Morally Ugly

The Brietbart/Sherrod controversy is perhaps one of the most morally ugly examples of what passes for news in America. Brietbart. a major right wing news source/blogger produced a snippet of a speech given by a relatively minor black Obama administration official, Sherrod, supposedly proving she was a racist against whites.

The vast echo chamber of FOX news (From Glenn Beck to owner Rupert Murdoch) & right wing media who is desperately truing to prove Obama is a racist splashed the story all over the media.

Shirley Sherrod after getting hammered 24/7 by the right wing & American media, was asked to resign (thrown under the bus) by Obama administration who along with the FOX & company thought this would distract for the big Financial Regulatory Bill signing.

Turn out when the whole speech is played there is no anti white racism and the farmer  Roger Spooner who is the supposed focus of Sherrod’s racism says -

No way in the world. No way. No way. I don’t even want to talk about it. It don’t make sense. She was just so nice to us as – she didn’t – there wasn’t no – there wasn’t no racism attitude at all in it. Heck no. … They don’t know what they’re talking about,”

The Glenn Beck, Rupert Murdoch tie above was intentional. Because it ties big business with those that spew unfounded hatred. They do this kind of fear mongering because it sells and produces results – both politically and monetarily.

When the Republican Congressman jumped up in the Obama State of the union and shouted “YOU LIE” he was overwhelmed with donations. Like the congressman, Brietbart whose actions are morally reprehensible will flourish.

The lemming like American media and this time the White House rushed to echo another right wing smear. When the truth comes out you hear almost nothing from Drudge to FOX on their rush to judgement. There is one word to describe our right wing, fear mongering hate filled media – Disgrace

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	-1.07%	up
NASDQ	-1.58%	up
S&P 500	-1.28%	up
Russell 2000	-1.86%	-

Technicals, Fundamentals & Analysis

How markets react to news is the key to forecasting direction. APPL is the “darling of HFT/BlackBox traders.” As Paul R concluded yesterday (see comments section) AAPL was going nowhere despite a great earnings report. Good analysis. This was probably due to the overbought (MO near 50 yesterday) nature of the market.

So along comes Ben Bernanke speaking in front of congress and traders focus on the worst of what he has to say = Bearish

US markets fell in increased average volume = Bearish

Mr Softy MSFT reports after bell today

Under traditional circumstances, you’d figure if the 800 lbs gorilla, AAPL, can’t move markets higher then nothing in future earnings reports this month will push stocks up. But with HFT’s dominating trading anything goes.= ??????

Bottom Line = Investors411 is far more focused on overbought/oversold (MO) levels than daily chatter.

Significant Indexes-

• McClellan Oscillator (MO) fell to +25.52 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. = NEUTRAL
• US Dollar –  The dollar  rose a significant +0.79% [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. Earnings have trumped this indicator for now, but yesterday it looks like this inverse relationship  trumped earnings.  = NEUTRAL
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This is a huge-60% drop in 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context.  A small but important four day rally indicates the BDI seems to have found a bottom — a short term bullish sign. BDI now at 1782 Fundamentally the-58% drop is very BEARISH

Reading Tea Leaves-

Bummer, Just when the MO shows US indexes are almost overbought enough to put the odds of going short (using ETF’s that short major US indexes) more in our favor, the MO falls back into Neutral territory.

Several of you have asked about YOUR stock list. – If/when the MO goes negative (below zero) we should start putting it back together. We will use the old list as the foundation. One major difference this time – Let’s look for more liquid stocks, because those are the stocks that get juiced by High Frequency Trades. This also means that the higher beta stocks (more volatile) are apt to do even better.

.

Positions

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

Updated over weekends Investors411 holds ONE position in SH at this time

As the MO approaches oversold territory will again consider ETF’s that short the market.

Strategy - The same as before - If/as US major indexes become more overbought the more ETF’s that sort the market will be purchased. Starting out with SH. Then the higher above 60 the MO goes, the more SDS (200% short the S&P 500) and other even 300% short ETF’s will be used the higher the MO goes.  See POSITIONS section at top of blog for more.

Glenn Beck

Jon Stewart does Glenn Beck

This parody of Glenn Beck was the major topic at my gym this AM. Even if you have never seen Beck on Fox the video is worth seeing. Some of you will be rolling on the floor howling with laughter.

Change in Long Term Stock Outlook

See Positions section below for why stock outlook was upgraded and editorial

CNBC – Las Vegas/Glenn Beck

CNBC is easily the #1 financial channel. With shows from “Fast Money” to “Mad Money” CNBC hypes the quick buck on Wall Street by combining the glitter of Las Vegas and the antics of Glenn Beck.  The blatant emotionalism sells for CNBC and their advertisers – the stocks they want you to buy. Confession – I have CNBC on a lot as background when I work and its on right now waiting for the 8:30 jobs report.

CNBC so lauded Greed based Capitalism (“Free markets” as opposed to rules based capitalism) it can be said it was a significant contributing factor to 2008s economic meltdown.

Jon Stewart’s Daily Show took CNBC’s star Jim Cramer to the woodshed over this. CNBC has put together a formula of hype, emotionalism, screaming that sells to fear/greed short term investment crowd.  Indeed this is a style diametrically opposed to the one Nobel prize winning psychologist and founder of Behavioral Economics Daniel Kahneman uses.

(to be continued)

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+0.46%	down
NASDQ	+0.51%	down
S&P 500	+0.37%	down
Russell 2000-	+0.49%	-

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)

Stocks rallied (minor rally) in weak volume AGAIN.  This is the Bull markets mantra. (See editorial and change in Long Term Outlet below) Fundamentally there was some good weekly jobs data, but the big news is the monthly jobs numbers coming out at 8:30 EST this AM

Jobs Report -  February employment numbers  – Unemployment held at -9.7% and jobs down -36,000, a bit better than expected -60,000. January revised down -6000 (minor)

This is about as good as it gets for stocks. The fact that employment is NOT declining means interest rats will stay low and the Fed will keep flooding the economy with money.  Expect a rally.

Good news is monetary policy has helped stabilize the employment decline and we are down from 3 months ago.  The bad news is we are still at 9.7%

Significant Indexes

• McClellan Oscillator slipped slightly to +52.43 yesterday We are now just below +60 or Overbought territory. Stockcharts has a better version of the McClellan chart ($nymo) LINK We are still close to oversold territory, but have fallen over 10 points in last few days. This gives us a bit of up side wiggle room. However, still holding onto the sell more into any major move higher.  The McClellan Oscillator would have to at least get 5 or 10 points above recent high of 62+ to sell.

Because of the change in Long Term Outlook to Cautiously Bullish - any pullback in the McClellan Oscillator to say +20 would be an opportunity to nibble again.  This market wants to move higher.

Positions

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

Even though markets are close to being oversold in the short trm – the Long Term Outlook has been upgraded to CAUTIOUSLY BULLISH. from NEUTRAL The reason for this is technically that the benchmark S&P 500 (see chart) has for 4 days traded above its 50 day moving average. It has also formed a series of higher price highs and one higher low. Yes, volume, the #1 confirmation factor, has been weak, except for the first two+ months of the Bull Market that started in March. In fact, the chart shows volume has basically declined since May.

Behaviorally – there are many investors out there who have been burned by the Capitalism of Greed that they are holding onto other investments like bonds. There are two main possible ways (perhaps more) that these traders would buy into stocks

• Greed based capitalism becomes Rules based capitalism – Some transparency is reintroduced into US financial markets – From standardized mark to market accounting to regulated Credit Default Swaps to eliminating to big to fail institutions.
• Seeing the markets move higher, greed overwhelms those on the sideline and they jump in building another bubble. Its hard to predict exactly what behaviorally would trigger those that are seeking safer havens than US equities.

