Get Money Out

Get the money out of politics. YOU can make a difference.

You can continue to be sheeple or perhaps take that first step

All you have to do is sign the petition then pass it on to your friends.

If you don’t fight for your democracy who will?

• Obama’s biggest contributor (bundled) was Goldman Sachs
• Romney’s biggest contributors are from Wall Street.
• Chairmanships of congressional comittees are now decided on who gets the most contibutions from the sector they govern. (Example Banking comittee – the poll who got the most $ from banksters gets to be chairman)

Want to know more LINK

Last Blog for Week

Back Monday

__________________

Stocks

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

The below Chart is from ETF Digest’s David Fry. David shares the same cynical opinion that Investors411 has on High Frequency Trading (HTF’s) that dominate stock trading.

His Chart shows what happened to US equities (specifically the influence of HTF’s who are “in charge”)

• Long Term Stock Trend - The benchmark S&P 500 (see chart on right side of blog) has spent the entire months of August and September trading below the 50 & 200 day price moving average (red and blue lines on chart) – Any credible analyst will tell you that’s a bearish sign.

Investors411 Technical Forecasting Tools.

The McClellan Oscillator

__________________________

Reading The Tea Leaves

Short Term Outlook

days, week+

• Both Forecasting tools have shifted to Neutral.  But HFT dominated markets have built up some major momentum  - So chances are we’ll keep moving higher till overbought indicators start flashing a turn around.

• Financials (ETF = XLF) are the sector to watch. Long term their chart is bearish, like the S&P 500. Shorter term there is a series of lower highs and lows on the chart = bearish. No market rally can sustain itself without this group.

• Bottom Line for rest of week – Bulls still have the momentum, till the MO and PCR reach overbought levels.

_________________________

Demystifying and Discussing

Simple Option Strategies

by JS

PUTS

(Note:  I volunteered for this column when I saw no one else did, and I had years of experience using calls, especially for increasing income on stocks I own.  However I’ve limited experience in using puts, but I can see ways they are very useful.) [Mucho Thanks from all of us - editor]

Put options are a way to force someone (the person who sold you the put) to buy the stock at a fixed price, no matter how much lower the price of the stock currently is.

Note: you don’t actually sell it to someone personally; it’s like buying or selling stock. When you sell, someone invisible  (or an institution) is at the other side, buying it.

Using put options

Puts protect you from indecision and accidents.  Example: if you own CROX and want to protect profits, or you just bought it and want to limit your loss in this volatile market, this put can do it.

-CROX111022P27 (Oct 22, 2011, strike price of 27).   Friday CROX closed at $27.58.  If you paid $27.58 and you bought this put at the same time, this is how you stand:

• Sock price ………………..$27.58
• Put price …………………..$ 1.95
• Cost……………………… …$29.53

If CROX drops, your loss is limited to $29.53 -$27.00 (strike price of put) or $2.53, a little less than 10%.  But the beauty of this is that if it drops, you can still hold CROX till Oct 21 before you “put” it  at $27. It could go down to 20 in a bad day, but you can keep holding it in case it rebounds, and in this market, it very well can. If it goes up past $29.53, you are into profit. In this market, if CROX is a good pick, it could go much higher.

The negative: no profit till $29.53.  The positive: you limit your loss to 10%. If you bought CROX at a much lower price, you’ve also protected your profits.

Put option: negative: increases cost of stock. Positive: real protection till Oct 22. And you can hold stock in case it recovers quickly and reaches profit level.

Please note:  The title of this column is “Demystifying and DISCUSSING Simple Option Strategies”.  It is very helpful to readers of Investors411 if some of you who use options, post some comments.

_____________________

Current Positions

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

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

NLY - Will buy back into  this high dividend stock on Dip. The date you have to hold the stock comes up on Wednesday. Since the 1/4ly dividend is usually between 3 and 4% the stock often goes down close to that amount after this date. Everyone expects this so Put’s offer little protection for this incident.

GLD - From Two days ago – (Investors411 did not make this trade) Traders who can handle the risk – a third gap down at open and another  significant fall should bring us to longer term support levels. GLD is at very oversold levels. This risk on trade worked like a charm. Investors411 on trades takes 1/2 off the table after +5% and sets a stop loss at the price the stock/ETF (GLD)was bought for. Let the rest ride. Kudos for whose who made $$$

Traders - The risk on trade has worked and now watch for overbought signs (MO & PCR) as an exit and a reversal of the trend.

Investors - This is a crowded trade, but I think it’s a winner.  Short financials and long small caps or technology. There will be a slightly different price at the open.

• Short Financials – Investors411 will use ultra short SKF (closed at 78.91)
• Long technology - Investors411 will use ultra long QQQ (tech’s) QLD (closed at 81.13)
• It helps that the prices re almost equal.
• Of course, those who know how to use puts (on financials) and calls (on technology) – this is another way to go.

Exit strategy – I do hope to hold this into the end of the year, but will exit  if it looses over 7% and take some profits after +5%.

