Investors 411 Blog

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Greece, Debt and YOU

You may or may not know Greece is having a problem with its financial debt. (NYT article) This small country, thousands of miles away is the tip of the iceberg of unsolved problems that directly relate to YOUR financial well being. Let’s put this in Bullet points

• A major reason Greece is in such trouble is because, like AIG and so many homeowner mortgages, Credit Default Swaps were placed on their debt. They still are being place on them today by shadow banks and hedge funds (Aside – hedge funds – are the equivalent of “economic hit men” and are perhaps even worse than  shadow banks – more later)  So there are a whole crew of hit men or CDS traders who will make money or are investing to see Greece fail and default on their debt.
• If Greece goes down, a lot of other European countries, who are in an almost similar situation, could follow. The list includes Ireland, Portugal, Spain, England and former Russian satellite countries. “Economic hit men” (Harvard/Oxford prof Niall Fergeson’s term for hedge funds) are the vultures circling here waiting to make money off the kill.
  
• California, Michigan Rhode Island and many US states are likewise in the same boat. Without the Stimulus package they could have gone under already.
  
• So is the USA – Except we have printed, & borrowed over S10 trillion to temporarily fix our problems.

This recovery, so far, is based on smoke and mirrors – Not transparency and rules that keep economic hit men like the traders at from AIG, or hedge funds from bringing the financial world to its knees.

Investing bottom Line - For years it was easy to recognize that globalization economically favored both emerging market growth and the privileged/wealthy class in the USA. Investors411 was very successful and careful in choosing investments outside the USA.  That potential still exists. However, an unregulated shadow financial system full of roving economic hit men exits. So, we have to move more cautiously, because the chances of economic bubbles growing and bursting is still INCREASING.

Therefore, using technical shorter term oscillators like the McClellan makes more sense right now.  It, no longer your parents buy and hold forever market.

Coming next – Economic Hit Men – Hedge Funds

Bloom Box (con’t)

About the most discouraging news, when you separate the hype is that the Bloom Box has not yet been built as an “in home power plant.” The technology may not be revolutionary, but who cares as long as it works and can be put into production sooner rather than later.

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.

The day started out as a disaster for US equities and recovered a lot of those losses. Even though we closed down in higher volume bulls had something to be happy about because of the recovery.  It seems like this market is looking for an excuse to rally.  It’s fundamentally hard to understand why, but some pretty bad news recently including weekly jobless data, Greece (see above) increased housing problems, & double dip inflation fears  yesterday, doesn’t seem to be able to sink stocks. Markets holding their own or have slight losses on bad news is a bullish sign.

Therefore, best read of the tea leaves is that we will hit +60 on the McClellan before we hit 0.

Significant Indexes

• McClellan Index fell to +28.62 We are somewhat oversold, but have a ways to go to +60 Oversold territory.

In answer to an email question – how did I come to determine +/- 60 as overbought or oversold? The McClellan Oscillator on the NYSE is one of dozens of indicators that show the market oversold or overbought. I like it because it is relatively simple.  Most stocks follow the trend of the entire markets. (say @ 80+%). This is especially true for, the ETF’s which are market baskets of stocks.

Click on the chart of he index above and adjust it to 2 or 3 years.  Note every time chart went over +/- 60. What I did then was also put up a chart of S&P 500 adjusted to the same time and compared the two. It’s not a perfect correlation, but if you go long (buy) when the McClellan dips to -60 or below you or sell (or go short) when it reaches +60 you would have done better. There are some weaknesses in just using the +/- 60 system that I’ll go over at a later date.

Positions

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

Will be lightening up when/if positions reach oversold 0n McClellan Oscillator.

As stated on Tuesday –

I’ve also set what’s called a stop/sell orders  on at @ 2% above what it was bought for

• recently bought (added to) EWZ
• 1/2 of MOO, a longer term position.
  
• The remainder of THY

Came very close yesterday to reaching stop/sell or selling TYH. This AM I raised stop/sell order to about 3% above what they were bought at. Will also, preferably, sell these positions if/when stocks are overbought.

IMAX – doing fine – really hope this will be a long term hold – and there will be other dips to buy into on the way up.

Other stocks on YOUR watch list – the earliest I would nibble is when the McClellan Index falls below 0 (zero)

Not adding to any major positions until markets become oversold again.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Health Care Debacle

There’s something in human nature that loves it when you can say I told you so.  Health Care reform attempts are crumbling and just like the greedy Wall Street Shadow bankers Anthem Blue Cross of California can’t wait to raise prices 39% on March 1.

Everyone knows that our long term debt problem is centered on a massive growth in military expansion and health care. Obviously unsustainable if you keep cutting taxes. The problem in health care is we spend far more on health care than we get in outcomes There are over two dozen industrialized democracies who pay far less and live far longer.  There may be problems in their heath care systems, but nobody’s voted to go back to a system like the USA’s.

One wonders how much of this 39% increase did Anthem use to defeat health care reform.

