Paul Otellini – Intel CEO with new billion $ China Factory

US Employment – A Deep Dark Whole

Today in the NYT Tom Friedman has an interesting article on US competitiveness and an interview with and an interview with Intel CEO – Paul Otellini – who is opening a new billion dollar plant in China in October.  Freedman/Otellini try to sell their reasons this plant and future plants will go abroad and they make a few decent points.  But, let’s not kid ourselves, globalization, gives emerging markets huge advantages over the US. Besides tax breaks why do US companies like Intel build plants & create jobs in emerging markets.

• There are already plants here and emerging markets are growing over twice as fast as us. It beneficial to have a plant near faster growing markets where few exist.
• Cost for engineers (workers) in China is about 75% less and 35% less in Germany than the US.
• Labor costs to build the factory (usually the #1 cost in construction) are significantly less in emerging markets.
• There are no health care costs in China and a universal health care in othe indutrialized democracies – In the USA health care over 17% of GDP while other indutrialzed democracies are between 5 & 10%.

Solution – One area we should all agree on is increasing funding for the Research Tax Credit. From today’s San Jose (Silicon Valley) Mercury News – “What’s really needed is to increase the value of the credit, and to make it permanent, as President Barack Obama proposed in his 2010-11 budget.”

This will NOT solve the problem. Those 4 bullet points are very significant to the profit bottom line. But its a step in the right direction toward getting us out of a deep dark unemployment hole.

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	+0.02%	up
NASDQ	+0.32%	up
S&P 500	+0.23%	up
Russell 2000-	+0.88%	-

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)

A bigger rally collapsed in the last 1/2 hour of trading. Volume was up, but only the NASDQ was above average. Longer term rallies are usually lead by the NASDQ & small cap stocks (Russell 2000)  These two indexes have taken over market leadership in the last few weeks.

Most foreign indexes are higher overnight and this AM. The fundamentals behind this are probably the fact that Greece has approved budget cuts demanded by European Union (really Germany) for a loan,

But, and its a big BUT the broad New York stock exchange is now in oversold territory according to our McClellan Oscillator.  This is not your parents buy and hold forever stock markets more and more economic bubbles have burst or are forming.  So right now, even though momentum is with the bulls, its time to start cashing in on some of your profits. The more oversold we get the more you sell.  See positions below.

Significant Indexes

• McClellan Index rose to +62.51 yesterday We are now over +60 or Oversold territory. Time to seriously consider selling into any rallies.

Positions

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

The mistake made was not buying enough long positions when markets got oversold last month or at -60 on the McClellan Oscillator.  Right now in Wall Street terms its time to start taking money off the table.

• recently bought (added to) EWZ (Brazil) - considering selling into any rally today or at open
  
• 1/2 of MOO (agriculture ETF), - Sold at 44.55 for +5% gain
• The remainder of THY (ETF that does 3X what techs do) – Sold into rally yesterday at 143.50 for +15% gain
  
• remainder of EWZ – Will sell into larger rally
• remainder MOO – Will sell into larger rally
• FXI (China) – Will sell into a larger rally
• IMAX – Still holding on (rallied 4+% yesterday)

ETFs because of their size and diversity are more prone to follow the broad NY Stock Exchange’s McClellan Oscillator.  Individual stocks less so, but most will.  Of course in the past few years there have been times the NYMO has reached over 100.  This is why you sell in moderation and not all at once. If we get up to area’s close to 100 Investors411 will start using ETF’s that short the market.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

-

National Georaphic – Great Wall of China (Emerging Markets)

Trends, Wars, & YOUR Money

Investors411 has followed 3 or 4 major investment trends over the last decade - Globalization, Peak Oil, Spread the Wealth & The Great Recession (the later needs some revision).  Global politics and events have impacted these trends and therefore investment choices.

• Fall 2008s financial meltdown proved again Free markets need regulations or they form boom and bust cycles . Even, arguably, the #1 proponent of self regulating free markets Alan Greenspan admitted he was wrong
• Working middle class taxpayers in the USA and around the world bailed unregulated markets with stimulus, packages, printing money, TARP programs, taxes , etc. This was socialism for the rich . It further expanded the gulf between the rich and poor in many countries.
• Emerging markets have kicked our asses as far as growth is concerned for almost a decade. Globalization and Spreading the Wealth to a growing, not shrinking, working class were the primary causes behind this.
• Most emerging markets have a managed or planned economy vs. our more unregulated economy. Few emerging markets were involved in highly speculative trading vehicles (example – Credit Default Swaps)

More recent events impacting trends.