For decades volume has been the #1 confirmation factor of a price move. This is simple supply and demand economics. The more people that want to buy something (demand) – the higher the price grows (assuming basically the supply of stocks is relatively constant).  In the end something has to give. However, technically, higher highs and crossing the 50 day moving average are both bullish indicators. The lack of volume is the caution.

NB – We are in a position of change and sometimes markets can reverse themselves quickly.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Celebrities will Save Us – NOT

Last weekend we were fortunate enough to see Pirate Radio . Before the movie, a promotion for Glenn Beck came on featuring him crying, screaming & on his knees in front of a theater audience. This evangelical performance was to be broadcasted over the next few months in theaters nationally. God help us.

Poor Arnold “the terminator” Swartzenegger – the celebrity Californian’s elected to save their state. He couldn’t and next to Michigan, California has the highest unemployment in the country. Like Palin or Obama (see past updates) America’s fixation with celebrity status and Beck tears, screaming or getting on your knees, will save nothing. “The terminator’s” problem is he couldn’t save Californians from their own greed and governance.

• Prop 13 limited tax increases and erased a $4 billion tax surplus in a few years.
• Property taxes were based on when you bought your property. So a property bought decades ago pays far less in taxes than an exactly similar property bought today.
• You need a 2/3 vote of the legislature to change any taxes
• Californians voted for things like costly regulations limiting pollutants because so many were dying from filthy exhaust and waste.
• The “Free market” capitalism  mantra dominated California and unregulated companies like Enron were allowed to rape the state.

EW in the comments section of the blog, seems to suggests who will save us from ourselves .  One example – We spend trillions in foreign nation building wars, yet keep cutting taxes.  Our system of governance isn’t working. It’s being overwhelmed.

Tom Friedman on the Charlie Rose show  articulates the problem. You should see the video LINK But here’s a list of some of his main points that we need to overcome

• Money in Politics
• Gerrymandering political precincts
• Cable TV fracturing & empowering extremes
• Internet (both good and bad) but also empowers extremes
• Permanent presidential campaigns
• A globalized business community that is AWOL on major issues.

EW like Tom Friedman seems to believe “we need better citizens… not leadership.” China is producing better solutions than we are. As Tom Friedman’s grammy puts it -  “A great power that only produces sub optimal solutions will no longer remain a great power.”

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.14%	down
NASDQ	-0.50%	down
S&P500	-0.32%	down
Russell2000	-0.17%	-

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

Basically we had another  the dollar rose so stocks fell day.

Volume decreased and was well below average.  This is surprising on an options expiration Friday. What this tells us. – There is no money coming in from the sidelines – Its certainly more than beginning to look like a whole lot of investors are NOT going to get back into the market. Long Term this is understandable and a bearish for markets The rally in stocks is based on the dollar falling – when that runs out we have a problem

However, the Dow was down over 100 points below where it closed and rallied into the end of the day.  Why?

It’s Thanksgiving week and historically stocks rise on this shortened week. (best guess 7 or 8 out of last ten years) Monday’s have been good to stocks since Sept (again @80%% of the time)  The rally was simply short term traders getting in front of what they expect to be a good week.

Big news for week is the shopping numbers fro Black Friday & the unemployment #’s for the week.

Congress is loosing patience with the Fed & Geithner - LINK – This could negatively impact stocks, but most likely in December.

FEARLESS FORECAST – Up Week

Now going to get a bit more technical

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

——–

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 has broken out to new yearly high

The BDI fell a significant -155 points yesterday and closed at 4507. The up 16 days in a row streak has been broken . Technically it broke out through its major resistance level 4291 (this year’s high)  The BDI has rallied about 2300 + points since late September.

The BDI is starting to go PARABOLIC – starting to move up too far too fast-inevitable result is a crash and burn.  We seem to be at the top of the parabola. DANGER for Bulls

Going Parabolic is one of the easiest technical forecasts to predict. Investor’s411 called this reversal to the day.

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets.