71% of Americans – Palin NOT Qualified to Be President

Latest WaPo/ABC News Poll shows Sarah Palin is NOT qualified to be President.

But,  according to those of you who comment on this blog – Is Barak Obama Qualified to be President? – Yes, this blog has been tough on Obama, but does his latest attempt to “begrudgingly” support  big bonuses on Wall Street in the very companies that help cause the meltdown  bring his credibility into question?

Paul Krugman – ” I’m with Simon Johnson here: how is it possible, at this late date, for Obama to be this clueless?“

Greece

The whole world waits to see what’s going to happen with Greek debt. Thee is a big meeting today in Europe. As far as stocks are concerned the sooner this is settled the better.

Greece like the USA and many European markets ran virtually “unregulated free markets”. Credit Default Swaps are still being traded on the bonds that Greece uses to finance its debt.  Someone has to pay for Greece financial system going overboard. Once again the end result will be Socialism for the rich and the working poor will feel the heat.

Dubai had the UAE to bail them out and Greece has France/Germany.  But there are lots of other countries out there who will feel the aftershocks of 2008 USA “unregulated free market” meltdown. Once again socialism for the rich and capitalism for the poor who pay and pay and then have their children pay and pay.

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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!

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.

Basically a nothing day.   The whole world waits to see what’s going to happen with Greek debt. Thee is a big meeting today in Europe. As far as stocks are concerned the sooner this is settled the better. We have a concept, not a specifc plan.  When a plan comes expect a short tem rally.

Greek bailout – Short term good news, but long term bad news. The more the Euro countries have to bail out the lower the Euro goes. Therefore relatively the dollar goes up. This costlier dollar makes our goods cost more in Europe and hurts US exports.

Oversold market’s natural direction is up.

Significant indexes – Forecasting tools for market direction

• McClellan Index fell to -32.47 =Moving away from Oversold. We’ve passed -60 or oversold levels twice recently. When the  McClellan Oscillator gets past those levels its a signal to buy.  The more we are over -60 the better at least a short term buy will come out successful. -32.47 is a better entry point than +32,44, but not as good as -60 or higher and beyond.

Positions

The  Positions Section has the latest buys and sells – Revised positions last weekend) – These are positions I actually own

Thinking about nibbling on ETF’s & stocks (see yesterday) as long as McClellan stays in the red.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

New Mexico

Move YOUR Money

The  state of New Mexico’s house voted 65 to 0 to move their money ($2 to 5 billion) from the big shadow banks to the local community banks. So why can’t YOU Write your state legislatures. Tell them what New Mexico did.  Tell them what YOU did. You can make a difference.

Elizabeth Warren Calls Out Wall Street

part 2

Great follow up by James Kwak editorial on how the Big Shadow banks will try to block Warren and reform. Obviously the entire Federal government failed to stop the Shadow banks bring this country to its knees.  All the TEA party people, Rush Limbaugh, Glenn Beck will rise up to  scream oppose to any attempt by the Feds to better protect the common working man and woman – They will call it socialism, big government, and stifling the markets.

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.

Technically, Volume. out #1 confirmation factor, seems to be turning in favor of the bulls.  For the last few days rallies instead of price declines seem to begetting the bulk of the volume.  While its too early to claim victory on this price roller coaster a bullish trend is developing. Perhaps the single biggest basis for this potential bullish trend are US equities are oversold (see below)

Fundamentally -Looks like rally may be starting and European countries are going to protect potential defaulting countries. Short term positive – long term negative. Here’s the question – Will Greek workers be happy with austerity demanded by German banks? Is Greece like the Countrywide Bank (first of the big USA banks to fail) of the USA?

US trade deficits just got bigger -$40.2 billion – for last month. A bigger than expected number probably due to strengthening dollar. Bearish stat

Significant indexes – Forecasting tools for market direction

• McClellan Index fell to -37.14 =Approaching Oversold. We’ve passed -60 or oversold levels twice. When the  McClellan Oscillator gets past those levels its a signal to buy.  The more we are over -60 the better at least a short term buy will come out successful. -37.34 is a better entry point than +37,34, but not as good as -60 and beyond.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells – Revised positions over weekend) – These are positions I actually own

SELLING & BUYING

These are YOUR selections

Stock Watch List

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. Click on ticker symbol for chart

Caution – You have to be careful that the dip does NOT break trough a major support level. Then the dip becomes toast

• SEED – A China related stock. Broke down through support levels and created lower low. Trend broken. removing from list
  
• AAPL - Formed a double bottom trading pattern @ 190 - a buy the dip opportunity
  
• CAAS – Broke down though 50 day, but has some STRONG volume up days. A China play that will follow FXI. Tempting
  
• PCLN – Fell below 50 day moving average. Formed a double bottom bullish trading pattern. A buy the dip opportunity
  
• F – Oversold, and well down from highs. Has formed a base at 10.5  - a buy the dip opportunity
  
• DRWI - Big exporter to China -  Sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip .
  