• Wars - The US weapons budget has exploded over the last decade to the #1 budget sector and to @ 50% of the world spends on weapons. Obama has increased the weapons budget and the secret war in Pakistan is no longer a secret.
• Trade war brewing – Relationship between the world’s #1 economy and the world’s fastest growing economy is souring. Check out NYT’s stories on China over last few months
• China – has moved to defuse a growing housing (people moving to cities for better jobs) and a possible  inflation bubble before it pops. Decent month old editorial on this. Remember Chinese banks did NOT sell credit default swaps on housing, so this housing bubble is not as sever as USA’s. But, this is still a serious problem.
• JOBS – While the job losses have declined in the USA from -700,000 to @ -50,000 a month, we increased last month. Obviously US jobs over the last decade have been lost to globalization and consumers in the USA are now saving more. Considering the above 3 bullet points its hard to see stimulus plan alone keep this figure from flattening or falling. (more later)

Bottom Line – Let’s try to be as objective as possible and look at the technicals. In this case, the chart of either the FXI (China) or EEM (Emerging Markets)

Both charts are similar, but China (FXI ) is a little more sever. Notice how fast they exploded in the first 1/2 of 2009 and that growth slowing in the last 1/2. Now for the first time the 50 day moving averages are heading down . In fact China is trading below its 200 day moving average. The countries led us out of recession (Indonesia, Brazil, India, & China never even entered a recession)

It certainly looks like growth has peaked and emerging markets are now in a correction phase.

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	-0.26%	down
NASDQ	+0.04%	down
S&P500	-0.55%	down
Russell2000-	-0.55%	-

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.

US Markets basically held onto the significant gains of the last two days – an oversold bounce. Holding onto gains = short term Bullish

CSCO – again had a great earning report and is putting 2000 to 3000 new people to work.

Hard to see a major  move in stocks in front of – The Monthly jobs report t on Friday Each of these reports becomes more and more important.  In November we reached positive job growth (+6,000 ). But this is looking like retailers hiring folks for Christmas buying season.

Best Read of Tea Leaves – You’re NOT going to be happy with the jobs numbers.

Significant indexes

• McClellan Index at -32,18 = We’ve pulled way back from -90 or oversold levels two days ago. Over -60 + Oversold
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is keeps falling. Yesterday the BDI closed at  2673.= Bearish However the rate of decline is SLOWING and this almost always indicates at least a short term reversal.
  

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

Thanks to 5 of you who sent in suggestions fo r Stock Watch Lis t!

ETF’s – were still 6% FXI (China), 10% EWZ (Brazil), & 10% MOO (Agriculture) – Since we have rallied would consider selling  another 5% (hopefully in a rally – which seems unlikely today)

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

A Frog in Hot Water

The old adage goes – Throw a frog in hot water and he’ll jump right out, but you can slowly bring the water to a boil and that frog will stay put.

A little known Republican State Senator, Scott Brown , won a stunning upset victory in the MA Senate race last night. Like Mitt Romney in 2002, he beat  Dem. Shannon O’Brien, Brown toasted another woman who ran a weak campaign – Martha Coakly.  For perhaps the best analysis of what this means see Nate Silver’s – Let’s Play The Blame Game

Health Care – Obviously in deep trouble. The only way Health Care would pass is if the House passes the Senate Bill. Since Democrats in the House have already voted for a far more progressive health care plan and will get hit for that in the next election Obama is going to argue why not vote for the Senate version.

Bottom Line – Health care. – You blew it – RIP

That Frog in this case is the typical American worker who is in the pot of ever increasing temperature .

• Globalization is slowly eliminating working class jobs across America
• Weapons budgets are growing at the rate of 10 to 20% each year
• For the first time in our history we cut taxes and went to war.
• Our federal and trade deficit exploded from 2000 to 2008.
• The era of cheap oil is OVER. The supply has peaked and the demand from billions of people in emerging markets is growing.
• Because of our suburban sprawl and relative lack of public transportation we are far more vulnerable to high oil prices.
• Time tested solutions like stimulating the economy to fix it will not work as well because of our already huge deficit.
• There fewer and fewer laws to govern excess GREED on Wall St. Main Street has socialized the risk for Wall Street
• The rich in the USA are getting richer and what’s left of the American working class (those not newly unemployed) are paying the bill
• As the situation worsens, self preservation kicks in, and Americans care less and less about others.