——-

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 rose  +0.43% Friday. The dollar closed at $75.61 .  The dollar is in a narrowing trading range between $75 & $76.

——-

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

It is a short term indicator and no t to be used for major trends.  Traders and short term investors should find this oscillator very useful.  There are dozens of similar forecasting tools, but the McC Index is clear, simple, and right now pretty accurate. The more oversold we get the better the odds are the market will rebound and visa versa on overbought.

The index closed at -29.78 This indicates stocks are somewhat  oversold .

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

I did get a chance to do some editing in the Positions Section of the blog.

Long Term Outlook - We are on the cusp of change between CAUTIOUSLY BULLISH and NEUTRAL for stocks.

Long Term Outlook = CAUTIOUSLY BULLISH

Iran

What was supposed to be demonstrations marking the 29th anniversary of the Iranian revolution turned into a night and day that members of the Green Revolution let their voices ring out. Professor Juan Cole’s website has details and video. Its heatening to see so many protest (“huge crowds”) despite those that have disappeared into Ahmadinejad’s Iranian prison system. LINK

Vietnam & Iraq/Afghanistan – Optimism

Even though many including this blog have focused on the negatives surrounding the “unjustified” invasion of Iraq and long term consequences,there are some major reason for long term optimism.

In Vietnam we used chemical weapons (agent orange) carpet bombing and even resistance was slow to organize. These weapons were not used in Iraq. Democracy was insisted on by Sistani (the #1 Shia religious leaders) and after a year of demonstrations the US relented. In Afghanistan the poll numbers have already turned negative LINK This poll was before the election debacle.

In no way does this excuse our growing nation building disaster in the Mideast under Bush and Obama. But, it is a long term ray of sunlight in an otherwise dark cloud.

US Elections

Republicans won two governorships in NJ and VA formerly held by Dems. The Dems won a congressional seat in NY – formerly heavy Republican district.  Overall a better night for Republicans and bottom line is about the economy.  Three out of mainstream observations

• NJ Democrat Gov. candidate was a mucky muck at Goldman Sachs.  GS & Wall Street are loved about as much on Main Street as the New York Yankees outside NY metro area.
• The “conservative” running in NY congressional race considered radical right wing FOX commentator Glenn Beck “his hero.”  He had huge support from the “tea bagger” or dominant wing of the Republican party.
• Long time incumbents spent huge money and had difficulty getting elected – example mayors Bloomberg in NYC and Menino in Boston.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.18%	down
NASDQ	+0.40%	down
S&P500	+0.24%	down
Russell2000	+1.46%	-

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 the last post for the week

Friday’s jobs report is the news for the week .  What we have is an oversold market going nowhere. Wall Street term for this is “churning.” Because we are so oversold a good jobs number (loss less than 200,000) would probably move market higher.  Oversold also limits downside risk.

Best Read of Tea Leaves – We will not get a sub 200,000 number.

For traders – A high unemployment figure means the stimulus will keep flowing  and I’d buy the dip. Even though everyone is watching Friday’s employment figure – keep an eye on the dollar. If we have a significant break through of the resistance level expect a meltdown in stocks as the dollar rises.

In Asia and Europe oversold markets rallied last night, so this could carry a positive bias to the USA today.

FOMC meets to day – expect no change.  Any changes in wording would be negative and a shock.

The Dollar War - (Part 2) The big news of the day was India buying $6.7 billion dollars worth of gold from the International Monetary Fund. This is an investment in gold not dollars. Still, obviously central banks did buy enough dollars to halt any dollar decline yesterday.

FYI - Best 25 preforming stocks since Obama’s election LINK

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Significant forecasting tools/Indexes for stock markets

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

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

The BDI is @ 24% 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 +62 points yesterday and closed at 3247. The rate of change is diminishing slightly. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1100 points since late September. =  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 rose a modest -0.12% yesterday. The dollar closed at $76.33 . The dollar did briefly rise above its 50 day moving average.  The dollar is technically doing what prices do in front of major resistance/support levels – hesitating. The longer it hesitates the better the chances for reversal.

