Sorry limited time this AM -Shortened Update

US Oligarchy is Kicking Ass

Political overview

One of the classic battles in every country is between the rich oligarchy and the people. In some countries like China, even though there is lots of corruption and pollution, the middle class is growing and they have a government surplus.  In the US the oligarchy is clearly winning & the middle class shrinking and the debt growing. The new administration has made little difference.

• The military industrial complex oligarchy is growing even as Afghanistan (Obama’s "necessary" war) has, like Iraq, become an unpopular war (poll numbers well below 50%).

• The big shadow bank oligarchy is winning. They don’t have to mark their profits to market, have received huge bailouts, still take exorbitant salaries, & no serious methods of regulation have been introduced to regulate them. Little hometown banks getting toasted.

• Small American business, the middle class, and medicare recipient can not compete with other countries or maintain anything resembling the same lifestyle if health care costs rise another 100%. (see past Updates)

• Massive debt built up by past Republican administrations is now being added to by Obama as he stimulates to keep us from falling into another great depression. The oligarchy used to pay a far greater share of this debt – now YOU (mom and pop) do.

Stocks

Everything hinges around the jobs number today .  The back ended stimulus program is working. Some private sources are showing the stimulus creating 500k to 700k jobs.  But these are temporary and in a year or two will run out.  The oligarchy in the big companies that are recovering will hire cheaper labor abroad. (see above)  One big added incentive is they will NOT have to pay growing health care costs if they hire foreign workers from Europe to China.

Markets have been reacting poorly to good news so there is a lot of temporary downside risk possible with today’s announcement.

The good news for markets is Obama will probably cave in on the public option in his speech on Wednesday.  This means the insurance oligarchy has won . Big US companies will not be impacted because they will hire abroad. Small business will get hurt because of the increased cost of heath care.  But most of these small companies are NOT on the major US stock exchanges.

This is perhaps the last chance to fix Health Care in the US.  It’s 16% of GDP and growing. Far less in all other other countries. Economically its hard to see Americans climb out of the growing hole – health care, energy dependence and debt along with an unregulated oligarchy have a strangle hold on government. However, it is plausible to see stock prices increase, because globalized (larger) American companies will hire abroad and make new profits from emerging markets.

All this doesn’t happen overnight, but continues to be the direction we are heading.

Barr

PS – You’d think after the oligarchy’s greed and corruption became so transparent after the shadow bank meltdown last September there would be some larger cry for change.

Health Care

photo – Huffington Post

Last Friday’s blog outlined the probable course of health care legislation. Basically the House would come up with a private plan, the Senate something different. Then it all goes to conference. If Obama and Democratic leadership wants, it can force a majority rules vote.  That’s when the real FIREWORKS happens.

Last week (sugar dependent) John, suggested a program in the comments section that deserves more thought - Provide everyone with a basic program, like medicare , and let richer folks add onto this. The devil is in the details , but this works with education, and law enforcement – why not health care .

Right Wing Radio Takes a Hit

Glen Beck The Fox News host who has called Obama a "racist" has lost more than a handful of major advertisers. LINK You can join and fight those who believe that screaming the loudest and name calling is what America is all about. Specifically in the Glen Beck fight one effective organization is TheColorofChange.org – LINK

Another older organization is MediaMatters.org – LINK

If you sit and do nothing, the Mob, the Screamers and the Haters win.

If you stay silent the fear mongering will grow.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

(see results for last 1/2 year – click  6/25 & scroll down)

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

Technicals and Fundamentals

A significant meltdown in WEAK below average volume. Volume, the #1 confirmation factor did NOT confirm the move lower.  If volume does not confirm the price move you look at what happens the next day. General rule if over 1/2 losses are recovered – that’s bullish & if market continues to fall, that’s bearis h .

US and most world markets were way oversold and long overdue for a retreat.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI three day bullish trend is flattening. Up only +22 points yesterday.  The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. Bulls need a good long run here to break out of the bearish trading pattern.

