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Why All the Fireworks?

• YOUR Stock List was up +7.6% while the S&P was down -1.9% (see below)
• Enter Investors411 in Google and this site comes up #1
• Happy Rosh Hashanah/New Year

A Little Redistribution

Would a little redistribution of the wealth really be so bad? The middle class is hurting and wants to work. We need to acknowledge the crisis brought on by globalization and how its impacting American workers. (Major topic of many past Investors411) Yes, the Shadow Banking meltdown made everything worse, but again its the middle class that’s has also felt the most pain in socializing the over leveraging at shadow financial institutions.

A message to all you wealthy Americans that have profited from the decades of globalization and those who don’t want to part with a dime to help. We’re All One America. Right now that middle class is hurting. We do need to keep middle class tax cuts and perhaps even offer more. But it’s your turn to step up and help.

Today offering a modest proposal for a new top tax bracket (those making over $410,000) by Annie Lowrey and what it would mean. Lowrey doesn’t ask for the tax rate to return to what it was under Ronald Reagan, but what it was for the weathiest 1% under Bill Clinton.

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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. Jim Cramer -”BB/HFT make up 80% of trades.”

Volume was still below average. The NASDQ was just below average indicating a few traders/investors outside the BB/HFT community nibbled on technology and probably smaller cap stocks.

This lack of volume is just further indication of the power of the BB/HFT traders or the % of the market they control. It’s not your fathers or even YOUR market anymore.  In the past Investors411 have discussed the impact of BB/HFT on trading and will continue to do so.

More Investors411 Guidelines

• The Calendar -on top will take you to any past post of Investors411. Just click on the date and the blog for that day will appear
• Search Box – Just type in a word and if it was tagged at top of blog the last post on that person/subject will come up. Example type in Kahneman then hit search - Bada Bing up will come one of my favorite blogs on the father of behavioral economics and some other outstanding individuals
• HELP, STRATEGY, OVERVIEW & POSITIONS - are all listed at top of blog and offer an array of different information (more later)
• Comments Section - Appears to the right and sparks fly on stocks, economics, trends and politics. Click on the writers Name, Initials and you’ll get the whole post.
• Financial Charts and Blog Roll –  Too the far right are a list of  charts of some indexes & ETF’s that Investors often refers to. They are from Stockcharts.com. A excellent site for gathering free technical data. The Blog Roll contains some frequently used sources.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell -0.28% higher yesterday. Dollar in 4 week long trading range. For stocks = Neutral/Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.95% yesterday. After slight four day hesitation back in rally mode. Remember this is especially relevant (in this case bullish) to those countries that have an export surplus = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to +30.84 yesterday. Clearly above zero and within 29 points of the NOT drawn in the sand line of being oversold.(+60) = Neutral

Reading Tea Leaves

The dollar is still the big dog wagging the stock market tail. Flat consolidation pattern holding means the same for stocks. We did have a dash of bullish news for stocks as the dollar fell a bit yesterday, but until consolidation pattern holds – so will stocks.

Considering how strong the run higher was last week in points, we should have another push even higher. Volume is just not as relevent to major indexes because of the BB/HFT domination and the lack of individual investors. Till the MO gets oversold case for bulls strong.

Repeat – UUP the dollar ETF is what to focus on for stock market direction if you are an active trader.

Positions

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

Current positions –  EWS (Singapore)

From Paul “With today’s strong action, “Your Stock List” is up +7.6% since Aug 3. The S&P 500 down -1.9%.” Lots more if you click o the aboved referenced link

You sent in the stock picks that make up YOUR stock List. Give yourself a round of applauds. Paul & I went over the list and did eliminate some candidates.

You can find the complete YOUR Stock List located by clicking on the POSITIONS word at top of blog and scrolling down. Also Paul R has frequent commentary on these and other market news which is especially helpful for active traders. See comments section of blog.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Demonstration in world’s largest Islamic democracy/country Indonesia where they allow Christian, Buddhist and many other religious faiths to openly pratice. They also have a woman president & a stock market at a new high.

Burn the Koran?

Another  direct follow up to the fear mongering surrounding the Islamic Center in NYC is a pastor in Florida who is going to burn Korans on 9/11 – “It’s International Burn a Koran Day .” General Petraeus from BBC – “This act will endanger US troop.” It will also be  a recruitment mana (gift) from heaven for any Islamic radical that will be broadcast all over the world.