The American frog is in a pot that’s getting hotter and hotter.

There is an upside to all of this outside the USA. Hundreds of millions (perhaps billions) in emerging markets are increasing their standard of living. They have or are learning to Manage their capitalism and hopefully not repeat mistakes that were made here.  Greed is a powerful factor and one hopes eventually more democracy will grow abroad.  If Time magazine called the last decade The Decade from Hell for the USA – it could get a whole lot worse for the American frog in this decade.

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	+1.09%	down
NASDQ	+1.42%	down
S&P500	+1.25%	down
Russell2000-	+1.75%	-

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.

Stocks staged a major rally (above 1%) in decreased, average volume. Volume, our #1 confirmation factor did NOT confirm the move higher. Even though we achieved some new highs (for a calander year) on 3 of the major indexes we are doing it in reduced volume.

• McClellan Index at +i3.14 = A little bit overbought.  There’s a long way to go till we reach @-60 or oversold or @ +60 or overbought

IBM reported after the bell and beat top and bottom line expectations. This was not a grand slam, but IBM did solidly better, but lost money in after hours trading.   The important news from IBM which does 60% of its business abroad was that their areas of growth were "Brazil, China, & India."

Even though stocks rallied yesterday still believe in down week.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

YOUR Watch List of Stocks . Unfortunately, I’m not daily checking these stocks out. Ideally, you’d like to McClellan index below zero (the further the better) and these all would be better buys. We developed most of these potential stocks about two weeks ago. Check old Investors411 for more.

Again the problem with buying now is that markets are slightly overbought and you would like stocks oversold position. Click on ticker symbol for chart. Going to limit Watch List to @ 10 stocks.  80% of investments wil be ETF’s 20% stocks.

NB – I feel much more confident with ETF’s because they reflect global trends than individual stock. Too many things can go wrong with individual stocks.

• SEED – In a buy the dip position.
  
• AAPL – big +4.42% rally yesterday. Sitting on breakout point. AAPL moves markets – if this goes higher so does the market.
  
• AMZN – We sold at highs and AMZN has formed lower highs and lows. In bearish mid term pattern. Will drop from list soon
• HMIN - Failed breakout, back at lower end of trading pattern. Will drop from list soon
  
• CAAS – Buy the dip opportunity as CAAS falls to just above 50 day moving average.
  
• PCLN – Buy the dip opportunity
  
• F – Still too over extended to buy
• DRWI – New – Big exporter to China -  Looks great but still too overextended to buy
  
• ENOC – New – Reduces costs for utilities – Great long term chart. formed base for last 5 months moving higher – A buy
• ATHN – New - Software reduces costs for health care - Clear trend higher since June – Buy the dip opportunity
  
• IMAX – Great long term chart – falling back to its 50 day moving average. A buy the dip opportunity

Mistake – I let my emotions over rule logic on IMAX It was too overextended from 50 day moving average to buy at 13.9. So I’ve sold the small position (1% of portfolio I bought at 13.9 for 10% loss) Keeping 1% bought at 12.9 and will add more at lower price.  Perhaps the most important rule of investing learn from mistakes and do not repeat them.

If markets were overbought I’d strongly consider ENOC, CAAS, ATHN, SEED, & PCLN.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = CAUTIOUSLY BULLISH

Happy New Year

EWZ (Brazil) – Investors411 #1 holding up +117% this year

This issue of Investors411 is the beginning of a 3 part series on ETF’s, stocks & economic forecasts for 2010. It is designed to educate YOU on how to make the same kind of money others have by following some simple investment strategies that Investors 411 has used for years to beat almost all major US indexes for the last 5 years. But first a word about

Avatar and IMAX

I’ve now seen the movie and it is truly jaw dropping . Some of the genius belongs to Director James Cameron and the rest to the Imax (a publicly traded stock) theater technology. To quote Time magazine "Look around! Embrace the movie – surely the most vivid and persuasive creation of a fantasy world ever seen in the history of moving pictures – as a total sensory, sensuous, sensual experience. " It’s like The Wizard of OZ going from black and white to c o l o r .