Disclaimer - I buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

_________________________

Long Term Outlook

(for US stocks only – not our economy)

CAUTIOUSLY BEARISH*

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

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

So, you going to ignore him?

Tax and Spending

Since Obama and the Republicans answer to the shadow bank, military/industrial and other business cartels in Washington it is important to get get a more unbiased point of view on the budget. Here’s one from today’s NYT. Tax and Spending Myth and Realities A must read since  the cartels dominate the flow of information.

Military/Industrial Cartel

Just how powerful and dominate is this cartel? Their budget has gone up a staggering 81% in the last ten years.  Nothing comes close to creating debt like the military budget yet they are so powerful a cartel that neither Obama, the Republicans or the media address the problem in a substantive way.

The $700 billion yearly usually used as an approximation of the  defense department’s budget is as phoney as a three dollar bill.

• Foreign wars (Iraq, Afghanistan) are treated as supplemental budget items and not included
• Veterans affairs are not counting in this budget, yet this is closing in on 8.5% of total budget.
• Homeland Security (almost 3%) is not part of this budget and so are other smaller related military expenditures.
• Since programs like Social Security are paid for with their own tax or fees and are currently in the black they are not part of the growing federal deficit.  If you eliminate these programs as debt contributors, the military budget alone wind up contributing over 50% of the growing national debt. Some put this figure much higher

So if we take the $1,000,000,000,000+ military budget and increase it by 81% growth over the next 10 years you come up with a $4 to $6 trillion dollar increase over the next ten years that almost every politician in the USA ignores.

You’ve seen Republican’s ignore the King Kong of deficit creators in the Room (far bigger than the 800 lbs. gorilla) and today you will see Obama in a speech to the nation virtually ignore it.

_____________

KISS & Stocks

(Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

_____________

_____________

.

Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• This is different. What has been a 3/4 day market correction has happened in light volume. Used to be we rallied in light volume and sold off in heavy volume.
• The dollar , oil and MO have fallen significantly and the likelihood of at least a technical rebound is growing (see below)
• Republicans seem to want to play politics with the Debt Ceiling. This could have a significant negative impact on stocks. More on this in later Investors411. Surprised the Wall Street part of the Republican party seems to be caving into the Tea Party wing on this.
• The key to US equities remains how accommodative the Fed can be. If it is limited by the debt ceiling or something else – watch out below. Everything will suffer.
• Fed announces POMO schedule though May 14. $80 billion, plus a second program of $17 billion. Can’t help but wonder if this second program will continue beyond the supposed end June 30th. Analysts very divided on a QE #3(more quantitative easing after June 30th)

________________

.

Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   Dollar fell moderately yesterday -0.23%.  The trend since start of year is bearish with lower highs and lower lows on chart, We are at a lower low.  For stocks = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell to -51.72. Almost oversold. = Neutral/Bullish

________________

.

Reading The Tea Leaves

From yesterday – “Looks like we are in for a correction. The dip last month took the MO down to -85 (see link to chart above)” and in past has gone as low as -135.MO at -51.72 now

Bottom Line  Till it Breaks Down – No Black Swan events have been able to seriously impact the Fed liquidity driven equity market. So we are nearing a buy the dip territory.

The dollar at a low, oil prices plummeting last 2 days, and the MO nearing oversold levels shows we are ready for a rebound. If oil , the dollar & stocks continue to fall I will buy the dip. The further the better. This may only be a short term play (day, days, a week, or more).

Debt ceiling Republican soap opera politics in Washington could really hurt stocks. Question becomes will US default? Investors hate uncertainty and this is yet another bond holder to get out of treasuries.

This could kill the duration of the expected rally higher.

What to watch today – For shorter term traders Market movers.

• USO - ETF for oil - Oil up = stocks down – Big hit in last two days – for stocks – Bullish
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks. Now bullish
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows. AAPL rebounded yesterday. Perhaps the start of a rebound rally? Still, overall = Bearish
• Japan Rector Developments - This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting  way over extended and now correcting.

.

___________________

Positions

_________________

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.”

Anne Paterson – State Dep’t Whistleblower

Corporate Profits Highest Ever in USA

The Recession and unemployment is for working class Americans. Wealth is raining down like never before on American Companies. Corporate profits are the higher than ever before even after taxes. What do most major corporations do? Watch the media – They cry, they whines, they finance political campaigns  of those that will even further increase their wealth and limit any benefits for America’s working classes.

“The recession is for chumps, Corporate America is doing  just fine.“ American companies in nominal terms are making the highest profits ever.

Globalized companies send their skilled jobs like software engineers to China where it costs 1/5 the money it does to do the same task as in the USA. (LINK - You have to play with this link and convert currencies) From Apple to Wal-Mart jobs growth is flourishing overseas and even though American’s think, by far, jobs and the economy is the most important problem we have.

Our corporate controlled media, and politicians focus is on fear mongering and distracting American’s from their top priority which is jobs growth and the economy.