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.67 this AM . So dollar is only 0.34% 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

Our major core positions into weekend. (See Monitor’s post in comments section)

NB  – These core positions have been long term positions for years and are STILL OUTPERFORMING the benchmark S&P 500 – For more see overview section

GLD – Gold rose a significant 2.41% and broke out to a new all time high in huge volume. This was based on the news of India buying a huge hunk of the shinny yellow stuff. (buy the dip)

EWZ – Brazil – has gone up too far too fast and was overdue for a correction. (see past updates)It had about a 10% correction (see chart) and its 50 day moving average is acting as strong support.  Think those of you who bought the dip will be rewarded in the long run.

FXI – China -  too recetly had almost had a 10% correction, another buy the dip opportunity.

Both China and Brazil could go lower if the jobs number is bad or the dollar rises too high. They go down faster than US markets, but rise much faster than US markets. The BDI recent move higher is favorable for both.

Considering diversifying into Indonesia & Vietnam ETF’s Also, for traders as an individual stock AMZN – great technicals& fundamentals, but also a swine flu play. If the flu ends up keeping folks housebound AMZN should profit. (more on Monday) It is currently dipping.

Concerns – 10 even 20% corrections are healthy for FXI and EWZ in the long term. Yes, these and other emmerging markets are recovering fundamentally far faster than the USA. But anything that goes up to too fast forms a bubble and they burst.

SPX – Selling entire position as soonas I get back from art show – taking profits and freeing $ for other investments.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Why You Should be Afraid for America

Perhaps the best example of the media rewarding bad behavior is the Music Awards when Kayne West stormed the stage, grabbed the mike from winner Taylor Swift and told the audience someone else deserved the award. Kayne was rewarded with a lot of attention including a feature guest spot at the opening of the new Jay Leno Show. Swift’s song was forgotten memory.

The exact same thing has happened in the health care debate.  Last year health care costs went up 3.5% while workers salaries dropped 1.5%, millions lost their jobs (health care benefits) and home prices fell.

Now hate mongers like Rush Limbaugh are screaming for segregation on buses, Glenn Beck calls President Obama a “racist,” and congressmen Joe Wilson screams Obama is a liar in front of an address to congress.  For this they are all rewarded-from cash to listeners their audience grows and of course the fuel the fires of hate and racism. They have no desire to seek a solution or debate only to sell hate. “Mad man” Glen Beck is rewarded and lands on the cover of Time magazine.

If the hate monger can increase your fear he/she knows your emotions will override reason or rational debate. More conservatives folks are especially vulnerable to this because they see the world more in terms of “you’re either with us or against us. Liberals get upset at what’s happening – they can’t believe people fall for this stuff and most importantly they Fail to Act.

One recent poll showed that 1/3 of the conservatives in NJ believed Obama could be the anti Christ LINK This group and those who spread the hatred is now in power in the Republican Party. No one in authority in the Party will stand up to them. This spiral of hatred is growing unless you stop being a Liberal or Moderate wimp and do something.

The best thing you can do is focus on the Health Care. Get out there and talk to how we can contain cost and get better coverage . You stick your head in the sand and those that want segregated buses or to carry guns to town hall meetings will win . We’ve worked on health care since Harry Truman was President. Meanwhile, every other very  civilized democracy has passed a nationalized or competitive (public option) plan and voted to keep it.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.08%	down
NASDQ	-0.30%	down
S&P500	-0.31%	down
Russell2000	-0.31%	-

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 .

This rally is based on a falling Dollar (down 8 days in a row) Up a smidge yesterday The dollar is oversold and reaching a support level (not a really strong support level).  This combination of oversold and an upcoming support level should hold for at least a day or two. This is exactly what happened. and it looks like the fearless forecast for week will be correct again.