The trend is the growing use of fear mongering on an Islamophobic US public in political seasons. Far right politicians have pushed this issue from Palin to Beck and even some notable Democrats like Harry Reid. Obviously, this trend also benefits those that manufacture weapons

Globalization* & US Education

Why is American education falling or even failing relative to the rest of the world?

Capitalist want to make money. To make that money they needed an increasing educated/smarter workforce to solve problems and deal with technological innovation. Up to, say 1980, that workforce came from US education which major American companies supported.

Now, because of globalization, global American companies no longer have to invest in US education. They simply use use the cheaper educational workforce abroad. “They don’t even have to invest a penny.”

In fact, over the last three decades American capitalists have developed their own think tanks to directly challenge American universities and education system  like American Enterprise Institute and the Heritage Foundation.  For more James Kwak at the the Baseline Senerio

* Globalization is one of the key mega trends dominating the world economically. For more click on OVERVIEW at top of blog

Simply put, an Investors411 mantra and Kwak conclusion – “it is the interests of big corporations that determine government policy in the United States.”

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. Jim Cramer -”BB/HFT make up 80% of trades.”

Its natural for volume to rise after Labor Day weekend.

Housing problem has deeply worried many economists. It’s also become a political football two months before the election.  Back in 2008, Investors411′ mantra was & still is the financial meltdown has caused problems “far, far, far, far, far” worse that predicted.

The NASDQ has “gapped” higher 2 of the last 4 trading days at the open. 3 gap higher almost alway means markets are too overbought to continue the move.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, of course, fell  a -0.54% Friday.  Threatens to break down through support levels of three week long consolidation pattern. = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.45% Friday. A 5 week rally the BDI had flattened out. Now starting to rise again. = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to +48.06 Friday Momentum obviously with bulls, but we are reaching overbought territory. The MO did spend one day above +9o in late July, but over the last year  the other 4 highs were from + 60 to +80. Therefore running out of room for stocks to move higher = Neutral/Bearish

Reading Tea Leaves

Emerging Markets are on a roll (see POSITIONS Section of blog for corresponding ETF’s) Almost all are relatively outperforming US indexes EWS (Singapore is almost at new yearly high, IFN (India),TUR (Turkey, & EIOD (Indonesia did close at highs. The BDI’s rally is confirmation or a forecast of the positive fundamental growth story of these countries.

US Sock Indexes are being driven higher by a weaker dollar which could break down through its support level today. But we are running out of upside “wiggle room” and almost overbought. There’s only 12 points between current MO at +48 and over bought conditions are +60.

Therefore its time to start thinking about taking profits on long positions in a major rally.  If/when we reach +60 or +80 I will be using the short ETF’s in a rally. (See POSITIONS section at top of blog for more)

Fundamental overview of world Economy.

The obvious sub trend brought about by globalization is the economic deterioration of the US & Europe economically  vs the economic rise of emerging markets and energy rich countries (peak oil mega trend – see Overview section of blog).

Will the emerging markets grow fast enough to pull the USA & Europe out of the Great Recession?

Positions

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

Current positions –  EWS (Singapore)

We are coming closer to the time to take profits or consider short ETF’s

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Is it time for Investors to put on their helmets and head to the bunkers?

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.

Another increased above average sell off that has been typical of the BB/HFT controlled US indexes for many many moons.

Perhaps its time to bring  out the old  Lost in Space Robot with all its bells and whistles and scream DANGER WILL ROBINSON DANGER DANGER. This was the third big volume significant downside day in the last two months and that almost always means the worst is yet to come (The Hindenberg Omen?) But BB/HFT’s have made a mokery of this kind of technical analysis. So caution is in order but the Robot is peaking out of the closet.

Here’s what’s holding up US stocks (Clearly NOT the US economy which is deteriorating) – Emerging Markets

EEM the ETF for emerging markets was down about 1/2 of US indexes (-0.77%) How long can emerging markets can things to hold together in the USA (see Reading Tea Leaves)

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant. Doll moves inversely to stocks] The dollar rose +0.27% yesterday.  Almost two week trend = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rally +3.66% yesterday. 5 week trend = 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 -27.32 = Neutral

Reading Tea Leaves

The good – The 5 week rally in the BDI is a clear sign that emerging market growth is continuing. China’s ( the #1 emerging market) stimulus worked, but almost overheated their growth. They have come down into a more normal range and are becoming more self sufficient every day.