WikiLeaks

THE major headline throughout the world has been another WikiLeaks information drop of American military/state department data showing media fabrication vs reality. –  In the following Patterson illuminates that the Bush/Obama foreign war policy (example Pakistan) is like the Titanic heading toward an iceberg.

She –  pleads that Washington’s whole policy is counterproductive: it “risks destabilising the Pakistani state, alienating both the civilian government and the military leadership, and provoking a broader governance crisis without finally achieving the goal”

The WikiLeaks data dumps will probably prove more damaging than the Abu Ghraib photos did in exposing the reality  on the ground.

Will WikiLeaks last? – Its one thing to go after the puppet American government, but when you go a some of those who pull the strings – Shadow Banks. then you can get in real trouble – The next data dump is on a major US Bank.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

World Markets -

The Bulls

• American corporate profits are the highest ever (see above)
• The Fed has announced $600 billion will be dumped into US economy.
• The  POMO Fed program dumped $9 billion yesterday afternoon and stocks rallied.
• India GDP a robust surprise at +8.3%

The Bears

• The Korea Situation could explode
• Smaller European countries are getting roasted in the crisis that began with the 2008 meltdown.
• Now a major country Spain is now seen as the #1 problem.
• Bad news in housing keeps growing

Reading The Tea Leaves -

Technically we challenged support levels again yesterday (1173 on benchmark S&P 500 – closed at 1188) That’s the line in the sand. 1173 is a strong support level and we are approaching it again with the Bears being weak (MO at -35)

The dollar is soaring which should drive stocks lower. Its NOT happening???? WHY – Fundamentally the only plausible answer is the Fed’s printing and dumping of money will go faster the more bad news there is.

Right now holding 1173 is @ 50/50. But even if the 1173 falls. The emerging market side of the globalization mega trend (see India above) is still carrying the world economically.

Three stocks/ETF to watch to help forecast market direction.

• BAC – Bounced off its low yesterday. If this shadow bank breaks low watch out.
• AAPL – #1 Globalization play. Hot technology that makes a huge chunk of its product in China. Rallied recently
• EWY – South Korea

Positions

• EEM – (Emerging Markets ETF) -
• UWM – (2x small cap stocks ETF)

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

See Stocks Below for Hindenburg Omen

Pakistan Disaster

“The magnitude of the problem; the world has never seen such a disaster. It’s much beyond anybody’s imagination,” – Pakistan flood where over 7 million are homeless UN President Ki-Moon.

When Bush/Americans sent Tsunami relief to Indonesia American popularity soared. Today America has far better relationship with the world’s largest Muslim democracy. Indonesia is not without problems, but it’s a whole hell of a lot harder to Islamic Jihadist to recruit where the population is pro American rather than one that hates Americans.

Someone is going to step into the vacuum created by Pakistan’s economic disaster in the world’s second largest Muslim country and  Democracy (@170 million people) Will it be the Islamic Jihadist’s or Americans? Obviously, right wing politicians are absorbed with trying to limit religious freedoms of all Muslims and fear monger political advantage. Its hard to be tollerant when so many on all sides are shouting hatred and fear. Also many of you want the $ to stay at home (unemployment and/or the deficit)

In this case not only will you be helping those in need, but you’ll also make it a whole hell of a lot harder for the lunatic Islamic jihadist to gain support. Here’s a list of places you can donate or simply donate by texting “SWAT” to 50555 to donate $10

Bombing Iran

Intrade puts the odds of the US or Israel bombing Iran at @22% by the end of 2011. Atlantic’s Jeffery Goldberg says odds are much higher (50+%) & In Asian Times Gareth Porter says Goldberg’s wrong.

Investment Bottom Line –  Stocks would obviously take a huge hit on this event.

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!

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Emerging Markets [EEM] turned positive on Friday while US Indexes took a hit in extremely low volume. Emerging markets are once agin outperforming major US indexes and the trades/country ETF’s that Investors411 has used seems to be working again. = Bullish

If you look at the DOW Transports (Friday -0.83) instead of Dow Industrials (-o.16) you’ll find even a gloomy senerio than in last week’s losses. = Bearish

The Hindenburg Omen

Named after the blimp that crashed in 1937, The Hindenburg Omen, is a somewhat accurate predictor technical analysts use to forecast a market crash using the McClellan Oscillator. The WSJ and many other financial outlets picked up on the fact that we had a Hindenburg Omen last week. Here’s the bottom line from the above Wikipedia source. Within the next 40 days the chances of the following happen (using back testing) are -

• a 5% loss = 77%
• panic sellout = 41% & stock crash = 24%
• every NYSE crash since 1985 has been preceded by a Hindenburg Omen

Since we just had Friday the 13th, September is historically the worst month for stocks, you know how susceptible American’s are to fear mongering, I thought I’d let you know what’s in the back of the minds of every technical analyst including those who run the BB/HFT’s.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose +0.38% Friday. This confirmed Dollar on a week long bull run. For US stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.27% Friday. Has broken up through 50 day moving average. But upside momentum slowing shows possible trend reversal. Overall trend still = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -40.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

No mater what help we get from emerging markets, the dollar is still key to stock prices and  has shown no signs of slowing down. Closest resistance level is about $1.00 away (50DMA). Monday’s recently have been the best day of the week and Chinese markets were up +2.11% overnight.

