Reading The Tea Leaves -

The Forecasting indexes have changed to mostly Neutral & its the confirmation day after  big rally. China news is going to hurt.

From yesterday in brown – Three paths in descending order of preference.

• Yes the bottom -TJX (Target) had a great earnings report and outlook. Oversold markets & 50DMA support levels hold. GM IPO energizes markets
• We’re in for an acceptable 5 to 10% consolidation after a nine week bull run with a S&P support level of 1130. (SPX now at 1179)
• A double dip recession is out there and Investors will soon realize the horror as foreclosures rise, Europe falls apart

The problem here is – if you combine choices the more bearish choices #s 2 & 3, are larger than #1.

The GM deal with a potential strong Christmas season and QE2′s print & dump could swing an oversold market. – It did. Today is a confirmation day for yesterday’s big rally but the China news is going to hurt.

• Stocks remain flat or go higher = confirmation & good
• Stocks loose up to 1/2 their previous days gains = fair
• Stocks loose more than 1/2 the gain = bad
• Stocks loose all gains or more = duck and cover

Positions

• EEM – (Emerging Markets ETF)

Short term Traders. – See no clear advantage to a trade today, although momentum is with the bulls.

Investors. [From yesterday in brown] The MO goes below -60 buying becomes a much better option. Twice in the last 3 years the MO has reached -130. So you could loose out especially if there is a double dip recession. So I started small and nibbled on a little EEM (emerging market ETF) A  position at 45.28 Willing to accept a 7 or 8% loss on this. If we keep going lower I’m going to add some more EEM and country specific ETF’s on dips. (See POSITIONS Section of blog.)

Investors411 main strategy is to “buy the dip” in a positively trending market. When panic is in the street we buy.

I think the chances of a double dip recession are remote, but a flatline US economy coupled with (right now over heated) growing emerging markets is more possible.

Long Term Outlook has been changed back to CAUTIOUSLY BULLISH from NEUTRAL. It will remain there unless the major US indexes fall back below their 50 day moving averages of pice (see charts on top right of blog) CAUTION – We are on the cusp of change so Long Term Outlook might flip flop for a while.

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

A Call to Action

Simon Johnson (Former IMF chief economist and MIT Prof.)

You make the difference – The folks at the Baseline Senerio have joined with others, after the President’s speech yesterday to support legislation offered by Sherrod Brown (D – OH) & Ted Kaufman (D- DE) to take stronger action against the shadow banks. (Obama did not endorse this bill) Nobel Prize winner Krugman’s view

I’ve signed their petition and hope you do too LINK

Bottom Line – Since Financial reform bill(s) wind their way through congress a most unusual phenomena is happening – They are getting TOUGHER. Republicans are caving (not a lot but  a significant handful) The harder you push the more protections for  Main Street – YOU, your taxes, your rights, your stock investments – will have.

Consensus on Shadow Banks is starting to move. Shadow’s have even hired and paid a phony front group that has already spent $2,000,000 to pose as a group that wants to break up banks, but actually promotes the opposite. Link to Video

Obviously the outright collapse of shadow banks would be devastating economically. However, what’s needed is legislation with some teeth that protects YOU.

Debate in comments Section

See J Sovjani latest reply – This debate has gone from GM to Dumpsters to Washington Square NYC. . A significant chunk of the folks who are on the private mail list of this blog are artists or craftsmen and you can follow the entire thread by scrolling down at this link

News Junkies

SHerwehe has sen in the following site that lists front pages  of newspapers across the world. I’ve used this site for months and it is really useful because it shows not only the different biases in the USA, but across the world. The US government has a post that actually translates foreign papers, but do not have time to track this down.

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 for changes made each weekend

Answer -stocks so eat.