The Bad – Back in 2008 Investors411 stated – the economic mess was far, far far, far, far bigger than expected (best example financial sector & this statement is still posted in POSITIONS section of blog) Economic mega trends (see OVERVIEW section of blog) have started to fracture both the USA & Europe economically. Neither has an abundance of cheap oil (peak oil mega trend)

The Ugly – Obama’s stimulus plan & tax cuts have halted the fall, but the jobs are still going overseas because of globalization mega trend. More jobs will be lost as the will for more stimulus fades. It’s election time and even a $60 billion (may have figure wrong) aimed directly at small business (“the engine of jobs growth”) and formerly supported by many Republicans was filibustered by those same Republicans. Nothing will get done in the next two months.

Longer term - 10s of millions of new jobs are being created each year in emerging markets. Millions more are graduating from universities in these emerging markets. When a computer tech will work 12 hour shift in China for $0.75 an hour and the same tech in the USA costs $18.75  for an 8 hour shift, who is Apple going to hire? (I made up the figures)

Just finished writting this and I’ve talked myself into and even more bearish position.  So lets go with the kitty in a helmet

Positions

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

Current positions - EWZ & EWS sold 1/2 of EWS for 0.5% gain

Because of yesterday’s meltdown  held off on buying USO & will start with a smaller 2% stake in a dip today.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

The Problem is Suburbia

Geography 101

Throughout the last 100 years geography has worked for and against the USA. Today mega trends dominate the flow of what happens. Investors411 has focused on 3 megatrends for years. There are, of course more. Lets look at an overly simplistic view of US history as a geography lesson to understand the pickle where in today.

• We ended the Great Depression with the massive spending of FDR’s New Deal and World War 2
• The end result was a debt that was 30% of GDP (relativity — today its @10%)

How did we fix this huge debt problem? We relocated people into suburbia  - built massive highways, factories, shopping malls and developed greater tolerance. Yes, we had much higher taxes then. The middle class and suburbia flourished and perhaps reached its zenith in the late 70′s (see comments section of blog for amount of wealth in top 1%) The Geography here is we sprspeadead out in & built a vast suburban sprawl , worked hard, eliminated a massive deficit. This achieved a lot for many Americans.

Along comes mega trends of  globalization (jobs move abroad) and peak oil (end of cheap energy sources). Geographically, the suburban sprawl depended on cheap energy and the building of more suburbia to thrive. We did hold ourselves together for a while with innovation (computers/internet) but soon because of “scaling” these too are being developed faster and cheaper overseas.

Now. Unlike almost every other country we’re stuck in a geographical nightmare that is dependent on cheap energy and its own further suburban growth to survive.

If you’d like to see a more radical apocalyptic presentation of this kind of scenario read Minnesota economist Jim Kunstler for a while. (Thanks to AG who first showed me this site)

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the vast majority of trades.

Many thanks to Paul R for providing stock information in the comments section over the last 5 days. We are both working together on YOUR on a stock list. Many of you have sent in stocks to be considered and a few more will be added. Hopefully, we’ll be able to get this together by mid week before we both leave.

Significant Indexes-

• McClellan Oscillator (MO) fell  to +40.41 over the last few days [+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. MO is back from overbought to = Neutral
• US Dollar –  The dollar  rose slightly  +0.12% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar  is in a two month long fall and is approaching a major support level. The fall = Bullish
• 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 was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a two week rally and is up +16% rally and is at 1942 = Bullish

Reading Tea Leaves-

We’ve had what looks like a four day breather in a month long rally. The MO is back in the upper end of neutral territory. It did establish a higher high above 90 (see chart) This gives the bulls over 50 points (90-40=50) of wiggle  room to move higher. The benchmark S&P is at 1101 and major resistance is at 1131 (see chart) The dollar and the BDI have turned bullish for stocks. So another charge higher is likely.

While the possibility of a good week for stocks exists, not only will we impact resistance levels on the S&P 500, but we will also confront support levels for the dollar. The BB/HFT traders that dominate stocks pay very close attention to the larger currency markets.