However, dollar bulls & stock bears rule,  the MO has yet to reach -60, and the BDI rally is slowing down. Bulls seem safely locked in the corral.

Positions

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

Current positions - NONE

NB – The whole Positions Section was updated over the weekend. (see top of blog of link here.) I’ve listed many emerging market and foreign ETF’s with links that are again outperforming US markets. Also, references to ETF’s that do +/- 2 & 3 time US indexes and links to YOUR stock list.

More aggressive traders could start to buy/nibble the dip. Longer term investors may want to wait for stocks to move lower. The MO is at -41 and ideally you’d like to see at least -60 before buying. It has reach @-120 in the past. None of these figures are written in stone.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Head of Lehman Brothers Dick Fuld

Friends and Enemies?

What countries do your fellow citizens look at favorably and unfavorably? Gallop Poll has some fascinating results with Canada on top and Iran on the bottom. In black and white, over the top terms – who are out top 3 friends and top 3 enemies? Interesting - 90% is the largest rating up or down.

D’s blog comment

As always check out the comments on right hand side of blog by Popeye, PaulR, D, & Doggie’s Mom on Israel and stocks. One comment is something I think or hope we all share by D -

I’m so sick of those who are blinded by their emotions and stereotype one side as all evil and the other as all good.

Seeking Alpha

Three of you last week sent me editorials/articles from this financial site.  THANKS Reality is money makes the world go around – or at least influences everything from politics to religion. One particular man to follow is Jeff Nielson – read The Plutarch nation about the huge and growing division between rich and poor in the USA – How great the tax cuts are for t he wealthy and how small they are for the Middle class.

Lehman Brothers

Turns out that Lehman Brothers was lying about how much money they had and their accountants (Ernst and Young) backed them up according to a 2200 page report. Lehman’s collapse set off the 2008 meltdown. Seeking Alpha currently has 3 stories on this, but this  Dylan Ratigan video best explains how “the crooks” scammed the world through “repo transaction ” One of the Greatest crimes in history.”

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!

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. (No changes this weekend)

Flat day in weak volume. Volume has NOT confirmed the move higher over the last few weeks. Cutting this section short to answer YOUR QUESTIONS

• What exactly is going elliptical? I really wish there were a clear set of exact rules to follow. Basically, its when a stocks moves too high too fast in big volume – it runs out of buyers and collapses because there is no one left to buy. This can also happen with sellers and going down too fast. This can happen interday (for day traders to use), but most of you are longer term traders than that.  Look at the charts of 3 stocks that have just gone elliptical. IMAX, C & CNAM (the later went elliptical @ a week ago. Common characteristic three or four days of a 20+% move higher in HUGE volume. Usually the bigger the climb & volume the worse the drop afterward. First off going elliptical is almost always a time to sell.  The harder question is when to jump back in. (tomorrow)
• Are TYH and other ETF’s that do 2 and 3 times what a market basket of stock do dangerous to hold overnight? See PaulR’s always astute market comments on the right side of blog. Short answer is YES. If you look at the “candlestick” chart of TYH over the last 6 months you will find several times is opened @3+%lower and one time in late November it opened @5% lower. This puts it in the same category  as “high beta” (hot stocks) stocks like Citigroup. Citi’s chart shows a  few more days it fell over 3+% and one time in December plunged @7% overnight. There is a big risk in both.
• Solution – First learn more about the technical aspect of investing. Second you can mitigate the risk by buying less.  Say you think technology is going to go up so you buy QQQQ (basically a tech ETF that mirrors tech.) THY does roughly 3X what QQQQ does. Therefore, Invest 1/3 the money in TYH that you would have in the QQQQ. It’s then almost the exact same risk in total money and you have 2/3 of your capital earning interest or for another investment. This is called leverage. And as many of you know there are a zillion other ways to mitigate risk through leverage. Some good (like this if you don’t go & over leverage your whole portfolio) and some that can get you and the world in a whole lot of trouble.

Significant Indexes

• McClellan Oscillator fell a again to +51.09 yesterday. We are still under +60 or Overbought territory. StockCharts has a better version of the McClellan chart ($NYMO) LINK. Two weeks ago week the NYMO reached a high of 75.33. Interesting fact here NYMO is falling as stocks slowly melt up.  This is probably due to the fact that this Oscillator takes into account volume that is declining.
• BDI - The Baltic Dry Index, which measures the cost of world trade (also a good indicator of how China is doing since they are huge exporters/importers) has exploded higher in the last few weeks. After flattening for a few days it is again starting to explode higher = Bulls rule
• USD – The Dollar 0 Friday the dollar -0.58% and broke through a support level.  In the past there has been a strong correlation between a falling dollar and a rising US stock market. = Bullish sign
  

Positions

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

Over the last few days several of you have sent emails with many interesting new stocks RINO, CTRP & explosive CNAM are three I’ll add to tomorrow’s watch list.