The IMAX theater concept is an investment choice suggested by one of you.  Right now the stock (which was on our list of YOUR recommendations) is exploding higher (LINK to chart) in HUGE volume. I’m going to nibble on/invest in the first small dip.  It will be hard to top Avatar, but IMAX is the future of movies & 3D TV is on the way.

2010 Economic and Stock Forecasts

Part 1 Positions

For 2010 Investors 411 is going to keep its focus on basically 4  core positions that it has held, throughout most of the last five years. These are the ETF’s (Exchange Traded Funds). An ETF allows you to buy a market basket of stocks or an actual commodity for less than it costs to own a mutual fund and it gives you a better tax break because it trades less (buys/sells different stuff) than most all mutual funds. ETF’s also trade like stocks and have NO hidden fees.

The fundamentals behind the choices of these core positions are simple and  explained in greater depth the OVERVIEW section on the top of blog LINK These mega trends include-

• Globalization – The key force that is allowing some countries to develop faster than others.
• Peak Oil – The world has a limited supply of commodities  and we are running out. As we run out these commodities get more expensive.
• Share the Wealth – Countries that have growing middle classes expand faster that counties that have wealth oligarchies that hoard their money.

Over the years these Investors411 core positions have outperformed almost every major US stock index are-

• EWZ – Brazil
• FXI – China
• GLD – Gold
• EEM – Emerging markets

Especially this year Investors411 held a lot of related positions and some stocks. You can find a list of these at the POSITONS section on the top of the blog LINK (check these out NOW before they change for 2010)

Investors411 did stray too far from its core holding – partly because of the enormous swings in the market this year. Top gainer was EWZ held from the beginning of the year (8% of portfolio total holdings) gained +117% . The biggest loss was a STUPID hedge on China (FXI) position. It was made because of fears about the Swine Flu epidemic seriously impacting China. FXP and ETF that is a double short of basically the FXI. Translation – if Chinese stocks go down FXP goes up @ twice as much.  The short term FXP trade (2.5% of portfolio total) lost -13%

Several NEW position may/will be used in 2010

• MOO – Agriculture based ETF – Will outperform because the huge growing middle classes in especially China & India will eat better. Already opened a position here
• EDC – This is an ETF that does 3 times what emerging markets do. Lots of risk here so it will only be bought or sold under specific conditions involving the McClellan Oscillator (see below & more later)
• ROH & TYM – Technology. Again like EDC these two involve lots of risk because they do 2 and 3 times what tech stocks do. Only to be bought/sold under special circumstances and are short term trades. (see above)
• Commodities – There are many ETF’s that are solely based on a commodity like GLD and not based on a company. Diminishing resources and increased demand for these commodities make for a decent investment.
  
• Stocks – Because YOU asked for it some stock positions like IMAX will be suggested. (see last few Investors411)

Tomorrow Economics – The Good ,The Bad, The Ugly - 2010 Forecast

KISS & Stocks

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+0.03%	flat
NASDQ	+0.13%	up
S&P500	+0.02%	flat
Russell2000-	+0.04%	-

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

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

Technicals, Fundamentals & Analysis

Weak volume continues. Most technical analysts consider flat trading (stocks have gone basically nowhere for the last few days) after a trend (upward in this case) a sign  that the trend is revering itself (bearish).  The problem here is it is usually accompanied by strong volume.  All in all THIS IS A BORING WEEK for analysis on stocks. YAWN – Investors are waiting for the monthly employment report at end of next week.

Weekly jobless claims number at 8:30 came in better than expected  Weekly claims fall to lowest since 7/19/2008.

The McClellan Oscillator (see below) has wiggle room on the upside but is slightly overbought.

FEARLESS FORECAST – same as before "Up to flat week" – Historically this is an up period (Santa Clause rally) Even though we are entering overbought territory – hope of a positive employment report for Dec. & historical bullish factors should keep stocks on the up.

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

——–

Significant forecasting tools/Indexes for stock markets

The Dollar & the BDI have been temporarily eliminated. Right now how overbought we become is taking on more significance.

——-

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

The index closed at +22.57 This is a slightly  Overbought Position. This chart has recently formed a series of higher highs and higher lows over the last 5+ weeks.  So it looks like there is a possibility of one more swing higher before we get to a clear oversold position (over +60).