Volume was down and that’s just what bulls want to see on a mildly bearish day. However it was not a huge drop in volume.  The Dollar fell all the way to $76.01 – right too its $76.00 support level. Probably another flat to down day that will see rally into the close.

While the BDI is troubling, there still is a lot of bullish momentum out there.

This is what is called a “quadruple witching Friday” – 3rd Friday of the month. = Lots of options expire so potential for lots of volatility.

——–

Significant forecasting tools/Indexes for stock markets

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

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off and started to rise over the last few weeks. BDI fell a minor -25 yesterday. They are small losses, but the index has fallen 6 days in a row . BDI trading at 2390 and has recently formed a resistance level at 2388. Would not trust any stock rally, especially in foreign exporting countries if the BDI breaks down significantly below this number.

2388 is number to watch We are getting mighty close to support levels . Another down day is reason for caution. Bears are growling as support levels seem to indicate a breakdown.

The BDI is 43% off its high (early June) Before that it gained almost +170% from early April to Jun e

——-

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

The dollar after falling 8 days in a row finally rebounded a little.  It rose  +0.12% yesterday. Dollar trading at $76.28 . . There is a support level around $76 (lows from Sept & Aug. of last year) As predict the $76 support level held.

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

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

Positions

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

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Health Care

photo – Huffington Post

Last Friday’s blog outlined the probable course of health care legislation. Basically the House would come up with a private plan, the Senate something different. Then it all goes to conference. If Obama and Democratic leadership wants, it can force a majority rules vote.  That’s when the real FIREWORKS happens.

Last week (sugar dependent) John, suggested a program in the comments section that deserves more thought - Provide everyone with a basic program, like medicare , and let richer folks add onto this. The devil is in the details , but this works with education, and law enforcement – why not health care .

Right Wing Radio Takes a Hit

Glen Beck The Fox News host who has called Obama a "racist" has lost more than a handful of major advertisers. LINK You can join and fight those who believe that screaming the loudest and name calling is what America is all about. Specifically in the Glen Beck fight one effective organization is TheColorofChange.org – LINK

Another older organization is MediaMatters.org – LINK

If you sit and do nothing, the Mob, the Screamers and the Haters win.

If you stay silent the fear mongering will grow.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-2.00%	flat
NASDQ	-2.75%	flat
S&P500	-2.43%	flat
Russell2000	-2.79%	-

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

A significant meltdown in WEAK below average volume. Volume, the #1 confirmation factor did NOT confirm the move lower.  If volume does not confirm the price move you look at what happens the next day. General rule if over 1/2 losses are recovered – that’s bullish & if market continues to fall, that’s bearis h .

US and most world markets were way oversold and long overdue for a retreat.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI three day bullish trend is flattening. Up only +22 points yesterday.  The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. Bulls need a good long run here to break out of the bearish trading pattern.

In a nut shell the BDI is

• short term - Short bullish trend turning
  
• mid term -  Bearish pattern
• long term - Bullish pattern

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.  What has become quite clear is that the dollars 50 day moving average has become and ultra strong resistance level . This is signified by the blue line on chart . Every time prices close to this descending line since the end of June they have failed to break out higher.

Once again we tested that 50 day moving average yesterdayand failed to break out. The dollar moved up +0.62% yesterday and therefore, stocks moved down. Long term the dollar is in a bearish trend , but the short term trend is at a bullish breakout level. Mantra – Dollar up = US stocks down

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession

This is the index to watch. If the dollar moves higher, then stocks will get toasted.

Fearless Forecast

• World trade numbers (BDI) continue to be locked in a mid term bearish trend. Trade could be breaking down between countries and protectionism rising or the BDI just went up too far too fast.
  
• The USA is printing and stimulating its economy with wheel barrels of cash. The dollar should be falling and therefore, stocks rising.
• US equities reached way oversold levels and technically needed a breather.
• There are fundamental signs of bottom line growth abroad (China mostly and some other countries and a few US companies)
• Big drop in small volume for US stocks on Monday = no confirmation of downside move.
  