From Friday “Shorter term traders – ” Bought a 10% (Of portfolio) position in TYH at 151.50. Put stop at that 151.5 and may sell 1/2 for 3 to 5% gain hopefully today. TYH closed at 154.99 – Sold 1/2 TYH at 156,oo for +3% gain Friday AM

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Nation Building Quagmire

Ronald Reagan was right

Once again Frank Rich’s Sunday NYT editorial is outside the American corporate media news box. It deserves your attention and is, in part, the basis for the points below. LINK

• We, getting out butts kicked in the war on terror – The call for a 3rd unilateral surge of troops (see Oct 25th post) is  a major example of failure – you don’t call for more troops when you are winning.
• The debacle or “unjust” war/nation-building in Iraq is the underlying cause of the trouble in Afghanistan. – While we fiddled with Iraq – Afghanistan, Pakistan and Iran all burned. This was predicted over and again since the Iraq war started by Investors411 and others.
• Pakistan (2 to 3 times larger than Iraq+Afghanistan and a nuke power) is deteriorating rapidly – All polls show the #1 party in the polls is now the Muslim religious party who campaign slogan is “Go America Go”
• Systemic failure of the military/pentagon to foresee the Hasan/Ft. Hood disaster.
  

Solutions fromthe far right and the military

• Of course right wing solutions blather fear and religious leaders like Pat Robertson are calling Islam “Not a religion, but a violent political system bent on the overthrow of the governments of the world.” Every Islamic terrorist is using Robertson’s (or some right wing American like him) quote to turn moderates into terrorist recruits.
• This right wing view is diametrically opposed to US military/General McChritstal’s call for 40,000+ more troops in Afghanistan   “The key to success – a strong personal relationships forged between security forces and local populations.” A worthy goal, but is it doable, what are the costs, and like Iraq will it just make things worse.

Iraq/Afghanisatan

• Maliki, our guy in Iraq, is one of the founding fathers of the Darwa party. The Darwa party is responsible for killing almost 250 American marines in a bombing in Lebanon. Reagan was smart and he got our troops out of the Lebanon quagmire
• The two major religious leaders in Iraq – Sistani refuses to ever speak to Americans & Sadr hates us worse than Pat Robertson hates Islam. They hate our occupation.
• Our invasion of Iraq has created the biggest refugee crisis in the world according to the UN. 4.2 million people have been displaces when the Shia just about destroyed the Sunni’s in Iraq. Sunni’s were responsible for most of the violence. LINK
• Maliki/current government along with Hezbollah and Hamas was the first to recognize (insert most negative adjective(s) you can think of here) Admadinejad election in Iran
• Iraq’s economy is rich with oil & Afghan’s rich with Opium. To create/nation build in Afghan means creating a whole new economy. Far more costly than Iraq.
• Our guy, Karzi, in Afghan, is corrupt, an election rigger, and his family directly related to the opium trade.

Solutions - Absolute worst solution is some form of  Obama compromise – (send in 20,000 troops)

If you’re going to commit to war/nation building in Afghan do so absolutely . Otherwise you’ll never win . If you do commit – Expect/be prepared for of tens of thousands of casualties, a lot more than 40,000 troops sent, many trillions in cost, a huge extended cost of occupation/nation building beyond Iraq, Afghanistan to other countries, our huge deficit to explode higher and the majority of Americans/world (already against the war) to grow in size and anger.

My choice – Ronald Reagan made a wonderful decision NOT getting us involved nation building in Lebanon after the bombing of the marine barracks.

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

Dollar fell  a  significant -0.60 so stocks rose The inverse relationship between the dollar and stocks is so strong it is easily the dominating factor in movement of equities. The other forecasting are distant seconds to the US dollar’s movement.

Monday’s since September have been historically very good for stocks. If the dollar is going to breakdown and stocks breakout higher it most probably will happen this Monday or next.

Major rally in most countries overnight.

KISS = Keep It Simple Stupid – The dollar rules

——–

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 @ 4% 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 VERY significant +155 points yesterday and closed at 4111. Up 12 days in a row . The BDI’s growth did slow down a little as it approaches its major resistance level at 4291 . (This years high)  The BDI has rallied about 2000 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

Like most major resistance /support levels expect 4291 to hold. Technically – Upward momentum slowing is a sign that the 4291 resistance level will hold and after being up 20 of the last 22 days the BDI is certainly overbought.

——-

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 was down a  significant  -0.60% yesterday. The dollar closed at $75.23 . “ Usually a major support level at least temporarily halts any fall.” The $75 support level held and now the dollar is near the bottom of its range.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.20 this AM . The support level is a little below $75.00 . Both are EXTREMELY important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow.

There is a major squeeze play going on as the resistance level keeps falling as does a major trend line. Support remains flat at @ $75.  Only $1.20 separates the two. Which ever side the Dollar breaks out through will set the momentum for it and the opposite will happen for US ( and most world) equities.