The NASDQ had fair sized gains gains in increased, above average volume. The Russell 2000 (small cps) out performed and the other two major indexes inched higher in increased above average volume.  Markets all rallied into the close = Bullish

US equities greeted Obama’s financial reform speech with a rally of almost 100 Dow points (Down @-80 to up +9.37 at close) Obama’s certainly no Teddy Roosevelt. = Bullish

Their is a giant cookie monster of ”programed traders” [ huge institutional investing] that comes at the same time and to the same place (Wall Street) each afternoon and devours all the cookies (stocks) it can eat. Every dip is getting bought no matter the cause. =Bullish

Stocks rallied despite a significant rally in the dollar. The Greek debt situation grows and the dollar is rallying because the Euro is falling. = Bullish

AMZN & MSFT Two tech giants both were down after reporting earnings in after the markets closed yesterday – drops of -5+% in in post market trading, still down but much better in pre market trading= Bearish

Analysis – If markets are down around noon expect the Cookie Monster to eat the cookies, vegetables and whatever is out there

Significant Indexes

• McClellan Oscillator rose slightly to +5.49 yesterday.  [Basically, 60 or above = Overbought = sell. -60 or below = Oversold = buy]. More sophisticated investors can use the 50 & 200 day MA’s and adjust from there. StockCharts has a better version of the McClellan chart ($NYMO) LINK. - This is almost right in the middle of NEUTRAL territory
• US Dollar – rose a significant+0.58% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Is very important. Remember, dollar down almost always = stocks up and visa versa. The positive earnings reports are overshadowing the dollar which is in the upper end of a consolidating range between @$80.00 & @$82.20. Dollar at 81.65. If it moves to either side of that range it will impact stocks.

Positions

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

UWM – Investors – Our long position, ETF, that does basically 2X the Russell 2000 will continue to hold into the weekend. Considering a smaller position in TYH (ETF that does 3X NASDQ) on a dip.

Many of you are reporting excellent results in IMAX, VCI, SHOO, SNDK MSPD & VLTR and others. Do NOT chase these stocks, unless you really know how to day/swing trade – even then most are too overextended to risk a short term buy.  Traders should think more about selling as issues get over extended. Use the basic strategy – see top of blog.

Again McClellan Oscillator is NEUTRAL and a better time to buy (less risk) is when stocks are oversold.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Drove my chevy to the levee
But the levee was dry
And them good old boys were drinkin’ whiskey and rye
Singin’ this’ll be the day that I die

American Pie lyrics by Don McLean

General Motors is Back

Today GM announced its paying back $5.8 billion in loans and interest to American & Canadian governments – just nine months after government supported bankruptcy and promises to pay the rest back by June.

Remember all those Republicans, especially Senator Richard Shelby (from SC who had Toyota plants), fighting to keep GM from being bailed out even though it could have cost millions more American job losses related to the car industry.

Obviously GM and other car companies still have problems to overcome, but GM, and my wife’s favorite – the Great 57 Chevy (photo above) – is back in less than a year  Thank You Barak Obama – for a Main Street bailout that kept American jobs and taxpayers off the unemployment lines.

Investors, GM news =Bullish

Goldman Sachs

Remember the 3 Monkeys covering their eyes ears and mouths- See no evil, speak no evil, hear no evil. They control Wall Street right now. The gargantuan shadow banks are simply too big & lawyered up to obey the law or fail.

We all know that virtually all Republicans (the secret meeting with 25 shadow financials big wigs on Wall Street) and many Democrats are owned by Wall St. not Main St.

Popeye in the comments section finds it amazing that the SEC is going after Shadow Giant GS because they are such a huge “cash cow” for the Democrats and Obama

From your credit card to your home loan to your stock market trading to your taxes -YOU get crunched by the huge shadow financials. No web site explains it better than the one from MIT The Baseline Senerio – “Break Up the Banks”

Obama BIG Speech

Thursday Obama will address the Nation on Financial reform. Who will he be?

MR MILQUETOAST - The Obama who wanted to compromise and turned to mush on Health Care. He got answered by Tea Party screamers disrupting Town Meetings and any rational debate with accusations of armageddon, socialism and death panels. Never, never, never underestimate those who want to (Tea Party members etc.) who keep the fact from coming forward by screaming, fear mongering & threatening.

MR CHANGE WE CAN BELIEVE IN – The Obama who campaigned  in 2008.  Again the Baseline Senerio sets what should be Obama’s message and tone. If Obama simply endorses the inadequate Dodd Financial Reform Bill the same thing will happen again and financial reform is over.

