“Applauding Death”

The Onion

A quote from The Onion has created a massive controversy.

The words “Jon Huntsman Onion” have 453 references asking about the validity of the quote and article, including the first one from ABC news.

Many thanks to RF who often updates us with the Borowitz Report. The “Huntsman quote” below -

“When I saw the numbers and realized Republicans weren’t embracing my message, I breathed easily for the first time in months…They’re terrifying. We’re talking about people who blame the unemployed for their own predicament and literally applaud the idea of letting those who don’t have health insurance die. What would it say about me if they gravitated toward me personally or approved of my political principles?“

The Reality

In the  America I grew up in you cared about your neighbor, community and country.

Today we sanctify greed.

Instead of shared self sacrifice, that person in the voting both could really “blame the unemployed for their own predicament and literally applaud the idea of letting those who don’t have health insurance die.”

The facts on health care aren’t a parody.

We live in the richest country in the world. A country where the 400 wealthiest people have as much wealth as the poorest 150,000,000 Americans or 80% of households.

The Organization for Co-Operation and Development OEDC is 34 nations banded together to promote just what their title says.

Their 2011 Report based on 2005 data show the USA with  far more expensive health care system and we narrowly edge out one other country for dead last in life expectancy. Just like the previous UN study.

LINK To Charts and editorial

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STOCKS

The Bulls are Back

The Cute white bear cub no longer leads the Stock Section of Investors411.

The short term bearish trend could not hold on

China leads and they are going to be around for a while. While US markets have moved @ +20% off their early Oct. lows China has moved @ +40% [FXI] FXI -ETF for 25 Chinese stocks – is on the verge of a breakout.

Yeah, Europe still matters, but China alone counts for 25% of worldwide growth.

“Wall Street Profits at Record Levels So Why Aren’t Stocks?” CNBC - CNBC sanctifies greed, so another headline might read “Wall Street Profits are Back So Why Isn’t Employment?”

Stocks rallied into the close on some pretty bad Euro/Italy bond data. Rallies in good news put the bulls back in charge – at least for the short term.

Our two forecasting tools remain in NEUTRAL – So there is plenty o room for a move either way.

The list of photos above on financial reform was from Dylan Ratigan’s MSNBC show. Obviously you can add to list.

Financial Reform DOA

Simon Johnson and the folks at the Baseline Senerio have thrown in the towel on financial reform. Virtually every Republican caved into the shadow banks lobbyist, but the real disappointment - so did Obama, Geithner and Summers and many Democrats. It’s disheartening to read that the Obama administration helped kill Kaufmann/Brown legislation and other substantive reforms.

There may be a few crumbs that the shadow financials have lost, but opaque casino capitalism where your FDIC dollar in banks insures their trading of highly leveraged derivatives will thrive – Privatizing gains and  socalizing losses continues. Shadow financials, obviously would rather trade derivatives than make less lucrative transparent loans to homeowners and buisnesses.

The shadows of over leveraged, opaque, Casino capitalism will thrive in the coutry that is/was the leader of the free world. For the future, let’s borrow a line from Shakespeare’s Macbeth- Something wicked this way comes

Tea Party Patriots and Deficits

Deficits are bad. No question. Building a future on growing debt if you own 50% of the worlds weapons leads to one of 2 things – You bankrupt the future, or you kill your debtors. I suppose you could find a third way where you hold a gun to the head of a debtor, but after a while somebody’s going to kill somebody. – Again – Something wicked this way comes

However,  Before you worry about your debt you have to worry about the soundness of your financial system and keep it from collapsing.

• Fixing financial problems and giving us a fundamental transparent capitalism would enable real transparent, democratic, economic, growth.(see above)
• Increasing debt to keep our financial system (even though it was/is a shadow system) from collapsing and creating a second great worldwide depression was more critical

This is what TPP’s can’t understand. We’ve prevented a worldwide economic meltdown, but we haven’t fixed the system. These two priorities are the foundation of economic growth and therefore supersede deficits.

You want to cut military spending, put a means test on social security/medicare, raise taxes to what they were under Reagan – great. It will cut deficits.

However cutting the National Endowment for the Arts, cutting funding for some pork project, screaming drill baby drill is NOT going to decrease the $13 trillion deficit in any substantive way.

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	-0.08%	down
NASDQ	-0.90%	down
S&P 500	-0.39%	down
Russell 2000	-1.03%	-

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

Technicals, Fundamentals & Analysis

The news that China was devaluing its currency announced over the weekend got sharply tempered. As uncertainty over the China move grew, so did the dollar and the algorithms used by the “black boxes” that control 80% of stock trading kicked in and sold stocks. A triple digit Dow gain faded into a loss = Bearish

This is hardly the first time the Chinese and economists have sharply tempered a government statement about devaluing currency. Let’s take that feather (for now) from Obama’s/Geithners cap and wait to see what happens as the G 20 nations meet.  This also toasts the Fearless Forecast for this weeks trading.