CAUTION – The first breakout (up or down) is often false. Right now the momentum (since the long term trend is down) is with the Dollar bears and consequently stock bulls

——-

$NYMO The NY Stock Exchange McCellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +5.83. This indicates stocks are just a wee bit overbought and moving is either direction is possible.

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching -60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

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

Sorry have not had a chance to update Positions section in well over a week – see past updates

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD )  Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

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. As a trade like GS. Again, waiting for dips

Traders (short term plays) These are not 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

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. But subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH

Afghanistan

US ambassador, former general/commander in Afghanistan, Karl Eikenberry , has “deep reservations ” about sending more troops to Afghanistan. His major objection is corruption in a country’s whose #1 economic product is opium. LINK & LINK

Finally a major columnist has drawn a comparison between spending money on heath care vs. spending money in Afghanistan . NTY’s Nicholas Kristof argues -  are we “better off spending that money blowing up things in Helmand Province or building up things in America.” LINK Lack of health car kills about 45,000 Americans a year and the Taliban in Afghanistan have not exported their violence to the USA.

Sherwehe points out in comments section of the blog LINK 2,200 0f those are veterans who lacked health care according to a Harvard study. If the current figures hold up “This year more veterans will die from suicide than will die on the battle field.” and “800,000 vets live on the street. “

As pointed out before the major problem is Pakistan – 5/6 time the population of Afghanistan and a nuclear power. According to polls and DAWN (leading English speaking Pakistan paper LINK ) views of Americans are deteriorating rapidly.

Bottom Line – We simply can no longer afford to keep nation build around the world. Investors should note this is just another reason to invest in countries that are focused on building their middle classes instead of nation building opium rich country’s like Afghanistan.

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

Dollar rose an anemic +0.07% , & US equities actually managed a minor rally in anemic volume.

The BDI is on fire. (see below) This is very positive for world trade, commodities, and an indicator China is buying.  In the OVERVIEW section of the blog PEAK OIL is mentioned as one mega trend impacting economics and stocks. You might consider peak oil as subset of commodities . As world population and middle classes in emerging markets grow the finite amount of commodities become more expensive.

Patten developing – On Thursday market’s fall in expectation of weekly jobless number and stocks rise on Monday – because of some merger.

The longer the dollar holds above its support level the stronger support becomes.

——–

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 @ 13% 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 VERY significant +133 points yesterday and closed at 3748. Up 11 days in a row. A higher high price on its chart pattern has been confirmed The BDI has rallied about 1600 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 was basically flat +0.07% yesterday. The dollar closed at $75.10 .  This is directly above its, line in the sand, support level. As predicted yesterday – “ Usually a major support level at least temporarily halts any fall.”

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.32 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.

——-

$NYMO The NY Stock Exchange McCellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +16.70, – Not yet oversold, but moving in this direction,

Key to chart – 0 is roughly  neutral and when you get to @ +60 you are overbought and approaching -60 you are oversold. Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy

Overbought positions = sell

Positions

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

Sorry have not had a chance to update Positions section 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 yea r

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

Comments – NOT the time to buy or add to these positions.  Enjoy the rally.

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. As a trade like GS. Again, waiting for dips

Traders (short term plays) These are not 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 for +12% gain  Now up 16+% since bought

CSCO – (5% of portfolio) Flat since we bought position a few weeks ago . – Going nowhere while markets have moved higher.  Selling soon for @ -1% loss – Hopefully into a rally. Sold 1/2 yesterday for -1% loss

AMZN – (now 5% of portfolio  ) Bought last Wednesday – Sold 1/2  for 11% gain . Like NVS letting the rest ride .

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. Instituted change, but subject to change

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

More than Just Wall Street Horrors

Photo from SeekingAlpha.com

Wall Street

Let’s call it the Halloween Horrors (See analysis below under stocks)

Mideast

Afghanistan – The run off election process in Afghanistan has broken. The challenger Abdulla Abdulla has withdrawn from the process.  The UN, as well as most of the world, determined that the first election was corrupt. The current president refused to even change the head of the Afghan Election Commission who was in charge of the corrupted election so the Abdullah Abdullah resignation is understandable.  This leaves the obviously corrupt Karzi as the only candidate and the future partner of the USA.  Story from BBC LINK

Latest news on tube is that there will be no runoff election .

Pakistan The UN (development agencies) is pulling out of Tribal areas. Story from Pakistan’s Dawn newspaper LINK Hillary Clinton’s recent trip to Afghanistan reviewed by Pakistani newspapers – Reviews basically NOT favorable – “White Goddess Should Leave Pakistan ” LINK Deterioration in Pakistan continues and another massive terrorist bombing LINK

Turkey/Iran – This may come as a shocker, but Turkey, who is seeking NATO membership, seems to be taking a pro Iran stand when it comes to nuclear development. Al Jazeera story (Remember AJ has no reason to have a pro Iran bias – AJ is Arab & pro Sunni and Iran is Persians & pro Shia) LINK

Bottom Line – Nuclear weapons in the hands of terrorist is something no one wants.  But the more we try to nation build the worse it gets. Let’s accept noble prize winner Joe Stiglets estimate that so far our nation building has/will end up costing us almost $3 trillion.