Simply put and longer term - GLOBALIZATION is a reality. Jobs and GDP growth are in emerging markets. The US can remain stagnant economically and US stocks can/will move higher along with China, India, Indonesia, Viet Nam etc. There is long term danger here, but for now globalization, peak oil mega trends are back dominating and the financial meltdown (the problem has NOT been fixed)  is not taking its toll on these markets.

Positions

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

The remaining 1/2 of SDS (ETF that double shorts the S&P 500) was sold at 33.17 on Friday for a +2% gain. Total gain a measly +1% on this position. Again will enter buy short ETF’s when MO gets overbought. This week will wait till/if we reach at least +80.

EWZ (Brazil ETF) - Bought 10% of portfolio position at 69.80 on Friday.

FXI – Under consideration if market does not make huge move higher today.

Any US or foreign stocks that benefits from emerging markets is back on the table.

Long Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Apple

Once again AAPL has hit a grand slam for is earning report. Apple is the 800 lbs. gorilla in the room and probably now beats out Exxon as the world’s #1 company. It is also the company most responsible for keeping the worlds economy afloat.

Their major new growth is, of course, in emerging markets. So Apple to meet the demand has to hire new workers? Guess where 100,000 new jobs were recently added? CHINA

Intel co founder Andy Grove has correctly identified the problem and calls it “scaling.”  Apple is simply opening outlets where the new growth is fastest and the labor by far is cheapest. Any US start up when it comes time for major production is going to do the same. It the mega trend of globalization at work.

John S writes in the comments section – “Perhaps as a country we’ve missed the boat.” He may be right. It is almost impossible to reverse this mega trend of globalization. But we can at least try to make a difference and lives better for our fellow Americans.

The progression goes like this.

• Globalization makes moneyed class in America rich.
• Jobs go abroad.
• USA – middle class suffers.
• Corporations gain power in USA and average Americans loose power (democracy)
• Chinese, one party state (oligarchy/dictatorship) gains power over both American companies (think Google) and its people the more it grows economically.
• US becomes more dependent on China economically.

Flying above the 800 lbs gorilla is the 1,400,000,000 people Chinese Dragon. We should be teaching Chinese in all our schools to get ready for the future.

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

The High Frequency/Black Box traders turned an almost -1.5% loss into a gain  of +0.75% yesterday. Volume was again , below average.

Fundamentals were bad – GS, IBM & TXN had disappointing earning, & economic news was not good. Yet the markets rallied on the bad news all day & into the close = Bullish

AAPL hit another  earnings grand slam after the market closed yesterday. Up +2.57% yesterday and was up over 4% in post market trading last night. = Bullish

Bottom Line –  High Frequency/Black Box trades that make up the majority of trades on US stock markets have shattered many former rules of traditional technical analysis. What used to happen is a week now takes place in a few hours in significantly lighter volume. Some conclusions

• The MO has basically worked as a predictive tool. +/-60 is not the exact overbought/oversold level market turn, but a useful rough guideline for when to be long or short.
• The Black Boxes, because of their size, stick to trading ETF’s and major liquid stocks. AAPL is their darling.
• At different time the algorithms Black Boxes use change.  Example – The religiously followed the dollar for weeks then switched away.

Significant Indexes-

• McClellan Oscillator (MO) rose to +49.90 [+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 +0.28% [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. Earning have trumped this indicator for now & we have consolidated for last two days. = NEUTRAL
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China.) BDI is in free fall from a high of @4200 to 1761 . This is a huge -59% drop in 8weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks the BDI rose Friday.  Last two days also saw small rallies. At long last the BDI seems to be finding a bottom - a bullish sign, but still too early to tell. Fundamentally the -59% drop is very BEARISH

Reading Tea Leaves-

The MO is again approaching oversold territory. It is the currently the most significant of the indicators considered.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

From Monday – “SH – The ETF that shorts the S&P 500 was bought at 51.45… 1/2 of SH was sold for 53.02 for +3% profit.  Letting the rest ride and will sell when conditions on MO near oversold.” The stop/loss on SH was removed and replaced at @3% below what it was bought for 49.95.

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

Strategy - The same as before – 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.

*

The Big Picture

See OVERVIEW section of blog. There are three major economic mega trends (globalization, peak oil, spread the wealth) being impacted by “casino capitalism” where huge over leveraged, unregulated, opaque, worldwide, financial institutions are allowed to exist that privatize gains and socialize risk.