The reversal in the dollar (See below) could mean an overall change in market outlook, especially if the dollar moves higher again today. Today would be confirmation day of the dollars move higher yesterday.. Right now the major institutions  that run the markets have set their stock market algorithms to currency fluctuations.

FXE – The ETF that tracks the Euro sure looks like its starting to turn and head lower.

Bottom Line – The one way to put the odds in YOUR favor that has a reasonable chance at success in stocstoks/ETF’s is to use the MO. The higher it goes the more you sell, the lower it goes the more you buy. Obviously NOT a hard an fast rule, but a good general guide. Currently, as explained above, currency fluctuations are dominating trading.

Significant Indexes

• McClellan Oscillator (MO)fell to +35.08 [+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. Clearly more overbought than oversold, but has pulled back from overbought levels.
• US Dollar –  The dollar rose yesterday +0.43% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. Yesterday – “The dollar seems destine to fall to its 50 day moving average which is $1.06 lower and rising.” The dollar fell to within 0.39 of its 50DMA to $85.01 then rallied a significant +0.94%..  This was the largest gain in the dollar in 11 trading session. For stocks = Bearish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped is in free fall from @4200 to @ 2600 yesterday. This is a huge -38% drop in  Often a leading indicator for stocks. Now at/ just above a support level. Clearly long term  = Bearish

Positions

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

Have not yet had a chance to Update over last weekend.

ETF to watch today is the China ETF - FXI – up +3.48% yesterday. The stock from Your Sock List is China’s BIDU

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

I think it was Pogo in the old Walt Kelly comic strip who said it first “I’ve seen the enemy and it is us.”

It Just Gets Worse – Gulf Oil Spill

The NYT is headlining that the size of the spill has been seriously underestimated (Perhaps 4 to 5 times larger) & drilling was allowed in Alaska/elsewhere without permits

Whistleblowers, BP hiding data, BP not following regulations, a giant oil  & More from Big Oil Spill Page

Perhaps, the most alarming or sensationalized news is in the following from Dan Froomkin at Huffington Post -

A new analysis of sea floor video indicates that nearly 70,000 barrels could be gushing out every day, NPR reports. That figure is at least 10 times the US Coast Guard’s original estimate of the flow, and “the equivalent of one Exxon Valdez tanker every four days.”

Bottom Line - The technology may be revolutionary and work, but human error and greed always are factors not entered into the equation. This does changed the balance on everything from drilling off shore to nuclear power for me. (more later) You just can’t mess with Mother Nature. The only way to ensure people play by the rules is to have a strong, (if it has to be) big, tough government that enforces these rules.

If our politicians protect shadow financials or any shadow company (BP) – they should be voted out of office.  All we have now seems to be crony casino capitalism.

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	-1.05%	flat
NASDQ	-1.26%	flat
S&P 500	-1.21%	down
Russell 2000	+0.87%	-

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

Technicals, Fundamentals & Analysis

Stocks moved significantly lower in weak, below average volume. Because volume was weak = NEUTRAL

From Yesterday - All week long the 50DMA of the benchmark S&P 500 has been mentioned as a key resistance level = RED light for markets.

What happened yesterday - Stocks again bumped all day against the 1173 S&P resistance level. It became evident that the S&P 500 was going to not break out. At 3:00 PM EST  all the major institutions came in and sold driving the market down toward its key @1150 support level. S&P ended day at 1157.44. Closing at low = Bearish

If we close below 1150 today = Bearish Therefore 1150 is the line in the sand to watch.

The increased size of the Gulf oil Spill is going to be along term negative on most stocks, if the new analysis turns out to be correct = Bearish

European stocks down @ 2% this AM. = Bearish

Shadow banks seem to be winning the financial reform battle = Bullish

Significant Indexes

• McClellan Oscillator fell to -29.08 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is NEUTRAL territory.
• US Dollar – rose +0.63% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important Dollar Rules because it broke out to new high is a significant move. = VERY BEARISH
• The BID – Kept climbing. It has broken out to a new 5 month high. The Baltic Dry Index measures the cost or flow of goods/trade between countries. This is positive for export countries like Brazil and China and commodities. Goods costing more means trade is increasing. One analysis of this is shipping costs are rising because of Gulf oil spill. = Neutral

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Sold ( took profits in) 1/2 of Investors411 positions in TYH yesterday when it became evident that we were NOT going to break out in the S&P 500.