• How much is it going to cost to turn tribal Afghanistan from an opium (heroin #1 economic product) to a viable state?
  
• How much is it going to cost us to maintain Iraq? Remember the Iraq government along with Hezbollah and Hamas was the first to recognize Ahmadinejad. The two main Shia religious leaders – Sistani, refuses to even speak with Americans and Sadr lives in Iran.
• How much is Pakistan – almost 3 times larger than Iraq & Afghanistan combined going to cost?
  

Crossroads moment for Obama – Adding more troops and nation building in the middle of the worst recession since the Great Depression. Can we afford the trillions it will cost? Wouldn’t it be better to economically help Pakistan more right now than have to nation build their later.

Jobs, Jobs, Jobs

The mantra for Investors411 is that job creation is going to be even slower this time than after any other recession. This recession is bigger and badder.  The new jobs from American companies are going to first be in countries with growing middle classes like India, China Brazil and smaller countries – Cheaper labor and you are closer to a growing market.

Nobel Prize winning economist Paul Krugman in today’s NYT offers a short term solution LINK

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

Volume the #1 historical confirmation factor is telling everyone - GET THE HELL OUT. However, the dollar still rules .

The Long Term Long Term Outlook is back to NEUTRAL As mentioned last Wednesday – 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

A falling dollar helped stocks move higher under Bush and its doing the same under Obama . (Check out weekly stock charts of S&P 500 & The Dollar for last 5 years) This inverse relationship between stocks and the dollar was quite different before Bush. (more on this later)

Lots of major economic events this week – The Fed meets and October’s unemployment # comes out Thursday are the big events.

FEARLESS FORECAST -  I’ve never seen volume be so huge on the downside days and the markets not continue to fall.  However, right now the dollar rules. It looks like its resistance level for the dollar (see below) will hold. Still downside risk is growing.

Investors411 has taken profits on its (20% of portfolio) position in the SPX and short term TRADERS might want to take a little of some other positions off the table (FIX & EWZ) in a rally. – There is NOTHING wrong fundamentally with these ETF’s.  In fact, the BDI is bullish,

Fundamentally, long term I see the dollar falling and technically it looks as if the resistance level will hold. This is good for stocks in the short term – next  month or two.

I’d rather have some more cash to buy any possible major sell off.

Long term – Bearish on the US economically. The mess in the Mideast could deteriorate rapidly and the long term cost are astronomical, especially considering the deficit & the recession. We still have NOT changed the same unregulated “free market” system that caused the financial meltdown. Agree with Krugman on stimulus/unemployment. Think things will hold up till the dollar reaches the low it had under Bush or the Mideast erupts.

——–

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 @ 29% 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 +90 points Friday and closed at 3103. . 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 the 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 +0.52% yesterday. The dollar closed at $76.36 .  

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.74 this AM . So dollar is 0.40% away from major resistance. 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.

Positions

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

Friday – Going to sell some SPX-reasons – Free cash for other investments & take profits

Long term investors should realize that positions like EWZ & FXI are going to have more dramatic moves than American stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Pakistan

Many of you have raised public and private comments about America’s desire to have a colonial empire. (see comments section of blog) I certainly wish these countries had a functioning democratic system, but it can’t be forced on them and that force has proven counter productive and enormously costly for the USA. (see yesterday’s enlightening Tom Friedman’s editorial) LINK

One of you told me a deeply disturbing story of a Pakistani couple (two doctors) who have their green cards and just returned from visiting relatives in Pakistan. They said the situation there was rapidly deteriorating.  LINK

Pakistan should be our focus not Afghanistan .  As brought up before the fact that we spend 30 times the $ in Afghanistan we do in Pakistan is deeply troubling. If Obama goes ahead with the 3rd surge in Afghanistan that figure could grow to 40 or 50 to 1. We should be giving Pakistan’s fragile democracy more economic aid and listening to the views of their moderates instead of focusing on troop surges in Afghanistan.

Instead America is consumed by war propaganda. Glenn Greenwald writing for Salon makes an excellent point about the Universality of War Propaganda LINK

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

Please Note – Long Term Outlook has changed from CAUTIOUSLY BULLISH to NEUTRAL

This is the first change to Long Term Outlook(downgrade) in many moons . This was done primarily on a technical basis. Both the NASDQ and the S&P 500 crashed through their major support levels (the 50 day moving average = blue line on charts at side of blog) We had an another major meltdown in above average increased volume again. This is the 3rd of 4th time within 5 weeks that volume has on a daily basis confirmed (rose significantly and was above average) a major downside price move (greater than 1%)

Longer term – volume has decreased as stocks have risen throughout the summer and fall. This is another technical sign of impending meltdown.

Markets are also not reacting positively to good news AAPL, GOOG,  AMZN , GS & others who beat expectations on TOP and Bottom line have rolled over and are trading down.  Hot stocks loosing ground on good news is the second canary in the coal mine dying.

