling a little (taking profits) into small rallies and more in BIG rally. Sold 1/3 of TYH yesterday at 139.00 for @ +18% profit. Still have 5% of portfolio position in TYH

Significant Indexes

  • McClellan Index fell to +46.16. Basically +60 = overbought and usually a time to sell or lighten up on positions. This is NOT a hard and fast rule but guideline. There has been a sharp fast change and a lot of upside momentum last week. So there is still psychologically a lot of positive momentum out there.

Positions

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

Mea Culpa – Should have added more to stock positions while McClellan Index was down at -60. Since stocks rallied dramatically last week so should any stocks we have on our watch list. Unless there was a special circumstance, these stocks should be outperforming the major US indexes.

Thanks to several of you who are sending in additional lists of prospective stocks. Have not had a chance to study them all yet, but will include them in future lists. Trying to keep list under a dozen stocks. This watch List comes from the stocks YOU send in. Tried to pick best of the ones you sent in. As stated before I’m more confident with ETF’s than stock picking. Since the McClellan Oscillator is close to +60, or overbought – buying now is more dangerous.

Last Update 2/11/10. Recommendations from 2/11 in black. New thoughts in violet

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

  • AAPL - Formed a double bottom trading pattern @ 190 - a buy the dip opportunity Now at 200, but showing danger of breaking down – May be dropped from list
  • CAAS Broke down though 50 day, but has some STRONG volume up days. A China play that will follow FXI. Tempting Lots of volume behind rally days and yesterday had big breakouthold if you own or buy the dip.
  • PCLN Fell below 50 day moving average. Formed a double bottom bullish trading pattern. A buy the dip opportunity Big earnings breakout – market leaderwished I had bought itNow wait for dip.
  • FOversold, and well down from highs. Has formed a base at 10.5  - a buy the dip opportunity – Flatlining or Forming a base
  • DRWI - Big exporter to China -  Sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip . Weak volume behind move upMay be dropped from list
  • ENOC New – Reduces costs for utilities 50 day MA acting as support Potential buy the dip Breakdown
  • 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. Now own 3% Due for correction - sell 1/2 into rally – buy on dip – or just hold if you’re a long term investor
  • GS, Often considered the #1 Shadow bank seems to have formed base at @ 150 Tempting. Up a bit but volume dropping Not Interested
  • CSCO, Techs new leader Moving up despite rocky market a by the dip Up, but tech not leading markets now – Better than AAPL – Not Interested
  • SHOO, Great long term chart. Pulled back and is forming a base. Would like to see a bigger base, but tempting Moved up to old high/resistance level - Needs breakout- Tempting
  • ICON, Did NOT form lower low over last two weeks as markets toasted a buy the dip Slow steady move higher with breakout yesterdayA buy the dip
  • VPRT Another stock that weathered recent pullback well a buy the dip Moved up to breakout level and pulled back yesterdayA buy the dip
  • DGIT Thinly traded, but potential winner – just broke above its 50 day MA a buy the Dip Had breakout in big volume and is now dipping - A buy the dip
  • CTCT Rebounding stock, has a of good volume up days has breakout potential Broke out and is in pullback- A little weaker than other choices, but buy the dip
  • VCI Good volume, good chart Somewhat overextended A buy the dip underway – Major breakout, then rallied more and yesterday big dropToo volatile for me

AnalysisNotice that the vast majority of these stocks moved higher as conditions of overall US equities went from oversold to (almost) overbought. Big lesson here is to buy when markets are OVERSOLD. YOU have chosen some pretty good stocks.

I’m familiar and use VPRT & PCLN. Plan to own them on dips hopefully sooner than later. Others that look decent on dips are CAAS, ICON, DGIT & CTCT

Caution – Markets are close to overbought

Will go over a few of the new stocks you have sent in later in week or early next week.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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