Time to take some profits, especially if you did not yesterday. (no one goes broke taking profits)

• The dollars breakout move yesterday is very bearish in the long term.  The dollar is rising because the Euro is falling.  Most analysts I’ve heard expect this breakout to continue.
• The McCellan Oscillator is in NEUTRAL territory and has a ways to go before -60 or even lower. It did get down to -123 last Friday . Do not believe  we will reach those levels again soon. But, the dollar is acting like an anchor on any stock advance.

Traders sell at open and/or wait for a rally.

Again the major tipping point is a drop below S&P 1150 support. Perhaps it will hold, but if the dollar keeps moving higher the best US stock will do is move sideways.

China FXI is going nowhere.  As mentioned earlier this week it is a canary in the coal mine stock.  This canary over the last few days did not rise as fast as US stocks. Therefore it has started to chirp. FXI is one position Investors is going to sell today.

Yesterday @ 5+% was taken off the table (see Positions) & will do another 5 to 10+% today.  That total will be up to 1/2 of what was recently invested.

We can buy back in when the McClellan reaches a lower level. Obviously I could be wrong, but the dollar’s move is significant.

GLD is looking good to buy on dips.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

-

Mental Health Break

From the NYT a photo/video Lens on the World

Absolutely fascinating!

Grant 1949 writes in the comments section yesterday - They just keep finding ways of stealing more money from the people who are just trying to survive… read full comment on right side of blog or here

Yep, It’s frustrating when you see the growing divide between those working just trying to keep their heads above water and the power elite in this country.  Frustrating when only 33 Senators vote to break up the big shadow banks. I agree

Hope we all can take some time out today and just ENJOY!!! Give yourself a Mental Health Break

Check out three of  hundreds photos I loved from the Lens on the World – (If you surf the site it just takes a second to load each photo these take @ 10 seconds)

• click here
• or here
• 0r here

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	-0.34%	down
NASDQ	+0.03%	down
S&P 500	-0.34%	down
Russell 2000	+0.85%	-

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

Technicals, Fundamentals & Analysis

See Positions for changes made each weekend

Stocks held onto the gains made on Monday in expectedly lighter volume. After you have a climax sell off in HUGE volume you expect volume to wind down. = Bullish

The old pattern did NOT returned yesterday, & institutions sold into a 1% rally at the end of the day.  Markets are dominated by huge institutions (Hedge Funds, Banks, Investment houses etc) who all have super fast computers and use trading algorithms. About 1:30 these “black boxes” decided to sell and we ended lower.= Bearish

The benchmark S&P 500 closed  at 1155.79. S&P next major resistance level is the 50 Day Moving Average at @ 1172 and support at @ 1150. This is the major trading range to watch. What happened yesterday was the upper end of the trading range was approached/hit (@ 1172) and the HUGE institutions sold. = Bearish

Great source for what’s happening live in markets around the world & in the US before 9:30 EST Wall Street opening at CNBC Slight upside bias for US right now,Europe, Asia basically up, but this could change in an instant

Significant Indexes

• McClellan Oscillator fell  to -53.40 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is just below OVERSOLD territory = buy = Bullish
• US Dollar – rose +0.38% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important  Dollar is down from last Thursday’s closing and Friday’s interday high. Still close to breakout levels = Neutral
• The BID – has broken out to a new 5 month high. The Baltic Dry Index measures the cost or flow of goods/trade between countries. This is positive for export countries like Brazil and China, Goods costing more means trade is increasing = Bullish

Positions

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

I revised all positions held by Investors411 yesterday. In POSITIONS (Click on the word at the top of the blog and scroll down to 2010)  As part of house keeping I’m going to eliminate the 2009 positions this weekend.

FXI – Investors411 bought this ETF in the China ETF.  This was done based on the volume behind China’s bounce on Monday and the fact that the BDI is rising.  Like most long ETF position there is a 5 to 7% stop loss limit.

Bottom Line - This is a canary in the coal mine investment - if China can NOT move up despite a rapidly improving BDI (see above) then stocks all over the world are in trouble. There are a lot of investors fearful of a China bubble bursting.  We’ll see.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Dr Delos Cosgrove – From Fortune Magazine

The Cleveland Clinic

There is something in this Fortune Magazine interview of  Dr. Delos Cosgrove, head of the world famous Cleveland Clinic (#1 ranked in cardiac care for last 15 years – yet charges much less than other major hospitals) for all sides in the Heath Care debate.

How does he get his world renowned doctors to work for salaries? His concepts on health care? His ROI (Return on Equity) No yelling, screaming and politically motivated statistics.  Agree or disagree with Dr. Cosgrove – but the 40,000 who work for the Cleveland Clinic get results.

Nothing else, this one editorial is worth focusing on.

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	+0.05%	up
NASDQ	-0.06%	up
S&P 500	-0.17%	up
Russell 2000	-0.67%	-

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.