Markets run on psychology more than anything else – especially in the short term.  Fundamentally , the situation is positive. The US lags most emerging markets, but even here more than a handful of companies now have top line growth.

The Dollar is the catalyst for this turn. Obviously it rose yesterday and this time the impact on stocks greater than the usual (@1% or less) that is approximately what stocks would have fallen with a+0.36% rise in the dollar. (see dollar analysis below)

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 . Expect a rebound this AM.

Best Read of the Tea Leaves – I don’t expect a major roll over -20+%. If/when the dollar starts moving back down stocks should go higher.  However, some sort of correction (a 5 to 10% fall – we are already at 5%) is good for markets.  Anything that goes up too far too fast creates a bubble that bursts.

Also see dollar analysis below.

——–

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 lost a modest -27 points yesterday and closed at 2986. 2nd day of modest losses. 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 rose for for the 4th straight day +0.36% The dollar closed at $76.48 .  This is above the former support – now resistance level of $76.00 . Technically - Bullish for dollar & Bearish for stocks.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at 76.83 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.

We 0.40 away from this resistance level. Mighty close.

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 .

Look to add to EWZ (Brazil) and FXI (China) positions because of dip. If prices continue to fall  will nibble some more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

More Troops – Bad Bet

Nicholas Kristoff’ s editorial in today’s NYT on why more troops in Afghanistan is a bad bet. Investors411 praised the fact that we tripled aid to Pakistan.  Here’s Kristoff’s money quote.  “American policy makers were completely blindsided in recent weeks by outrage in Pakistan at the terms of our latest aid package — and if we can’t even hand out billions of dollars without triggering nationalistic resentment, don’t expect a benign reaction to tens of thousands of additional American troops. ”

Jobs Jobs Jobs

Investors411 has painted a bleak picture of long term job prospects for Americans over the last few month. When you add to this shadow banks are still in the shadows and foreclosure problem is at best stabilized you have a bleak picture for Main Street USA.  Perhaps those that have seen gains in their stock portfolio’s since the spring will spend and juice the economy. However, especially for older workers, as Abby Gold in the comments section points out, on Main Street its not a rosy picture.

Solutions – One specific help would be to extend something like the $8,000 homeowner credit for first time home buyers. 350,000 buyers took advantage of this program – it worked especially for lower priced homes. The ripple effect is those new home buyers have to furnish those homes. Two respected individuals have offered their solutions

• Mort Zuckerman (right of center – editor of US News & World mag.) in an editorial titled “The free market is not up to the job of creating work” suggests a “massive program(s)to restore stable jobs growth.” He suggests a National Jobs bank and allocating $65 billion toward it. LINK
• Tom Friedman (left of ccenter/pro business – NYT columnist) looks at the failures of America’s education system to keep up with the increasingly  globalized world.  Here’s the money quote – “While the subprime mortgage mess involved a huge ethical breakdown on Wall Street, it coincided with an education breakdown on Main Street — precisely when technology and open borders were enabling so many more people to compete with Americans for middle-class jobs. ” LINK

Pay Cuts on Bailed Out Companies

Obama administration is forcing pay cuts on top executives of 7 bailout firms. Good first step, but what about all those other shadow financial institutions who used the Fed or collected big time from AIG’s  bailout? Goldman Sachs & many others gets away without any claw backs in this. Huffington Post LINK or NYT LINK

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

This is a US stock market dominated by professionals and traders.  Some sort of programed trade kicked in the last hours and the pro’s left the building.  The volume way well above average and the fall from what was a rally was over 1%. Volume increased significantly in the last hour’s price collapse = Bears asserting dominance

The dollar fell significantly which almost always means US equities rally. This again = Bears asserting dominance

The dollar fell so overbought oil prices rose significantly LINK to chart +2.25 to $81.37 . Obviously oil prices above $80 is going to hurt ma and pa consumer in any recovery.  Sure looks like some entity or group is manipulating oil prices. Up 9 of last  10 days and going parabolic (up too far too fast)= Bears asserting dominance

The BDI rose (probably did not have time to react to swift fall in equities)

Reading the Tea Leaves – There is no specific fundamental(s) that you can point to that says yea that’s the reason stocks tanked in big time volume at in the last hour of trading.  Obviously “the Pro’s” know something us common investors do not. Earnings season has been much better than expected with companies beating on both TOP and bottom line. The dollar fell. The BDI is rising.  Stocks should be rising.

Stocks falling on good earnings news, a rising BDI and a falling dollar is a disconnect from what has been a historically a positive trend .  Think of this as a sign in the road saying WARNING SPEED BUMP AHEAD.

——–

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 +85 points Friday and closed at 2917. A higher high price on its chart pattern has been confirmed and it sure looks like a bullish run could be starting. =  Bullish for stocks & world trade right now

——-

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 fell a significant -0.55 % The dollar closed at $75.12 . We have developed a support 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,(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. Have no position in XLE. Also for TRADERS (not investors) strongly considering buying some companies listed yesterday that had outstanding earnings, but have fallen over last few days.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!