Casualty Battle for castle Bear Skull yesterday as Bulls stampede

Again a must see short video from Dr George Gerbner on Violence

Hope you joined us in making $. Yesterday Investors411 called for a rally –  Castle Bear Scull fell and, as predicted, BULLS rallied – “Not guts no glory – I’d love to wait for a 100 point Dow dip, but you can feel the bulls breath & it may never come before the rally.” (more below) .

Jim’s List

Here’s a short list of Senate candidates I’m supporting either with cash and in one case time. I also like F.S.’s Congressman Grayson in Florida. He’s been “change we can believe in.” I’ve tried to choose close races and focused on solid candidates like those who had the conviction to vote yes to break up shadow banks. The other criteria was if they were running against someone that is truly over the edge on the far right.

#1 Russ Feingold Wisconsin – Progressive maverick who haas done everything from more body armor on HV vehicles in Iraq to campaign finance reform.

#2 Harry Reid Nevada – Harry did vote to break up the shadow banks,but it is more his Tea party opponent who is the concern. Example she no longer wants us to be the leader of the free world – she wants us out of the UN.

#3 Alexi Giannoulias Illinois – Close race & Alexi does not take a dime from corporate PAC’s or federal lobbyists.

#4 Chris Coons Delaware – Good man in race against Tea Party/Sarah Palin opponent whose latest scandal is being investigated for stealing living expenses from her campaign fund. See my post in comments section of blog for this.

#5 Barbara Boxer California – Strong progressive who is running against someone who did a poor job running HP computers. Her opponent knows how to outsource jobs.

That’s my list in order of preference. Barr thanks for letting me publish them and you guys for asking him for it in the comments section of the blog for the list

Jim J.

[Jim's right - Lots of you in comments section were vocal about wanting his list - so here it is. Like the list? Don't like the list? Have your own list of candidates from whatever party. Post them in the comments section of the blog. Barr]

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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day -Over extended – From Investopedia

US Markets

US stock markets rallied is what has become standard – reduced from day before and below  average volume. Just about every standard text book on stock analysis uses volume as the  a very or most significant factor in a price move. This is no longer the case for many many months.

Long Term Is this a bubble building? – Yes Here’s what’s holding us up technically & fundamentally

• You have a bunch of hard core investors who are holding onto stocks no matter what
• Companies are buying back stock instead of creating jobs or using $ for expanded research.
• BB/HFT’s trading.
• Investments by wealth sovereign wealth funds and hedge funds (the world’s oligarchs)
• A central bank that keeps pouring/printing money ($5 billion yesterday) into the economy
• Emerging markets are red hot. US money is investing abroad in these emerging markets – not US jobs.

Bubbles can take years to build – Look at the stock market leading up to the housing/finance crisis. So for now we ride the wave using the MO as our guide.

Obama gave an hour long town hall for  the ultra right wing financial channel CNBC and stocks rallied in front of & after his speech.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.08% yesterday. Dollar seems to be starting another consolidation but longer term, falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -1.79% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. 6th down day in a row, with rate of fall decreasing. After 8 week bull run trend could be changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to +48.47 yesterday. We’re only 11.5 points away from overbought territory, but still = NEUTRAL

Reading Tea Leaves

The benchmark S&P 500 stands at 1143 and just about every analyst is telling their client that 1220 is the next serious resistance level. Also, the strong triple top resistance level or castle bear skull was shattered (see yesterday’s Investors411)

Bulls are going to do everything they can to drive stocks to 122o. Today is a confirmation of rally day.

• give back over 1/2 of the gains bearish
• the less we retreat the better
• Adding to gains bullish

Our early change to CAUTIOUSLY BULLISH seems to have been the right call.

Positions

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

(I do manage 6 accounts that have other positions)

Current Longer Term positions –  EWS (Singapore), USO (price of oil/commodity) SSO (2x what S&P does- this ETF is more a trade that may turn into an investment)

If, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Since we now have a bullish trend Investors411 is going to adopt a different set of parameters around the MO.  (see earlier Investors411)  Traders instead of waiting for -60 on the MO the area around +20 or the 50 DMA seems to be a support level. Just remember over the last 3 years 3 months is the maximum period the MO has gone without reaching -60.

We can also allow for a little bit more on the upside of the MO (+60)

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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Jobs, Jobs, Jobs

Ever since the 2008 meltdown Investors411 has stated financial and economic conditions are “far far far far far bigger than first imagined.” This statement that has been made many times and is still bolded in the position section of the blog.

Poll after poll (except among Tea Party supporters) have said “To Hell with the Deficit, Its Job, Jobs, Jobs.“ See yesterday’s Investors411 for  a list of historians and economists who make the same case less colorful language.

Immediate Help

• Extend unemployment benefits its “the human thing to do.” Republican Billionaire Mort Zukerman
• Extend unemployment because (the average American unemployment check was under $300 a week in 2009) it will stimulate the economy. These people will SPEND the money and we all benefit because money flows.
• Republican’s know that the longer they can delay a vote on this the less money will flow and consequently the more people unemployment will grow before the November elections. Every day they delay = the more votes they get in November, because they can blame Obama for unemployment.
• It’s certainly hypocritical to endorse the Bush tax cuts on the wealthy. Next vote for unnessesary war funding outside the budget for over 10 years. Then play politics because our own American families of former workers are going hungry.

Longer Term Help

• Infrastructure projects get you the most bang for the buck according to Mort Zukerman (who I usually don’t agree with) and most economists.
• We need an Independent Infrastructure Bank Not one where a powerful Senator like Democrat Harry Reid can take $350 million for a high speed train from LA to his home state of (Los Vegas)Nevada.

Bottom Line – Andy Grove, Intel’s CEO had it right – Globalization has created a major “scaling” problem in the USA. Unless we somehow change that direction the ultimate result is going to be very negative economically for the USA.

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 (that are focused on the here and now) pushed the markets higher in weak trading. This has been the typical headline for many moons in what’s been a falling market since April. – Lower price highs and lower lows.

IBM was the earnings report of most interest and its down @-4% in pre market trading = Bearish

APPL – Both Monitor and Paul R have warned about today’s earnings report at close.

YOU have pretty much reached consensus that holding a stock, especially in a declining economic environment, is highly risky before its earning report. If you are an insane lover of risk (short term trader) and AAPL continues to drop before earnings – it does take some of the downside risk away.

Ruptured oil well leaking again and possible leaks on oil on ocean floor related to BP oil spill. Best site for this is The Oil Drum = Bearish

Significant Indexes-

• McClellan Oscillator (MO) rose to +21.91 [+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 Friday was basically flat +0.04% [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 1700 yesterday. This is a huge -60% drop 8 weeks.  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 & +0.70% yesterday. At long last the BDI finding a bottom - a bullish sign, but too early to tell.Fundamentally the -60% drop is very BEARISH

Reading Tea Leaves-

Don’t think the negative fundamentals of the BDI (Trade and China) & Europe have been fully integrated into stock prices yet. Sure fells like we are going to have a negative day. But, with Black boxes in control (almost everyone else has fled to safer investments of bonds and treasuries) – you never know.

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 Yesterday – SH – The ETF that shorts the S&P 500 was bought at 51.45. It’s up over 3% now. 1/2 will be sold at 3% profit and a stop/loss has been put in place at what it was bought for. 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.

No other positions long or short are contemplated in immediate future because MO is neutral. Sorry, there is little to do but sit tight,  be happy you’re almost all in cash, and wait till we get oversold or overbought.

One exception is GLD or DGL (@200% GLD). Its dipping and if it falls to its 200 DMA – would consider buying on fundamentals.