• ENOC – New – Reduces costs for utilities 50 day MA acting as support Potential buy the dip
• IMAX – Great long term chart – Poor short term chart. Lower highs and lower lows  Investors411 has a 2% of portfolio position in this stock. Sell at least 1/2 into next rally

YOUR new Stocks (sorry several of you sent multiple lists and I picked what looked best)

• GS, Often considered the #1 Shadow bank seems to have formed base at @ 150 Tempting.
• CSCO, Techs new leader Moving up despite rocky market a by the dip
  
• SHOO, Great long term chart. Pulled back and is forming a base. Would like to see a bigger base, but tempting
  
• ICON, Did NOT form lower low over last two weeks as markets toasted a buy the dip
  
• VPRT Another stock that weathered recent pullback well a buy the dip
• DGIT Thinly traded, but potential winner – just broke above its 50 day MA a buy the Dip
• CTCT Rebounding stock, has a of good volume up days has breakout potential
• VCI Good volume, good chart Somewhat overextended A buy the dip underway
  

Bottom Line – We are oversold and ready for at least a short term run – Investors 411 opened a 5% position in TYH (3x financials) Friday at 117.14  TYH now at 123.56 Sold 50% at 124.85 on Friday for +6% gain.

Big Mistake here was not to commit more $ TYH to trade.

I’d much rather buy while the McClellan Oscillator is -37 than +37. But, the lower the McClellan goes the better the buying opportunity.

Lots of the above stocks have technical potential IF there is a rally

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Wanting Obama & America to Fail

I may criticize Obama and before him Bush, but I never wanted them to fail. Our politicians have gotten so partisan that Obama’s failure has become far more important than solving problems that confront our country and the world.

Richard Shelby (Powerful Republican Senate finance committee minority leader) – has held up 70 Obama appointments because he wants “earmarks” (special compensation) for his state of Alabama. The Huffington Post  labeled him Mr. Roadblock after Shelby held up the nomination for chief of the General Services Office for 10 Months . She passed 96 to 0 . Additional story here . Buying votes has overwhelmed US politics. But this case was just way too blatent.

PIGS

- World Market’s stocks plunged in an aftershock of the financial earthquake that hit last Oct. 2008. In 2008 it was the huge shadow banks that stood on the brink of collapse from over leveraged debt bombs called Credit Default Swaps.  Iceland’s economy is still shattered because it took on too much OVER LEVERAGED debt.

P ortugal, I reland, G reece, and S pain are now in trouble. You can add Great Britain and all the former Soviet satellite countries.  They bought into the unregulated free market capitalism and now like financials are suffering.  They are selling their debt at much higher prices than we are.  Are other countries going to fall like Iceland?- Bill Gross (big bond seller) editorial

Here’s the problem nobody knows how bad or over leveraged things exactly are because there was little regulation.

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.

Worldwide stocks dropped in big, above average volume on fears of a credit meltdown in Europe. (See above) This, added to China and some other emerging markets pulling back on stimulus has driven all major indexes to yearly lows = Bearish

Jobs number -  Headlines -20,000 job losses in January (about what was expected) 9.7% Unemployment rate . Don’t understand how they got this number – down -0.3 % and not seeing job creation).  Seems implausible. They did a yearly revaluation. Basically this is good news for stocks .

Significant indexes

• McClellan Index fell to -70.88 = Oversold. How low or oversold can markets get before rebounding. We did reach @-93 about 3 days ago, about @-115 last November & @ -130 back in the fall of 2008.

• 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 .  Yesterday the BDI rose +12 at 2685.

Analysis – Oversold conditions means we are closer to a buy than a sell. Two major questions.

• Is this correction going to grow? Technically the answer seems to be yes . The charts are showing now 4 major down days in big volume. We are at yearly lows and the McClellan Oscillator is at -71. 3 trading days ago we hit -93 and the markets were at a higher low. All this is Bearish but oversold markets are when to buy.
  
• How to play the dip When everyone else sells you buy. The bigger the dip the better your chances. Of course this works best for a short term trader, who is willing to buy the dip and sell a few days/week later.  The more a longer term investor is in cash- the more its time to nibble.
  

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

Here’s stocks YOU suggested  to add to the Watch List. – Will try to analyze stocks over weekend.
GS, JPM, CSCO, SHOO, ICON, SOA, ALF, VSEC, BIDU VPRT

ETF’s -  6% of portfolio FXI (China), 5% EWZ (Brazil), & 10% MOO (Agriculture) -  Total 21% invested. Sold 1/2 position or 5% of portfolio of EWZ yesterday at $65.1 . This was bought at $52.8 back in July. A +23% gain

I will be adding to positions (hopefully long term) today, hopefully in a dip.

The strategy .  Buy a position in an oversold market and sell 1/2 of it when it gains 5 to 10% and let the rest ride.  The position should take into account major trends that you understand. For me China, Emerging Markets and Brazil still fit the bill. However there are concerns about a long term US/China trade war. Also any of the ETF’s that do 2 & 3 X what the major US indexes do.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING