Investors 411 Blog

Dow 10,000

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

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

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

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

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

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

Investors411 recommends the following  (see overview for more)

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

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

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

Put on your Rally caps and watch volume – Today should be the day that we know if the money on the sidelines is willing to start to get back into stocks.

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

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

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

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

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 40% (I haven’t done the math) off its high (early June) Before that it gained almost over 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

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

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

Stocks went up so guess what happened to the dollar – The dollar reached a new yearly low fell a significant -0.46 % The dollar closed at $75.47. We have developed a support level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB –

• Earnings will probably trump the dollar as the #1 influencing factor for the nest two weeks. But the falling dollar is the main driver of stocks right now and we have a long way to go till we hit last year’s $71 low.
• A slow decline in the dollar = good a rapid decline = bad .
  

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

Positions

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

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

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

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

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

Sold FAS yesterday for +8% profit

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

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

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

Outlook is still CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

The Crash, Bailouts and Future of Wall Street

James B. Stewart has an excellent and frightening  editorial in the New Yorker (you have to subscribe) that starts by describing just how close the world came to total financial collapse. Bernanke, Paulson, & Geithner are heroes for preventing the fall over the abyss. Of course, they’re villains for helping to create this mess too.

Pulitzer Prize winner, Stewart goes well beyond this (If any of you can find a link to this editorial please share it) Here’s a valuable Q&A on his piece from the New Yorker LINK

Willing to bet – Less than 5% of American’s  have some understanding of what happened (the crash, the bailouts, and solutions) Everyone, running around like chickens with their head chopped off,  screaming, or just plain angry.  Instead of listing to the dogmatic screamers – get educated – take some time and learn what happened.

Your Comments

Dr. Gold has written a  guest editorial for Investors411 and has  just posted some valuable insight on the health care debate. Check out the comments section of the blog for her wisdom and all the other comments.

They’re Back

Financial Weapons of Mass Destruction (Warren Buffett’s term) Credit Default Swaps are becoming popular again just one year after the major economic meltdown that almost created financial Armageddon throughout the world. Bloomberg , a major financial radio, TV, web, and print outlet headlines the following “Credit Swaps Lose Crisis Stigma as Confidence Returns.” LINK

Obama Scraps Missile Shield

Front Page NYT. LINK

Finally. Remember the missile shield that was supposed to be built in eastern Europe (Poland) to protect them from a country over 1000 miles away – Iran.  Made no sense then and none now. In the event of war with Iran what you want to do is to keep them from destroying the Saudi oil fields. Perhaps this will bring about some detente with Russia.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.12%	up
NASDQ	+1.45%	up
S&P500	+1.53%	up
Russell2000	+2.07%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Technically, A significant big volume rally = Bullish sign Some money is coming on off the sidelines.

CAUTION – This market is up 8 of the last 9 days. It’s overbought.  Look at any huge rally in big volume as  climax selling – and sell (take some positions off the table) into that rally. Sometimes a climax can be two days of intense buying.  It would be great for bulls to have a flat  or down day in decreased volume.  Don’t think this will happen because there are so many waiting to buy the dip.

This rally is based on a falling Dollar (down 8 days in a row) The dollar is oversold and reaching a support level (not a really strong support level).  This combination of oversold and an upcoming support level should hold for at least a day or two.

A dollar that slowly declines helps stocks – up to a point. At some point (perhaps close to last year’s low or huge declines above 0.50% for a few days) a cascading dollar becomes a problem because it shows a lack of confidence in the USA - our debt is too huge.

This is another free market stock bubble building – the questions become will it grow too large? & when will it burst? As long as there are

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off and started to rise over the last few weeks. BDI fell a minor -16 yesterday. They are small losses, but the index has fallen 5 days in a row. BDI trading at 2415 and has recently formed a resistance level at 2388. Would not trust any stock rally, especially in foreign exporting countries if the BDI breaks down significantly below this number.

2388 is number to watch We are getting mighty close to support levels . Another down day is reason for caution.

The BDI is 41% off its high (early June) Before that it gained almost +170% from early April to Jun e

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

The dollar has fallen 8 days in a row.  It dropped  -0.37% yesterday. Dollar trading at $76.18 . The last two days have seen rallies in the dollar crushed. There is a support level around $76 (lows from Sept & Aug. of last year)

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

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

Positions

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

Current positions listed as % of portfolio

• EWZ (Brazil) 12%
• FX I (China) 18%
• XLF (financials) 10%
• GLD (gold) 10%
• EWZ (S. Korea) 5%
• SPX (S&P 500) 20%

Other positions discussed – But  Investors411 does NOT recommend individual stocks. I personally own- bought a week a two ago.

• NVS (Novartis)
• AAPL (Apple)
• FAS – (3X financials) – I’m in and out of this ETF

Other positions mentioned, but not bought – AIG, C, GS

Would be more focused in taking a little profit from investments especially the closer you are to being 100% invested. Remember this is NOT you’re old buy and hold market. – There are still financial WMD’s out there and rallies/collapses that used to take years now happen in days/weeks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!