A significant rally (all major indexes up over 1.00%) collapsed in the last hour of trading. Biggest single factor behind the fall was the rise in the dollar against other currencies. The last two times we had a breakout of the dollar (click on chart to see trading pattern for early Dec. & mid Feb. below) the dollar rose another 2 to 4% after the breakout.  The dollar rising historically is NOT good for stocks.  We had our rally of the last few weeks when the dollar was flat.

The problem specifically is Greece, but other European countries are in trouble. (Portugal, Italy,Ireland & Spain plus many former USSR satellite counties)  A third cause of Greece’s problems not mentioned yesterday is corruption or total lack of transparency.

We also have a significant problem rising and that is in long term  government bonds. A sale of 7 year Treasury bills did not go well. CNBC analyst gave them a D. The 10 year T bill has exploded higher the last two days and broken out of its trading pattern. Notice strong positive correlation between the 10 year and dollar.  Basically interest rates (yields) on the ten year are going up. T bill now at 39.01 which roughly translate to a 3.9% interest rate.  Over 4% or better 4.25+% and the whole recovery is in trouble.

The world’s economically interconnected. The fact that our stock market stayed strong despite a rising dollar shows strength, (hope this is what JAB is trying to say in comments section) but its starting to wobble.

Two fundamental factors may help stocks - We are nearing the end of what looks to be a relatively good quarter for stocks and the monthly jobs report late next week has three reasons to expect a decent number – new government census jobs, snow distorting calculations, and some recent weekly gains.

Explosive situation could go either way The rise in the dollar/10 year treasuries almost merits taking out the “Lost in Space” TV show robot with all the bells and whistles and shout DANGER WILL ROBINSON DANGER DANGER As many of you know the DANGER signal is  as loud as I shout about impending doom. If the dollar & 10 year treasury yields move higher (so will interest rates) not only are stocks in trouble, but so is the whole economy.

We are running up to a cliff.  Today and next week are critical for the dollar and the 10 year Treasury bond. Therefore also critical for stocks and the economy.

Significant Indexes

• McClellan Oscillator fell to -16.92 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. -  The $NYMO chart has made a series of lower highs and lower lows = Bears Rule.
• US Dollar - rose another +0.32%. This confirms the breakout and huge move of two days ago. Dollar closed at $82.16 = Bears Rule
  

Positions

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

All our 3 D stocks, the ones Investors 411 owns and hopes to own are significantly outperforming the overall markets.  Short term – Dreamworks Dragons movie opens this weekend and Titan’s next weekend are adding fuel to their rally. AIWL is still packing them in at IMAX, but How To Train Your Dragon starts today.

Going to take profits on long term holding FXI

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Making YOU money

$$$$$$$

Mega Trends, Investments. Fundamentals, Technicals, Economic and Politics all interact. Checkout OVERVIEW LINK section of blog. You can agree or disagree with the politics, but you can’t argue with the results.

• FXI -our #1 position up over 50% this year
• EWZ – our #2 position up over 100% this year
• GLD – our #3 position – up over 20% this year
• 5 year record of beating the benchmark S&P 500
• See position section of blog below

American’s Just Don’t Get it

From Huffington Post – Fall of Berlin Wall

I don’t know if its ego, religious zeal, stupidity, greed or whatever.  We are totally out of step with the rest of the world on lots of major issues. One issue is especially relevant – 20 years after the fall of the Berlin Wall where supposedly Capitalism triumphed -

The BBC asked – Is Capitalism Working? Here’s the results from from 29,000 people in  27 countries – LINK

• 11% yes capitalism is working well.
• majority believe capitalism needs more regulation and reform – obviously not many members of the US congress seem to agree/
• 23% believe it is fatally flawed.

YOUR Comments

Checkout recent posts by Sherwehe, Bob Sadinski (always passionate), & D .  Sherwehe has an excellent follow up to what’s happening to our financial system. LINK

D worries “are our investments safe.” Short answer is always NO. Nothing is absolute. Israel could nuke Iran tomorrow. But the mega trends continue

Right now, in the short term, its starting to be is a better time to take profits than add to positions.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+2.03%	up
NASDQ	+1.97%	up
S&P500	+2.22%	up
Russell2000	+2.06%	-

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, Fundamentals & Analysis

Another major rally in weak anemic volume

McClellan Indicator LINK Investors411 is going to include this forecasting tool far more often. There are other indicators that tell if a market is overbought or oversold, but this one is easy to understand and is really working well right now.

Key to chart – 0 is neutral and when you get to @ +60 you are overbought and approaching-60 you are oversold)( buy at oversold and sell at overbought) We are going to use this chart a lot more. Yesterday the index moved from @-10 to +20

As stated many times before The new #1 forecasting tool is what happens to the dollar.= Yesterday the dollar dropped was huge so the stock market rally

FEARLESS FORECAST FOR WEEK -  It looks like we are in rally mode . The dollar rules and yesterday it fell to its major support level. Usually a major support level at least temporarily halts any fall. However, last week India spooked the entire investment world by buying $7 billion in gold. This has put added pressure on the dollar that basically crashed yesterday. Best guess – we hang on for a while but dollar falls and stocks rise.