What you’re watching unfold broadly is an economic restructuring and downturn, & specifically a stock meltdown. The STRATEGY section of the blog opens with the statement – The problem in the financial sector is far far far far far bigger than first imagined. Impact of this mess is going to take years to resolve. All of this was written 1 to 3 years ago.

Globally, the economic growth rate (GDP) is declining, and it’s beginning to look like even emerging markets (China) that have benifited from globalization have begun to falter. Stocks are a bit different, they can be held up by smoke & mirrors (fear & greed)

The bottom line – The more you have a working and growing middle class and upward mobility  the better off the country, countries or planet. The more you have hidden wealth, opaque institutions and a rising oligarch the worse off the planet.

Remember -Oligarchies can take many forms – Monopolies, Politburos, religiouous fundamentalist, corporate, military dictatorships, supposed democracies, etc. – but  the more you confine wealth/power to a few the plant suffers.

* The above photo was from an organization that promotes big picture books. The kind that my grand daughter loves. It has nothing to do with subject matter, except  the title.

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

Mantra for week - ” Any analysis of stocks has become an analysis of what the ”Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.” They make up 80% of trading and right now the huge currency markets are dictating their moves.

The Dollar War

The red army (short stocks & long the dollar) had a secret group of reinforcements in hiding that emerged yesterday.

Markets got toasted in above average, increased volume as trading went beyond the Black Boxes & currency traders and investors headed for the exits. (big volume shows some long term investors jumped ship) The red army’s reinforcements

• Dollar two day technically rally breaks out to upside of consolidation pattern (see chart)
• Oops a math error first states China’s growth as 1.7% then revised to 0.3%. Without China you can fundamentally forget worldwide growth.
• Delayed reaction to G20 nations saying they are going to raise taxes and cut spending a la Herbert Hover.
• Worries about Obama stimulus running out of gas and its impact on state governments.
• Ireland/Europe worries as FXE (ETF that tracks EURO) also breaks support level and falls a significant -0.63%.
• Consumer confidence numbers come in worse than expected.
• Tech leader AAPL closes below 50 DMA. Never a good side when you see the top US market general get hit.
• Worries over monthly employment data published on Friday
• Weak Financial Regulation reform was thown into limbo. There may not be enough votes to pass even this.

Seems like the green army (long stocks & short dollar) suffered death of a thousand cuts. The biggest cut in the short  term is China. The 41% drop in the BDI certainly predicted China and more broadly world trade was in trouble.

Market analysts will tell you that both the Dow & the benchmark S&P 500 rallied at the end of the day to finish above major support levels. (see charts at side of blog) This would be the 4th test of the 1040 low for the benchmark S&P 500. I’ve read about a double bottom & a triple bottoms, but never a quadruple bottom. Any things’s possible, but its unlikely we will stop falling here, because NASDQ is already the anchor (at new yearly low) dragging the rest of the US markets lower. = Bearish

Significant Indexes

• McClellan Oscillator (MO) fell big time to -44.39 [+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. In May the MO reached two lows – one at -120 and the other close to -130. Therefore, potential for more downside risk. = NEUTRAL, but approaching oversold
• US Dollar –  The dollar rose another yesterday +0.49% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The dollar has risen a significant +1.03% in two days and broken out to the upside of its consolidation pattern.= Bearish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high@4200 to  2447 yesterday.(2482 to 2447 yesterday) This is a huge -41% drop in 6 weeks.  Often a leading indicator for stocks. Now just above a major support level (@ 150 points lower) Long term. =Bearish

Positions

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

Have not yet had a chance to Update over last 2 weekend but there are NO positions held at this time.

Still watching DGP (ETF that’s double long gold) for a dip close to its 50 DMA – Will buy.

Don’t plan any buying or shorting (ETF that short the market) until MO reaches overbought or oversold

Time to dust off YOUR Stock List and potential ETF candidates that are holding up better than most other stocks/sectors. When the MO gets below -60 its time to start nibbling. The lower the better. Will try to go over potential candidates tomorrow. Paul or others in the comment section might have some new suggestions/stocks that are holding up well

When panic reigns we buy. We may only get a modest rally to a lower high, (hopefully sell 1/2 into 5+% gain) but we may get a longer term rally too.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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!

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

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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!

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!

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!

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

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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.

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$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