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 for changes made each weekend

Wall Street went back to what had ben the standard weak volume stocks move higher pattern. Although volume is historically the #1 confirmation factor behind a price move, the old trend continues = Bullish.

Earning report have overshadowed too big to obey the law, too big to fail, too big to worry about huge bonuses, shadow financial institutions. The profits and bonuses keep coming. Even the Greek debacle which has some of the same root causes is being ignored = Bullish

AAPL – Earnings report was a grand slam home run. Like so many other huge corporations the majority of jobs will go to faster growing emerging markets (more customers – less distance to transport product) where construction and labor is cheaper. Up another 5% in after hours trading. = Bullish

YHOO – Down over 3% after earnings. Not as important as AAPL= Bearish

McClellan Index is below zero and this gives building bullish momentum room to run = Bullish

GM – Repaying

Significant Indexes

• McClellan Oscillator rose  to -6.78 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still in NEUTRAL territory
• US Dollar – rose +0.08% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Is very important. Remember, dollar down almost always = stocks up and visa versa. The positive earnings reports are overshadowing the dollar which is in the middle of a consolidating range between @$80.00 & @$82.20. Dollar at 81.03. If it moves to either side of that range it will impact stocks.

Positions

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

Why you should always check out out the comment section of the blog.

YOUR STOCK LIST is now closed. This does not mean you can’t trade any of the stocks on it or the whole group.

Yesterday, Both The Critic and Paul R put into simple clear term the most used trading strategy of Investors411 for stocks. I can do no better than repeat them below. Also D. on IMAX

The Critic:

“#1 The Lower the McClellan goes the better time it is to buy stocks.
#2 YOUR Stock List has stocks moving higher – The 50 day moving average is going up. This is the blue line on the chart.
#3 the time to buy is when these stock dip back down closer to their 50 day moving average.
#4 A time to sell is when the stock gets too high above that moving average?
#5 AS ALWAYS DO YOUR…”

Paul R

“When a good quality stock pauses to refresh and hangs out on the 50 day moving average (DMA) it can be a good time to buy, this point is known as “Free Parking”. If you are watching a stock in this situation and it starts moving up on higher than normal volume go for it!

When a stock is extended 30% from the 50 DMA be light on your toes. When the stock is extended 50% from the 50 DMA have your finger on the trigger. When a stock is extended 100% from the 200 DMA many institutional buyers (mutual funds etc) will lighten up on their position.”

D

“:):):):):):)”over IMAX up +6.37% yesterday in increased above average volume

There is a play for short term traders here. IMAX is again just below or at an all time high. This is a technical breakout point. What could happen at the open to IMAX is a “pump and dump.” – (See Sunday’s Investors411) A major player(s) will try to break out this stock and the greed will flow as IMAX gets pumped up by other day traders who want to make fast money on the breakout.  You could see another big gain Then those who pumped it will dump  all their shares (the ones they owned form the past and the shares used to pump IMAX.

Obviously you have to buy early. The big question is how high will it go before it gets dumped.  For longer term investors, just be happy when a higher high is created on the chart because that = bullish

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Mini Me & GM – GM Solutions, outside the box, Michael Moore – Market Patterns – Volume still not confirming rally.

GM, Mini ME & Solutions

-

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

-

Technicals & Fundamentals 

Technical Price & Volume Patterns -

• Again notice (even though the difference is not as large) that the NASDQ and Russell 2000 are leadingthe other major indexes. From yesterday – The NASDQ(technology) & Russell 2000 (small cap stocks) have taken over the leadership roll. In longer term bull markets the NASDQ and Russell usually lead.
• The start of each week recently has seen a big move higher followed by a more mellow or declining market.
• The fact that we held onto Monday’s gains is a bullish sign. 
• This is not a rally that is specific to the USA, but the world. China, Brazil and other countries broke out of their patterns before the USA.

Reading The Tea Leaves 

Sorry due to a technical glitch I lost everything but this short summery -

Volume still has not yet confirmed the move higher, but cumulatively (each day we hold above breakout levels volume grows) volume can act as a confirmation. Many secondary indicators are positive. This is only our 2nd day above breakout levels. Breakout still very vulnerable. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? GM Bankruptcy – Email addresses that can make a difference – speak up, fight back, be a watchdog. Stocks on verge of breakout from consolidation pattern. Investor’s 411 positions have already reached new highs. A mea culpa

GM Bankruptcy

-

Photo from Huffington Post

GM files for bankruptcy this AM - Lots of the issues have been agreed on before hand. This is a positive. Overview from NYT or 7 Reasons Why GM is Headed for Bankruptcy  from USA today

For investors – This bankruptcy is going much better than expected 6 months ago. This would have been a Lehman Brothers type failure 6 months ago. 

EMail addresses that matter*

YOU can make a difference speak up, fight back, be  a watchdog. Keep the following to the list of addresses.

Congress.org How a politician votedd and forms to email your opinion

sunlightfoundation.com texts of major bills, special interest contributions, and earmarks

Recovery.gov Government on Stimulus bill

Cagw.org tracks gov’t spending by Citizens Against Gov’t Waist.

Pogo.org – monitors government waste

Cop.senate.gov – Monitors bank bailout

Consumerfed.org – Connects you to local groups working on local issues.

* The above list came from a Michael Crowley’s significant article “We’re Done with Greed.” in  Reader’s Digest (page 47, June)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

-

Technicals & Fundamentals 

This market wants to rally. It sure looks like we will break out of month long trading pattern this week. The NAsDQ has taken over the leadership roll – the only major index with above average volume on Friday.

GM files for bankruptcy this AM – Lots of the issues have been agreed on before hand. Overview from NYT or 7 Reasons Why GM is Headed for Bankruptcy  from USA today

Interest rates and the (falling) dollar are probably the big news of the week, The dollar’s decline juices the price of oil.

XLF - The ETF that tracks financials (mostly shadow banks ) rose +1.83%. Financials has been the leading sector and as financials go so go the markets. Financials are lagging Techs (see QQQ) that broke out of consolidating pattern in light, below average volume.

WTIC - Oil prices again closed over their $60 support level +1.89% at $66.31. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

BDI - The Baltic Dry Index measures the flow of goods (world trade).  The momentum here is bullish (see chart). This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism)

Reading The Tea Leaves -  Looks like we are going to break out of the consolidation pattern to the upside this week. Some of our major positions already have done so. Volume, for the most part is NOT confirming the move higher. Techs is driver’s seat. However our secondary indicators are bullish – especially the BDI.

Positions - (See positions section of blog for more)

•  EWZ - From Thursday “sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday… looking for a dip (-5 to 10%) to get back in.” EWZ at new high (see chart)
•  GLD (gold) is one of the hedges against inflation. Up +2.08% from Friday GLD at 3 month high
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now. This ETF has gone elliptical and will wait for a pull back. We have had the predicted pullback.  This stock is for traders and not long term investors.
• FXI - our major position here only rose +3.35% yesterday. FXI has broken out to a new high
• GEX - alternative energy - +2.01 yesterday 
• FAS - 3x financials has been working. This position is for traders not investors

Mea Culpa – We have cashed in on some of our longer term positions recently (EWZ, XLF & QLD)(26%, 23% & 16% gains) and these stocks are still moving higher.  Looks like the pullback/entry point  is simply not happening. I thought stock would not move higher on $60 oil. I was wrong. Looks like oil will hit $70 and perhaps $80 before impacting stocks 

Tomorrow change in long term outlook to CAUTIOUSLY BULLISH if rally occurs.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? – GM crumbles – the impact; Major trend establishes itself – Reverse Colonialism; Your broker’s bias; Stocks -Buy and hold is dead – why; Changes to Positions section; Your stock questions

Auto Parts Workers – Josh Anderson/AP photo 

GM/US Auto’s Crumble

GM sock fell over -20% yesterday to below 1933 prices. It ended the day at $1.15.

What happened is that big companies that hold GE bonds also have Credit Default Swaps (remember how CDS’s crumbled housing) protecting their bonds.  Therefore, they have no financial incentive keep the company in business. Looks like bankruptcy is almost inevitable. Story link to pain of car sector dissolving. This looks like a death spiral.  Consequences of bankruptcy -  

• The worse case senerio the Stress Test had for unemployment (now -8.9%) was -10.3% - We could easily surpass this.
• More unemployment = more foreclosures = Home prices fall = less consumers buying = more stress on banks= greater chance of economic meltdown. 
• The USA is addicted to oil and cars. Transportation is vital to the economy. We are already dependent on foreigners for oil and now we will be dependent on them for cars/manufacturing. 

The Trend – Reverse Colonialism

One significant trend that is almost ignored is just how significant a role other countries are playing in buying our debt.

Most talking heads put foreign ownership of the US at @$5 trillion now. The whole way our financial structure has been moving over the last 40 years has depended on expanding and over leveraged credit. Foreigners have bought up lots of this credit.

Inevitably, foreigners are going to demand better and better assets as they become bigger and bigger shareholders in the USA. Already in  countries like Saudi Arabia – the  #2 form of income is foreign ownership.

It’s doubtful that foreign entities will stop buying US debt because it will hurt their own economies. But what is more likely is that they will demand more significant and better American assets to finance America’s future debt. In essence - Reverse colonialism

Bottom Line – Teach your kids Chinese.

Buy and Hold is Dead

Thanks for all the  personal emails on specific stocks (see comments section) I will answer them. But, I do NOT recommend individual stocks because I’ve long since realized that everyone else knows more and has access to better information than I do. 

Your broker is biased.

• Brokers are paid by how much $ they have in the market 
• Each AM they are given a list of companies to push that their bosses have made deals with. This info is given to most wealthy clients first.  
• Individual stocks are too easy to manipulate like GM (see above) Your broker might not be, but brokerage companies play this game.

Buy and hold 

• Buy and hold used to work in multi decade bull markets.  Since 2000 (Dow at 11,000 & now at 8,400) we’ve been in a Bear Market.
• Markets now move much faster because hedge funds and private mega institutions dominate trading. The buy and hold mutual funds are not as significant a factor as the past. Even mutual funds trade far more often than they use to.
• Short term traders with computers and far more esoteric trading tools dominate the markets.

This is why Investor’s 411 looks for mega trends and follows them with low cost stable market baskets of stocks (ETF’s)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Technicals & Fundamentals

Major markets closed mixed. Mostly to the downside. Volume was up but below average for the S&P 500 and Dow. Above average and flat for the NASDQ. Volume so far this week is not showing any sign of confirming the price move. Therefore …

Still looks like natural profit taking after a big run higher. I could develop into a reversal if volume increases.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.12% in flat below average volume.  Repeat - Since the current rally began two months ago only 4 times have we had two down days in a row for financials.  So if today is another down day in, especially in light volume, short term traders might (day and swing traders) might see it as an opportunity to buy.

Short term Traders only – would buy the dip today (see above) and use stops to limit losses

If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks – The mantra of the markets for the past two months continues.

WTIC charts “Light Crude Oil”.(see chart). Oil prices momentarily crested over $60. Prices were up 0.30% to $59.71.  In one sense high oil prices are bullish. Higher oil prices indicates that investors think demand will be strong in the future. The downside is higher energy prices is it further diminishes the buying power of the middle class consumer in America,

Repeat from yesterday-What happens to Shadow Banks is still the dominant factor controlling what other stocks do. Investors411 has given the good,the bad and the ugly of the privatizing the gains and socializing the risk in Shadow Banks – The good is the gains on Wall Street.

 The Upcoming war We have rapidly created an incredibly massive subsidy system for America’s Shadow Institutions – How do we disconnect from these wealthy welfare recipients?

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.

Email Question from MamaJama

Should we take profits on China and Brazil now? (see Comments and Positions section of blog) 

Reading the Tea leaves - There is at least a short term dip coming. Investors411 has already dumped positions in financials and techs.  Do plan as a trader to buy the dip in financials.

 Yes you can take some money off the table/take profits in China & Brazil. No one evr went broke taking profits. You can also buy some protection.

Remember, the last time I recommended this (the “swine flu scare”) I was wrong. Right now, personally I’m selling some Brazil (EWZ) with the intention of buying the dip.