Oversold conditions (@-60) = buy, Overbought positions (@+60) = sell The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Positions

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

These are positions I actually own

Resource for ETF’s -MSN Money has 821 ETF’s listed according to performance 1,4,13 weeks 1, 3 5, years on a 20 minute delay for daily prices. LINK

SELLING & BUYING

One of the ETF’s we are going to use in 2010 is EDC – an ETF that does 3 times what emerging markets do.

Still holding onto all of UWM.

When/If McClellan Index gets back above +60 will sell some more.

Long Term Outlook = CAUTIOUSLY BULLISH

Your Comments

Both Bob Sadinsky and sherwehe have echoed Jon Stewart and added to the Rape and Halliburton /KBR story in the comments section of the blog. The fact that this and other brutal rapes of American women are NOT publicized shows the vast power of American corporations especially those of the military industrial complex.

Obama is a huge disappointment in this. If he stood up and spoke out forcefully for rape victim Jamie Lee Jones you would see headlines behind this story/legislation.

Disaster for Democrats – Globalization

Teddy Roosevelt

Perhaps the headline here should be China Rising - Globalization. See OVERVIEW section of blog for more. Here again is the Good, Bad, and Ugly for globalization.

The Good – Globalization has brought a better standard of living to hundreds of million of people in emerging markets.  It has produced jobs and better paying jobs across emerging markets. Worldwide GDP has expanded

The Bad – If you are an American worker you are the first fired and the last hired. You cost too much to employ relative to cheaper costs abroad. Globalized companies also have to pay for your health care. Ross Perot was right – that giant sucking sound is job loss in America.

The Ugly – Globalization has helped concentrate power and puts wealth/power in the hands of fewer individuals at the top. This leads to corruption and less accountability.  From corporate power in globalized companies to one party rule in China, this trend has helped led to a class of ultra wealthy, powerful and potentially corrupt individuals who are increasingly above the law.

Why it’s disaster for Democrats – They’ve embraced globalized Wall Street instead of fixing the problems.  Jobs are going to be created over seas where markets are growing, labor is cheaper and health care is provided or absent.  Wall Street grows while Main Street suffers = disaster for Democrats in upcoming elections.

Solution – Globalization, like capitalism can work but it needs regulation or rules. Globalization, of course, is part of a world wide capitalist system. Yes it creates faster economic growth. But, it also creates imbalances, or cancers.

Teddy Roosevelt acted and took down growing concentrations of power (monopolies – like Standard Oil) when capitalism raged out of control. This capitalist problem is now far more globalized.  We’ve had many warnings – the last major one was last years financial meltdown.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.50%	up
NASDQ	-0,59%	up
S&P500	-0.62%	up
Russell2000	-1.43%	-

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

Mea Culpa – Lots of you sent personal emails that I forgot to change yesterday’s stock chart. It was Monday’s results. Sorry Today’s got changed.

Usually volume is the #1 confirmation factor or forecast tool. However, the dollar’s rise or fall is now dominating the US stock market. Since (as discussed in past Investors411) the longer term trend is for a lower dollar –  Stocks should move higher.

Stocks fell in increased, average volume. Technically a moderate short term bearish sign – But the dollar rules right now.

Reality – money is NOT coming into this market from the sidelines. This does not mean we can’t rally further. But it does mean you have to pay close attention as an investor.

After a breakout 8 day rally, oil prices LINK finally fell

——–

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 @ 37% 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 +66 points Friday and closed at 2832. 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 rose +0.22 % The dollar closed at $75.53 . 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.

Therefore, The dollar can drop much lower and stocks rise much higher till support levels are reached

Positions

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

Review of Positions (Part 3) This section is really for traders who are comfortable owning a position for a day or two – Would sell on any 7 to 10% drop. NOT a Longer term Investment

Recommendation Buy the Dips till the dollar drops to near $72 . Have positions in NVS & CSCO. Waiting on other positions for dip.

NVS – Novartis is a major European drug company that continues to steadily move higher. +13% since bought .  In part this is a swine flu play whose technical chart looks good. Going to sell NVS when flu hits – perhaps a month or two.

AAPL- Apple (don’t own) Fundamentally a fabulous story. Beating on top and bottom line. Only 49% of profits or sales (sorry forgot which one 0 it was announced on CNBC) come from abroad. That means not only Apple exploding in the USA but it has room to grow in faster markets (faster growing GDP) like China/India

CSCO – Cisco. Has been moving into the “telecom revolution” (Apple’s and related products). One of the best internet “picks and shovels” maker. 0% gain/loss since bought. Consolidating right now.