——–

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 @ 18% 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 rose a significant +87 points yesterday and closed at 3480. We look to be starting another major move higher. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1400 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

——-

The Dollar is currently the #1 forecasting tool .

$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

US dollar dropped a HUGE -0.92% yesterday. The dollar closed at $75.06 .  This is directly above its, line in the sand, support level.

From last week – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.45 this AM . The support level is a t @$75.00 Both are important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow.

Positions

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

Sorry have not had a chance to update this in over a week .

Investors

FXI – China – (now 25% of portfolio) At new high – up over 50+% this year

EWZ- Brazil – (now 20% of portfolio) At new high – up over 100+% this year

GLD (now 11% of portfolio) At new high – up over 20+% this year

Comments – All major positions have beaten the benchmark S&P 500 . With all our major positions.  This is clearly NOT the time to add to these positions.  Investors 411 buys the dips. Short term investors could even take some profits.

Going to add Indonesia & Vietnam ETF’s – but waiting for dips. Also going to add DGP (this ETF does about 2x what the GLD does) – More explanation later.

SPX – Sold entire 20% position for 1085 (this was done to free up cash for other investments and take profits)

Traders (short term plays) These are no t ETFs, but individual stocks

Extra Note of Caution here – Even though I always warn you AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! please note I’m far less confident in individual stock picks

NVS – (5% of portfolio)  We’ve already sold 1/2 of this. Now up 15+% since bought

CSCO – (5% of portfolio) Flat since we bought position a few weeks ago.

AMZN – (10% of portfolio) Bought last Wednesday – Got lucky and this stock has risen 9% in less than a week. Going to sell 1/2 (hopefully into a rally today) and let the rest ride.

Long Term Outlook – The dolar looks like it may bred down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH when this happens.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

GDP = + 3.5%

This better than expected number is obviously a positive . Its due to the Obama & Bernanke stimulus – Cash for clunkers, tax cuts, first time home buyers credit, low interest rates etc.

It’s the first positive growth in over a year . Since only 40% of the Obama stimulus has been allocated and interest rates should remain low -  the next few quarters should also be positive.

The question becomes when you take the stimulus away what will happen?

Globally the canary in the coal mine is Israel, Norway and Australia. We are a globalized world and these 3 countries have already started to raise interest rates. If their economies continue to grow with raised rates others will follow.

The US does have a specific unemployment problem that will anchor it down longer than other countries. (see below). However, we’re getting some real growth abroad, especially emerging markets. Hopefully, this growth will be strong enough to drag the US along with it.

Jobs, Jobs, Jobs

So far the recovery act has saved or created enough jobs to “shave @2% ” off the unemployment figures. You can get a breakdown state by state at Recovery.com LINK

You can debate their figures, but a jobs recovery is going to be harder than most predict because

• The financial shadow bank crisis created a much bigger hole than most people realize
• Globalization will send most new jobs abroad.
  
• Education of American workers/students has not kept pace with technology.
  
• Our huge deficit will limit stimulus needed to create jobs.
• Our manufacturing base has been seriously diminished.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+2.05%	down
NASDQ	+1.84%	down
S&P500	+2.25%	down
Russell2000	+2.45%	-

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, Fundamentals & Analysis

The Lon Term Long Term Outlook is back to CAUTIOUSLY BULLISH As mentioned yesterday – When the Long Term Outlook is changed we often go back and forth for a while as stocks move above or below key support levels

The discouraging part of yesterday’s rally is THE LACK OF VOLUME . Once again upside moves have little volume and downside moves greater volume. Volume has historically been the #1 confirmation factor of market direction. So this is a very bearish sign

However – The Dollar Rules. Yesterday the dollar moved above the previous days high and closed lower than its low (See chart below). Technical analysts get very excited about a reversal that “engulfs” the previous days move. It fell  over 0.50% which is a significant drop. Investors411  predicted this because it was approaching its  strong resistance level – its 50 day moving average.  As long as the dollar remains below this resistance level - Bearish for the Dollar & Bullish for stocks.

Monitors Question/statement (see comments section of blog)  Sorry I’m not being clear. Yes, I did recommend adding (nibbling) to Brazil and China yesterday (I did) & yes I did lower long term outlook. These ETF’s (FXI & EWZ) had dipped more than 5% & were “buy the dip opportunities.”

