Making YOU money

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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!

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!

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!

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!

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

-

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 !

WHAT’S UP – China leading world out of recession; Huge stimulus and Chinese banks loan package has dramatic positive short term impact on stocks; Shadow banks are winning in their tug of ear with Obama’s administration: Stress test results; Investors411 recommended positions have possibly best day ever!

-

China

Chinese Banks are lending money - big time They were not nearly as over leveraged as American shadow banks and China. Their stimulus which is bigger per capita than the USA’s is also helping turning the Chinese economy. A second stimulus package is projected soon. Some outstanding growth stats announced yesterday. Some details on China’s stock’s explosion higher yesterday here and here

For more see 4/16 Investors411 blog on China or (recommended) Positions section of blog

Bottom Line – China is leading the rest of the world out of the recession. In the long run this much stimulus is going to be inflationary.

Shadow Banks

There’s the good, the bad and the ugly about shadow banks. But the the good is the fact that they are leadings stocks higher, It seems in the tug of war between increased governance  by our government and allowing US banks to continue to move in the shadows is moving in one direction –  the Shadow’s are winning, NYT story.

Stress Test

Shadow bank, Wells Fargo was thought to be one of the banks that failed the government’s “Stress Test” and it moves up +24% on the stock market.  Talk about moving higher on bad news = great for stocks.

“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter”    Full WSJ story

Why Tom Friedman is Wrong (part 2)

Sorry Started this when my server/modem went crazy on me last Thursday. See his editorial “A Tortuous Compromise.” in which he invisions a decent wesern US democracy in Iraq. 

Imagine Rush Limbaugh and the far right coming together as “brothers” with Move On and the far left. Multiply that times 10 and add a mountain full of oil money/power to fight over and you have how the Shia feel about the Sunni’s in Iraq.

What happened is the Shia (60% of the population) kicked ass in a civil war over the Sunni’s (20% of the population and Saddam’s group) Add to this years/decades of mass killings. This is almost as bad as imagining Hamas and Israel coming together in one democratic love fest. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

-

Technicals & Fundamentals

China (FXI =+8.95%) (see April 16th blog)and Financials (shadow banks) added high octane jet fuel to last week’s breakout.

S&P 500 turns positive for the year! SPX closes at 907 – First major technical resistance level at @ 940 (an old high and close to the 50 day moving average)

XLF - The ETF that tracks financials (mostly shadow banks )Broke out of its consolidation pattern and rose +10.14% in increased above average volume.  Therefore, volume confirmed a huge breakout. If you’re in recommended ETF’s that do 2x & 3x what the XLF day you did spectacular. (see positions)

The XFL had been consolidating between @ 9.4 & 11.3. XFL closed  above breakout levels at 11.73 .

A Wowie Zowie Rally!

Wow! Yesterday was a fabulous day for Investor’s 411 recommended Positions.

See Positions at top of blog. Most Investors411 recommended  positions did 2 to 4+ times better than US markets. Both China and Financials are recommended ETF’s (see positions) 

Even GEX (alternative energy) was up +9.95%.  Also Brazil (EWZ) was up +5.98%.

Reading the tea leaves - Obviously, would love see stock positions hold onto their gains and not rocket higher or lower. Moving too far too fast is reason for concern. Consolidation over a few weeks is best in the long term for bulls.  

Those shorter term traders should obviously book some profits soon. Why be greedy? There should be a whole lot of traders buying the first dip today.  Let’s see what happens after that.

Caution – Don’t get all caught up in this good news. There are massive economic problems out there in the USA and many foreign countries.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

China 中國 -  The Trend.  It almost seems inevitable that our children are going to have to learn to speak  Chinese unless there is a dramatic shift in the major economic trend  - China - The Good , the Bad, and the Ugly.   Its Exchange Traded Fund- Ticker Symbol FXI has been the #1 Investment recommendation of Investors411.

China from Google maps

The People’s Republic of China 中國

For some basic information see

• Positions section at top of blog (scroll down to FXI) – contains  reasons to invest.
• Wikipedia will give you a more comprehensive overview

GDP –  China’s GDP numbers have just been published for the last quarter – +6.1% See BBC story. China (@$7 trillion per year GDP) is getting hurt by the worldwide recession. However compare it to the USA 4th quarter GDP -6.3% (@ $14 trillion per year GDP)  

China’s figures are the lowest since they started keeping figures in 1992. They are down 0.7% from the previous quarter, obviously because of the worldwide recession.  The economic trend is also obvious. China’s economy is growing far faster than the USA’s. It may only be a matter of years rather than decades before they become the #1 economy in the world.

Recent Headlines

• China moves into Latin America – Today’s NYT
• China moves to become #1 in the electric car – NYT
• China’s Shopping spree – Time magazine

China has over a $2 trillion dollar surplus compared to USA’s $11 trillion dollar deficit  

Note – all these figures are suspect. China’s even more so than the USA’s.

The Bottom Line – The economic trend is clear. China is economically rising and the USA is sinking. Right now, the economic gap between these two counties is closing at an accelerating rate.. You may not like this trend – but if you have kids or grandkids teach them to speak Chinese.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

STOCKS

Technicals & Fundamentals

Major US stock markets (and most foreign markets) rose yesterday in decreased below average volume. 

XLF - The ETF that tracks financials (mostly shadow banks) rose +4.83% in decreased, below average volume.  Financials have lead this rally and if they  collapse so will almost all other sectors. The loss in volume (the #1 confirmation factor of a price move) is troubling for the bulls.  This could be the first sign of a correction.

Short Term Outlook - Similar forecast to yesterday – First technical chink in the bulls armor appeared Tuesday.’s big volume sell off. A small gain yesterday in decreased volume is not bullish.  

Too early to make a call, but short term traders should pay attention. The Danger signs to watch for - another big price/volume decline probably led by financials and/or stocks moving lower on no news or good news.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!