Its very important to look at things globally instead of just egocentrically focusing on US equities. Everybody is oversold and a low volume retreat (yesterday) is not a conformation of the downside move. In bull markets a 5 to 10% fall is a buying oppertunity.

For the week - look for a rebound early and then things to level off or even fall lower .

A retreat of 5+% would even be technically good for the markets. Worldwide, we need to cool off a bit. The dollar is the index to watch in the short term and the BDI long term.  Fundamentally its hard to see the  dollar move higher so longer term still see raly intact.  Of course, this could change if dollar rises.

CAUTIOUSLY BULLISH is still the long term call and dips are buying opportunity.

Positions

The whole Positions Section has been revised (Click on "Positions" at top of blog). Check it out

Still have not had a chance to revise Positions section of blog.  Buy on dips smaller positions in FXI (China) & EWZ (Brazil) have been added to. Also an SPX (S&P 500) position has been built on dips.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

The “Socialist” Joker

Obama – SF Bay photo

The attempts to break up civil discourse at the Town Meetings Democrats are having to discuss health care is turning into anarchy. Encouraged by the FOX news cable channel, the right wing, and host Glenn Beck who considers Obama “a racist,” mobs are trying to break up normal debates and discussions of the issues.  Latest “Violence” at Tampa Bay town hall meeting. Link here Photo below

There are also pictures of Obama with white powder and red lipstick on his face, depicting him as The “Socialist” Joker. For those too young to remember in the first half of the last century white men used to put black powder on their faces and lips to mimic black men as a vaudeville act. Needless to say this was derogatory and racist. Link to story here Photo above.

Tampa Bay mob banging on windows of meeting – Huffington Post.

Propaganda/Falsehoods – HealthCare

The estimated cost of House version of health care plan is $90 Billion a year NOT a trillion dollars a year. The proposed payment is a tax on those earning over $1,000,000 a year. The trillion dollar figure is estimated cost over 10 years. Two sources Debunking the spin

• WaPo’s Steve Pearlstein – Link here
• NYT Paul Krugman - Link here

Impact of Stimulus

The NYT feature story is the impact of the stimulus package. So far @ $100 billion of the $7 80 billion has been spent. Headline – “With Jobs Data Due, Experts See Some Lift From Stimulus ” Story link here

Bottom Line – If you sit back and do nothing the mob wins. The in your face yelling works unless you act.  Send some emails, write an editorial, go to a Town Meeting (see yesterday’s blog) – Do something, anything – Make a Difference - Its your country

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.27%	up
NASDQ	-1.00 %	flat
S&P500	-0.56%	up
Russell2000	-1.48%	-

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

Volume is beginning to pick up and so is the downside moves in front of the unemployment data. Volume is the #1 conformation of a price move. This is a sign that we have reached a top (a bullish higher high of prices) and are due for some sort of correction. Actually long overdue for a correction,

Even though jobs are a lagging indicator in an economic recovery, these figures are very important. Waiting for results…

US employment data for July -247,000 jobs – Better than expected loss . Best monthly number since Aug. 2008.  Rate down to to 9.4% from 9.5% – Markets rally on news.

This paragraph was written last – Rally in stocks

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3051 down last six days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly.

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning - The BDI falling through its support level at 2975 would be very bearish. IT DID yesterday . What’s worse the rate of downward momentum is accelerating BDI fell 109 points two days ago and 144 points yesterday. We broke through a major support level and the rate of change downward is accelerating = Bears Rule

Simply put - if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose a health +o.57% yesterday. Dollar closed at $78.00 (weighed against a market basket of other currencies)  We did establish a lower low for the dollar earlier this week.  This chart is important as a forecasting tool because there is a strong inverse correlation between the dollar and both (most) stocks and oil prices

Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008

Dollar up usually = stocks down.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

See Thursday’s comments and those made earlier this week. The BDI breakdown through support and accelerating decline is a longer term BEARISH SIGN .

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!