NEUTRAL -  Even though it is a downgrade it is still an overall environment that some ETF’s should do well. When  CAUTIOUSLY BEARISH becomes the Outlook – t hat its time to sell. Secondly, as mentioned we are on the cusp of change. Lastly, This market is very difficult to call because the old rules about volume have been cast aside and the dollar now rules.

The Dow is outperforming other major US indexes – This is probably due to the fact that these 30 giant stocks benefit most from the falling dollar (relative to other US companies most of more of their profits come from abroad)

Bottom Line – There are no universal rules in market analysis. Right now the Dollar is trumping volume and all other factors in predicting the direction of stocks and this is quite unusual.

——–

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 @ 30% 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 rose a modest +27 points yesterday and closed at 3013. Exactly what it lost yesterday. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 900 points since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict he daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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

US dollar fell a SIGNIFICANT -0.67% yesterday. The dollar closed at $75.96 .  This is almost exactly on its support/resistance level of $76.00 . 

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at 76.78 this AM. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions  as we get close to this resistance level.

Past statements -Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

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

Outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - Our problem is one of timing. We can’t get a 5 to 10% dip to invest. Looks like we will get at least our 5 to 10% dip now.  Investors 411 should have much larger positions in emerging markets .

Current positions

EWZ (Brazil) – Bought at 69.5 (4% of portfolio)  Now = 20% of portfolio

FXI (China) – Bought at 42.75 (4% of portfolio) Now = 24% of portfolio

GDL = 11% of portfolio

SPX = 20% of portfolio

For traders also have positions in NVS & CSCO

• Going to sell some SPX -reasons – Free cash for other investments & take profits
• Need more diversity in emerging markets than just China and Brazil
  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Tom Friedman’s Dream/Nightmare

Sunday TF wrote an editorial LINK that opened with imagining President Obama in 2012 standing in Iraq under a banner “Mission Actually Accomplished .”

This is the dream of anyone who wants to build a 20th century colonial empire.  The person who should be standing ALONE under any banner in Iraq in 2012 or any future date is an Iraqi President.

• Britain got out of India – It wasn’t pretty but the end result is the world’s largest democracy in India and a fragile democracy in Pakistan.
• The US got out of Vietnam – Again it wasn’t pretty, but now Vietnam has one of the world’s fastest growing economies and even its own ETF – VNM . Like China there is one party rule, but millions are coming out of poverty into a growing middle class.

Our efforts to colonize the Muslim world have made the overall situation worse, cost trillions in dollars and who knows how many lives. Let the nightmare of colonialism go .  If there is a clear and present danger – act. Now we are on the verge of nation building in Afghanistan whose #1 economic product is opium not oil. It’s long past time for a change to a new strategy.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.08%	up
NASDQ	+0.50%	up
S&P500	+1.22%	down
Russell2000	+2.04%	-

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, Fundamentals & Analysis

Reading the Tea Leaves -  BE CAUTIOUS volume has in no way confirmed the move higher. If you look at the beginning of the bull run (March April and May)(check out weekly charts of a major US index) there was huge volume behind the move higher. You expect some slower volume in the summer, but volume has not returned to the markets. In fact there has been significantly more volume on downside days than upside days this month.  Our #1 confirmation factor of price moves is calling for – bears to rule

The Dollar (see below) The slow/moderate fall of the dollar is a trader’s dream . One danger for a fall in the dollar is the rise in oil prices. $100 dollar oil would negatively impact stocks.  As long as the dollar falls it holds up stocks. – Bullish for stocks

Bottom Line – Still CAUTIOUSLY BULLISH Long Term Outlook (see below) The dollar trend is the trump card that is firmly in place. Every big volume decline is trumped by the falling dollar that pushes US equities higher. The second major reason is the stimulus packages in emerging markets like China, India and Brazil have worked. China, especially, never entered recession and the growing middle classes here has led the world equities higher.

The drag is concentrated in the USA. Why – We already had a huge debt, our financial industry still has  huge phony unregulated profits, and we are/will be wasting trillions trying to nation build.

——–

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 @ 30% 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 rose a significant +42 points yesterday and closed at 3043. A higher high price on its chart pattern has been confirmed The BDI has been rising (with one bump) since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict he daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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

US dollar rose a significant +0.56% The dollar closed at $75.47 . Bullish for stocks

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

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

Trades made this week are updated at the end of the week. -  Sold 50% of position in EWZ and all of EWY. – This sure looks like – a big mistake – Should have been adding instead of subtracting – especially EWZ – Still no one ever went broke taking profits. - Sorry – Did not update Positions section.

Outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - My problem is one of timing. We can’t get a 5 to 10% dip to invest. Investors 411 should have much larger positions in emerging markets .