MVIS, – Has best technology in its sector and a couple of huge moves higher. Recommended by one of you

GS , & JPM – Fundamentally the best two financial companies. Their competition is weak and they’ve used taxpayer funds to their advantage (see past Investors411)

CAT – Caterpillar – Best heavy equipment maker. Just had blowout top and bottom line earnings report. A major China/Emerging markets play.

EWZ – Brazil -Up way too far too fast.  Trader s should lighten up on this ETF

Sold 50% of position in EWZ yesterday for @ a +39% gain. Hope to buy back in on bigger dip. Also have sold all of EWY (South Korea) for +11% gain

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Debt/Globalization

Debt is  bad. Globalization, and economic planing has led some countries to grow and others to suffer. Take a look at China and South Korea . Their managed economies (as opposed to our free market economy) have prospered over the last decade and continue to have stock markets that that are outperforming ours again this year.  In both these countries you see 10’s of millions of people who tended rice paddies a generation ago becoming the computer programmers and manufacturers of today.

These economies severely restricted their imports and benefited from other countries going into debt buying their exports. – part of globalization and managed capitalism. The USA went trillions of dollars into debt buying their products ( add some other countries especially those that sold oil) over the 8 year Bush administration.

Some companies and wealthy individuals grew rich in the USA as we personally and as a government fell further into debt running our unregulated free market system. This all collapsed when adding to this debt we discovered that shadow financial institutions were running a giant ponzi scheme of fake profits called credit default swaps on home mortgages, and other forms of credit.

Baddaboom, we almost had a world wide economic meltdown when just one shadow bank, Lehman Brothers,  collapsed. The cumulative debt hole is enormous.

Historically, in good times and wars (Iraq) you are supposed to pay down debt. We didn’t.

Historically in bad times you stimulate the economy and this does add to debt. We are.  The problem is that we re already up to our necks in debt. This debt was is not as bad as the debt that flatlined the world’s #2 economy for over a decade, but its very bad. To this you add a shrinking work base caused by globalization.

The real problem is we are sending more of our citizens to the rice paddies (unemployment) and our companies to maximize their profits send jobs overseas. This is one major part of the globalization mega trend.

We have fortunately seen a decrease in job loss since January from about 700,000+ in January to 500,000+ now. A good trend, but still a big loss. When many small companies reaches a certain size, (let’s guess 50 people)  they realize that everything from bookkeeping to information technology can be done for a cheaper price abroad. Where are the new jobs going to come from?

So simply as an Investment adviser – You’re far better off with economically growing managed capitalism rather than debt ridden free market of the USA – This is why Investors411 has a record of beating the S&P 500 . Why FXI, EWZ, EWS , and other managed economies are better investment choices.

The catch 22 – Of course, the more a US company outsources the better it will do (cheaper labor cuts cost), but the greater unemployment here will grow here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.19%	down
NASDQ	+1.20 %	up
S&P500	+1.14%	down
Russell2000	+1.49%	-

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

The leading NASDQ again moved higher in increased volume. Even though it was not above average volume, the increase coupled with the break down of the dollar (-o.84% )(see below) is bullish for stocks.

Other major indexes have reached new closing highs, but have NOT had as much volume behind their moves higher.

Obviously US markets are now overbought and need a breather

Bernanke reports to the House today and the Senate tomorrow.

Whole bunch of companies reporting this AM. These fundamentals will drive stocks. Merck , DuPont, Coke , UTX. & Caterpillar all seem to have better than expected earnings. So many major S&P companies are hitting doubles triples and home runs. Rally is on again

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 turned lower yesterday and the short term bullish pattern is getting wiped out. Longer term this is not good for the global recession recovery. BDI at 3511 and 2975 is the line in the sand support level that must hold . So no reason to throw in the towel yet but Bears are gaining momentum

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern
  

$USD - The Dollar broke down through support levels yesterday . Down a significant-0.84% . The last remaining support level is the June lows at @78.4. The dollar index closed at 78.87 . The dollar goes down usually = stocks gold and oil prices rise. This contributed to yesterday’s rally. Obviously this is bearish for the dollar, but Bullish for US stocks. (not small but important one word change – this is bullish for US stocks in the short/mid term)

That 78.4 support level is very important.  A weak dollar does have its downside, but it certainly fueled the last rally stocks had this spring.