As stated many times in the past month – what happens to shadow banks is what moves stocks.  China and Brazil right now (in the short term) will follow this trend. As long as Shadow Banks rule – and right now they seem to have the Obama administration in their pocket – stocks should not fall too far too fast.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? Thanks to all of you who wrote in comments and set the agenda for both SmackDown and Torture; The endemic of torture – accountability, your comments, definition, & its cost in American lives; Shadow Banks and the Stress test;  Flu Pandemic hits stocks; Major changes at GM;  Market – Technicals & Fundamentals.

TORTURE

-

Definition of Torture

• The Spanish Inquisition waterboarded and we called it TORTURE (Frank Rich - Link)
• The Japanese waterboarded (WW 2) We executed those responsible and called it TORTURE (see ewanapt’s comments)
• The vicious dictator Pol Pot(Cambodia) waterboarded and we called it TORTURE
• The scum in North Korea waterboarded and we called it TORTURE
• The Cheney Bush administration waterboarded and we call it ”ENHANCED INTERROGATION TECHNIQUES.’

Commission on Accountability

The endemic and acceptance of torture has dramatically altered the moral character of our nation.

Torture authorized  by the Cheney/Bush administration was not used in one singlular Jack Bauer (TV show 24) moment but instead spread throughout the world.  Authorized torture approved by the government elites – from the 84 ghost prisoners to Gitmo to Abu Ghraib to Afghanistan – flourished throughout the world. See, Andy Worthington’sTen Terrible Truths About Torture

One of the greatest outrages of our time has been the change in America’s character to accept torture. Character and moral values used to be what separated us from Chairman Mao and al Quaeda.

Please join me and others  calling for an independent non partisan commission to examine and publicly report on their findings. See-

Commission on Accountability.org 

Dick Cheney

The Overlooked Cost in American Lives

Our use of  Torture killed  a whole lot of Americans “The reason why foreign fighters joined al-Qa’ida in Iraq was overwhelmingly because of abuses at Guantanamo and Abu Ghraib and not Islamic ideology,” says Major Matthew Alexander, who personally conducted 300 interrogations of prisoners in Iraq.”  

Torture and the “unjust” occupation/war in Iraq was the #1 recruiting tool for Islamic terrorists. who have and will kill thousands of Americans. See  ”Torture? It probably killed more Americans than 9/11″ -LINK

STOCKS

Technicals & Fundamentals

Mantra -Forget all about the major indexes - What happens to the shadow banks (financials) absolutely dominates stock  trading.

We are in the second 1/2 of earnings season.

Possible Flu pandemic negatively impacting markets throughout world.

Major changes coming out of GM. They are dropping major lines of cars and more.(breaking)

XLF - The ETF that tracks financials (mostly shadow banks) rose +2.24% Friday in increased volume.  Financials have lead this rally and if they  collapse so will almost all other sectors (see Positions section of blog on XLF) 

The XFL is consolidating between @ 9.4 & 11.3. XFL closed at 10.94. We are moving close to strong resistance level at @ 11.3.  This is the resistance level all Wall Street is watching.

BDI -Baltic Dry (Sea) Index has rebounded. (see BDI chart on side of blog) Translation – world trade is doing better.

Reading the Tea leaves – Stocks are in a tug of war-but the trend looks up. Here’s a CNBC article that agrees with this outlook. Technically we are consolidating, but there has been more upside days in big volume than downside days in big volume. Fundamentally the big event is the May 4th “Stress Test” announcement. Here some more info on the Stress Test.

Fearless Forecast.-  It’s hard to see the FLX break out above the 11.3 resistance level before the “Stress Test” on the shadow banks becomes public. But, at the rate the current administration is caving into the big banks a breakout seems likely after 5/4

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! 

Government rejects GM/Chrysler bailout plan. The G 20 meets. Asking the wrong questions – What’s wrong with our prisons/justice system? The real question - What’s wrong with the USA? The “Quiet Coup’s”  ominous forecast referenced in Sunday’s blog deserves further consideration. One solution that prevented/delayed the downfall of the Roman Empire.

Rejecting Autos & G 20

(see  fundamental section below)

What’s Wrong with the USA?