For Traders (not long term Investors )

NVS - One of the 2 stocks owned (the other is CSCO). This is a swine flu play. Obama has declared a national swine flu emergency and NVS’s vaccine is not due to be distributed till mid December.  NVS is going to have too little too late. Taking profits today. (You could also sell 50% and put in a stop/sell order)

EWZ – Yes it was a mistake to sell 9% of this. Buying it back.  Will add to both FXI (China) and EWZ this week  A falling dollar is just an additional fundamental reason to own these areas. Other reasons have been listed over and over again.

Traders – Three major tech stocks leading the charge – Hope CSCO joins them when it reports earnings.

• AAPL – cutting edge computers and telecom revolution (phone’s) moving into China.
• AMZN – Fabulous earnings report and forecast.
• GOOG – Internet adds is growing even in USA.
  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Capitalism’s Most Ruthless Monster

John D. Rockefeller who owned 90% of US  oil at the beginning of the last century many thought earned the title back then.  The NYT’s Frank Rich LINK , Salon’s Glenn Greenwald LINK and MSNBC’s Dillon Ratigan – LINK all seem to be nominating Goldman Sachs for this position.  Over the top analogy – yes. But it does have some basis in fact. Ratigan , a former analyst for two financial channels has the best explanation (video) .

Basically, GS  received $70 billion from the government & the Fed while the financial world almost collapsed.(see Ratigan video) GS took that $70 billion and bought everything financial for incredibly cheap prices in the collapse.  They bought stuff with our money that allowed them to keep from collapsing. They "didn’t pay a dime for this money." Basically "legalized theft."  As the authors point out former GS employees permeate both the Bush and Obama administration. How do we get rid of legalized theft?

• Demand claw backs
• Get rid of invisible exchanges
• Stop placing GS executive and their protégée’s  in charge of our government
• Limit (GS on track for $29 billion) bonuses to firms who got bailed out.

President Teddy Roosevelt broke up the big monopolies including Rockefeller/Standard Oil. Will any of this happen now? Not under the Obama administration or any Republican administration – Too many GS folks running government economic policy. Some bad PR perhaps, but like Rockefeller did, GS will throw shinny new nickels at the poor/us taxpayers – As taxpayers we got royally screwed.

Investing in GS and its main rival JPM (JP Morgan) may be similar to investing in a ruthless capitalist monster(s), but also an obvious financial winner(s) The competition was devastated, they have profits from our cash, the backing of our government, they’re smart and therefore, they rule. -Recommendation – Buy these stocks on dip s

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.67%	up
NASDQ	-0,76%	up
S&P500	-0.81%	down
Russell2000	-1.15%	-

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

• prices fell and the #1 confirmation factor, volume, was mixed = Prices falling always bearish, but volume inconclusive
  
• Better than expected earnings for most companies yet markets fail to advance =  Short term bearish signal
• Dollar rose Friday (see below) = obviously short term  bearish for stocks, But longer term pattern bullish
• BDI (see below) forms higher high on its chart =bullish for worldwide recovery

FEARLESS FORECAST – Short term it looks like we are over bought and companies not moving higher on good earnings results. This is an indication of a short term correction. However The FED and the US government is not going to stop shoveling cash at the market as long as unemployment is so high. US companies are not hiring and will first hire abroad where labor is cheaper and growth faster.  So the cash shoveling will continue and Wall Street, once over bought situation is corrected, will continue to rise and the dollar fall.

Apple reports this evening

——–

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 @ 38% 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 rose +40 points Friday and closed at 2728. This confirmed a higher high price on its chart pattern =  Bullish for stocks & world trade right now

——-

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

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

US dollar rose +0.15 % The dollar closed at $75.62. We have developed a suppor t now resistance (it’s called support on the way down and resistance on the way up) 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 major and very crucial support level.

Positions

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

Review of Positions (Part 1) All recommendations for longer term investors unless otherwise indicated.

GLD – ETF for gold – Technically broke out over major resistance level at @ 100+. This is mostly a play that the US and other debt ridden G 7 nations will keep throwing money at economic problems till unemployment situation reverses itself. The longer this takes the higher GLD will go.  Mid 2010 is best read of tea leaves on this, but the created jobs will be tied to government bailouts in the US and not US companies producing jobs. – Recommendation – Buy the dip

EWZ – ETF for Brazil – This country is going parabolic in price now (not volume).  Going way up too far too fast. Very rich in natural recourses and more progressive government has meant more money for middle and lower classes who juice the economy and spend the cash. Due for a moderate/significant correction. Recommendation If there is a big spike in volume take some profits.

FXI – ETF for China – China has gone up too far too fast this year and is now lagging or mirroring US equities. China’s growth and huge stimulus package (relative to GDP) has led a worldwide recovery.  Somebody coined the word Chimerica and its true. Both economics are bound together through globalism.  The US middle & lower classes are shrinking , but the Chinese middle class and lower class is growing. This is now a decade(s) old trend.  Recommendation buy China on dips

EWY – S. Korea (much smaller position ) Tied to Chimerica, but N. Korea is a problem. Traders may want to take profits on any rally. There seem to be better countries to invest in like energy rich Canada, Australia or any country that is not consumed by debt and wasting money fighting wars. – Recommendation Hold or take profits on any rally.