Positions

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

QLD – (2X what the NASDQ 100 does) which was bought at 38.2 was sold at 41.1 for a 7+% gain yesterday.  Why be greedy? We added a lot of positions last week. (QLD, IFN, EWZ, EWS ) Time to take profits on one.  Will buy back in on another dip. Taking profits now looks like a mistake . If the dollar keeps breaking down OLD will keep going up.

IFN - (India) The technicals behind this trade are just not as good at all the other trades. India has not broken out to a higher high and developed a series of lower highs and lower lows. Going to take profits. – Will put in what’s called a stop sell order (send me an email if you do not understand this)  Looking at S Korea (EWY ) as a better foreign investment.

Another reason to sell India is the BDI seems to be establishing a bearish pattern. (see above)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Deer in the Headlight

Remember the Deer in the headlight warning two weeks ago ? We’ve gone over the short term problems that have caused the “Great Recession” But the deeper long term problems also need to be addressed  You can LINK to Part  One here

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Long Term Structural Problem 

(part 2)

What Made us Strong

Back after WW 2 President Eisenhower (from Wikipedia) led a major stimulus program that transformed Americans. He continued FDR’s New Deal programs, He massively expanded Health Education and Welfare departments, created a Interstate highway system, developed a GI bill to help returning vets own homes, and  the civil rights movement began.  Economically, only one member of a household usually worked, and a fortunate America whose infrastructure was not devastated by war flourished.

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The Decline

What happened is that the rich grew richer and the working class lost in its struggle to catch up and stay solvent.  Wages got hit in the 70’s “by a double whammy of globalization and technology.” Women went to work to keep up with the Jones. But this was not enough. In the 80’s to fix an over reliance on welfare we changed to a tax and government system that rewarded the wealthy and began to strip away the very regulations that were put in place to prevent the Great Depression.

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The Fall

The rich got richer. Other industrial countries provided health care for their citizens that not only helped their economic status and health, but gave their businesses a competitive advantage over ours who had to pay for health care. Both members of families struggled and were encouraged to go further into debt (credit card, college, mortgages etc) just to hold on.  The bubble burst with the fall of housing prices and the over leveraged greed of financial companies. Debt expoded.

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Solutions

All this reveals the fundamental economic flaws of the economy and the huge gap between the rich and the working classes of out economy.  While Obama has made some mistakes, he has fundamentally and structurally set us back on the correct path. Economist and former Labor Sec. Robert Reich has an excellent editorial on this The following and an above quote ate from his piece -

we have “failed to address — widening inequality, sagging median incomes, a broken healthcare system, crumbling infrastructure and global warming — are that much larger now, making the current crisis all the worse.”

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AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Stocks

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Index	Percentage %	Volume
Dow	+0,49%	up
NASDQ	-0.44%	?
S&P500	+0.12%	down
Russell2000	+0.46%	-

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Technicals & Fundamentals

Friday markets consolidated after Thursday’s big fall. (Sorry could not clearly read volume chart on Dow)  Last week saw a massive 6 to 8% drop on the major US indexes and lots of bigger falls abroad.  You’s think, because markets are sooooooo over sold hat technically we would have a least a small bounce higher.

Let’s take a look at perhaps the best two indicators of a bottom in a bear market – The VIX and the Put/Call ratio.

From Yesterday  - “The VIX (today’s quote) is out measure of fear for the benchmark S&P 500. Back in November it peaked at @90 interday and 81.48 as a closing high. it  need real fear to wash out nervous investors and  50 is a long way from 80.  Translation, the VIX is usually a reliable indicator in bear markets = More downside to follow.” Friday the VIX closed down 1.67 to 49.33.  Translation – The level of fear is not as nearly as great as it was in November when markets rallied for a few months.

The Put/Call ratio chart This is one difficult chart to understand.  But the bottom line is watch the close when it gets above 1.00 it shows as many traders are betting the market will go down than up.  This is usually considered by many analysts as the point where markets turn or a point when too many folks are throwing in the towel and you can get some quick rallies as traders rush to cover shorts. So focus on the closing number.  We are close to that level at 0.87.  But a sustainable Put/Call above 1.00 usually means a reversal.

The VIX is a bit better indicator because it focuses longer term.

Long Term Outlook = BEARS RULE

See STRATEGY, POSITIONS, OVERVIEW  & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!