Parade (the Sunday news magazine/supplement in many newspapers) headlined What’s Wrong with Our Prisons? Investors411 asked what’s wrong with our Justice System Friday?

Yes our justice system is a “national disgrace” (Sen. Jim Webb)   Our rate of imprisonment is “5 times the world’s average… Either we are the most evil people on the earth or we are doing something very wrong.”  (headline from front page of  Parade) The real question is what wrong or what’s happened to America’s culture? Webb has some good ideas, but the roots of this problem go well beyond the justice system. 

• Why are we so violent, 
• Why are we so fearful?
• Why are we so focused on me instead of we?  
• Why do we focus on retaliation instead of mediation?
• Why is mob mentality growing and individual accoutability vanishing?

I’m sure you could add to this list. 

The Quiet Coup

Here’s the conclusion of the MIT professor Simon Johnson’s editorial

What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.

How a Roman General Beat the Terrorists.

Pompey in 67 BC beat the terrorist pirates who threatened to destroy Rome. Here’s how

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

A Stiff Upper Lip 

You’ve got to admire the Brit’s for their stiff upper lip. Across the pond they’re in a lot more trouble than we are from England to the Ukraine. Most of the emerging democracies of Eastern Europe bought into what they thought was the American dream. It turned into an over leveraged toxic asset bubble with banks/countries wobbling on the cliff of insolvency nightmare.  

But at least the Brits  have some degree of transparency. Here almost everything  except the amount of bailout and stimulus funds is a deep dark secret. Take the deeply troubled Bank of Scotland now all but completely nationalized by the Bank of England.

_________

Transparency

The Royal Bank of Scotland has put admitted to  $722 billion of “troubled assets” of over leveraged toxic debt and are trying to wind down those liabilities. This loss is staggering England with about 1/5th the gross GDP of the USA.  But, they are dealing with the problem in the open.  We don’t even know the staggering amount of over leveraged debt of AIG, GE, GM or any of our major/minor banks.  The only thing we do know is the near meltdown of the financial system when Lehman Brothers went belly up and its toxic debt brought the entire worldwide banking system to its knees.

Unfortunately we also know this problem is going to get worse. Because more defaults are on the way,  unemployment is growing, home prices declining, and esoteric mortgages will soon start charging higher rates of reurn.

__________

Obama Pass/Fail

Let’s give the guy credit for a transparent budget. He’s getting some excellent reviews because he stopped hiding many items like the Iraq war as part of the overall budget. 

But on the other hand he’s getting clobbered with his rosy economic assessment of the future. Whose he kidding? The US GDP will be -1.2% this year and +3.2% next year. A consensus of Economists believes otherwise as Peter Goodman in NYT point out. (Many thanks to one of you who emailed me this article)

__________

“Geithner’s Folly”

Our new Sec. of Treasury has come up with something called a “stress test” for big banks.  Let’s get real. The vast majority of these toxic institutions invented the stuff that the Bank of Scotland has already admitted to. Big banks are broken. Wake up and smell the coffee – Geithner “is asking the wrong question. The question he is posing is: how can the government save Citigroup? The right question is: how can the government rebuild the banking system?”  Bob Kuttner, columnist for BusinessWeek, Boston Globe and co founder of the American Prospect on no matter how good the rescue plan is it doesn’t matter a lick if you don’t fix the banks.

__________

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Stocks

-

-

Technicals & Fundamentals

Just about every front page is covering the biggest ever quarterly loss - $62 billion by AIG. 

From Friday – “The Ugly news” would be - “The SPX ends closing  a bit below 741.  This would just establish a lower low (see chart on right side of blog) and further entrench the bears rule chart pattern.”  

The SPX ended up at 735 (A bit below its mother of all support barriers) and technically this along with no climax selloff  shows there’s more down side to come. Perhaps today we may see a climax selling panic today and a chance to nibble. To have a “climax” sell off you need both a big fall and big volume.

Big news of the week is the employment numbers for February come out Friday. 

Reading the Tea Leaves – How many Danger Will Robinson Danger Danger signals can there be?   – Hope you protected any long investments.

Long Term Outlook = BEARS RULE

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

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!