More tomorrow. Including individual stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

WHAT’S UP? – Another terrorist attack in the USA – Rachel Maddow editorial on terrorism – O’ Reilly,  Boss Limbaugh, left and right wing anti Semitism, hate groups and those who water them – Obama as the #1 target. – Reading Stock tea Leaves – Change in GEX position – and more.

Terrorism in the USA

Rachel Maddow Editorial Linked Below

Photo – Virginia Sherwood for NBC

• Gun loving terrorists ambush/kill 3 Pittsburgh cops. They were afraid Obama may limit gun rights.
• Abortion Doctor killed by pro life terrorist at his church
• Army recruiter killed by newly converted Muslim Terrorist
• Latest headline – Security guard a holocaust museum killed by anti Semitic, right wing, anti government, anti black terrorist, who believed Obama was not born in the USA.

These are the last 4 major terrorist incidents involving loss of life that American Corporate media has splashed on the front pages.  Of course they missed all the deaths/terrorism due to domestic violence.  This mostly involves killing women, who may have it better here than in many other countries, but are still second class citizens in the USA.

Many in the USA are part of a violent, gun loving culture that preaches hate, loves it torture, & and is conditioned by fear mongering. Boss Limbaugh (Talk show host Rush Limbaugh) according to a recent USA Today poll is #1 person on the list of the leaders of the Republican Party (To be fair a majority thought the party leaderless) Limbaugh preaches that Obama is more dangerous that al Quaeda.

Another influential hate monger Bill O’Reilly repeatedly likened the deceased abortion doctor to Nazi doctors and called him “Baby killer.”  Even members of the far the left wing in this country has started using anti Semitic statements referring to all Jews. While its hard to prove a direct link, People like Limbaugh,  O’Reilly and others  water the ground of this hatred.

Is the threat of right wing extremism getting worse? Economic turmoil and our first black president have further enraged the hate. Rachel Maddow has an excellent editorial on her MSNBC show last night.

Obviously, the major target of all these haters is Barak Obama.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.27%	up
NASDQ	-0.38 %	up
S&P500	-0.35%	up
Russell2000	-0.80 %	-

-

Technicals & Fundamentals

$USD – The dollar is the index to watch You could write a book on the dollars influence on everything but for us the bottom line right now is – When the dollar goes down -stocks and oil prices go up and visa versa.

XLF - The ETF that tracks financials (mostly shadow banks ) have been flat for three weeks. Financials has been the leading sector and as financials go so go the markets. Financials are lagging Techs. Yesterday financials down -1 .52%

WTIC - Oil prices closed up +1.89 to $71.33 As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

BDI - The Baltic Dry Index measures the flow of goods (world trade). Stated before -  This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism) Down for sixth day in a row, but the rate of decline is slowing. This follows 24 days of going up. So extended moves the normal this index.

Reading The Tea Leaves

Volume has Never really confirmed the breakout we had last week. Even though staying above breakout levels is a confirmation, one would really like to see an increased above average 1%+ gain for major US indexes.  We keep bumping up against another breakout level and failing.

Right now, markets seem to have over extended themselves and a 10% correction would be good in the long run for stocks . Trading is very light except for the NASDQ which is near average. (Summer trading is usually light)

Conclusion – Very light trading – This is a traders market and traders move fast.  Still expect and hope for a slight pull back or consolidation.  As stated before looking for entry points/dips to buy back into  some or all of the following –  QLD, EWZ, IFN and PBW (see GEX below) –

China, India & Brazil are growing and they are leading the world out of the recession. The USA has some “green-shoots” of hope, but there are big long term problems here.

Positions – (See positions section of blog for more)

• FXI – our major position here rose +2.89% yesterday. This is the third failed attempt at a breakout. FXI was actually up 2=% more almost at a new high and pulled back.  It looks like FXI has formed a short term top.
• GEX – alternative energy - +0.77 yesterday. GEX is trading at or near anew high for the year. We are going to change to the other major ETF that does alternative energy PBW . This alternative energy ETF is more liquid but its also outperforming GEX. We have been in PBW in past years and went with GEX because it outperformed. This will be a slow transition over the next month. Already sold 1/2 position in GEX and will add that $ to PBW on a small (5%) dip.  Then sell other 1/2 and wait for a dip.
• The HEDGE – Almost no change. You can get a rough idea how this position does by looking at the difference between the NSDQ and S&P 500 – (-0.03% and multiplying it by 2) instead of looking up SDS and QLD

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING G !