In a nut shell the BDI is

• short term - Short bullish trend turning
  
• mid term -  Bearish pattern
• long term - Bullish pattern

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.  What has become quite clear is that the dollars 50 day moving average has become and ultra strong resistance level . This is signified by the blue line on chart . Every time prices close to this descending line since the end of June they have failed to break out higher.

Once again we tested that 50 day moving average yesterdayand failed to break out. The dollar moved up +0.62% yesterday and therefore, stocks moved down. Long term the dollar is in a bearish trend , but the short term trend is at a bullish breakout level. Mantra – Dollar up = US stocks down

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession

This is the index to watch. If the dollar moves higher, then stocks will get toasted.

Fearless Forecast

• World trade numbers (BDI) continue to be locked in a mid term bearish trend. Trade could be breaking down between countries and protectionism rising or the BDI just went up too far too fast.
  
• The USA is printing and stimulating its economy with wheel barrels of cash. The dollar should be falling and therefore, stocks rising.
• US equities reached way oversold levels and technically needed a breather.
• There are fundamental signs of bottom line growth abroad (China mostly and some other countries and a few US companies)
• Big drop in small volume for US stocks on Monday = no confirmation of downside move.
  

Its very important to look at things globally instead of just egocentrically focusing on US equities. Everybody is oversold and a low volume retreat (yesterday) is not a conformation of the downside move. In bull markets a 5 to 10% fall is a buying oppertunity.

For the week - look for a rebound early and then things to level off or even fall lower .

A retreat of 5+% would even be technically good for the markets. Worldwide, we need to cool off a bit. The dollar is the index to watch in the short term and the BDI long term.  Fundamentally its hard to see the  dollar move higher so longer term still see raly intact.  Of course, this could change if dollar rises.

CAUTIOUSLY BULLISH is still the long term call and dips are buying opportunity.

Positions

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

Still have not had a chance to revise Positions section of blog.  Buy on dips smaller positions in FXI (China) & EWZ (Brazil) have been added to. Also an SPX (S&P 500) position has been built on dips.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors 411 Record - Beating the S&P 500 for 4 1/2 years

Your Comments

Yogi Berra – Old Yankee catcher

Both Mama Jama and Bob Sadinsky have come up with some valuable info on health care in the comments section of the blog.  Check out following Physician’s website – here

Yogi Berra said it best – Deja Vu All over again

Just like in the Iraq war when anyone questioned the war was shouted down with in your face screams that you were “unpatriotic,” “un American,” and” hated the troops.”

Now in the  health care debate. Bob points out that the same thing is happening. Town hall meetings to explain heath care reforms are being  shouting down and  disrupted.   This coordinated organized angry protesters are funded by the drug, insurance and right wing fringe groups. Some examples

• In Massachusetts  one anti public health care advocate “likening Rep. McGovern to Nazi war criminal Josef Mengele, notorious for performing macabre experiments on concentration camp inmates.” link
• In Connecticut “an angry mob” heckled Senator Dodd who has prostate cancer  to “treat” his cancer with a “handful of pain killers” & “whiskey” link

The Democrats are fighting back with the following add about the same old Mob . You can see it at the same above link (you may have to scroll down) Unfortunately this political in your face yelling works because it takes the attention off the debate/facts and onto yelling demonstrators.

Who pays for the almost 50 million uninsured people when they use the hospital? – First the hospital, then you pickup the eventual huge increased cost? If we institute a public system the cost would most likely be picked up by a 5% tax on those earning over 1 million dollars a year.

You pay or those who get big Wall Street bonuses, sport figures, Rock stars, CEO’s, old money mansioned  millionaires pay.

Yes, some smaller business owners will loose $50 k out of $1,000,000+ they make each year.  Some might cut a job instead of buying a new boat. But with health care covered the uninsured and those who loose everything because the insurance company finds a way to deny them coverage in a medical disaster will be protected. These folks will now be better able to spend money once they know they are covered.  Small business will benefit in the long run by their spending.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

(see results for last 1/2 year – click  6/25 & scroll down)

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

Technicals and Fundamentals

Big news is jobless figures for July come out on Friday. Don’t expect major moves in US equities till that number is announced.

US markets shot up in the last 20 minutes of trading – A short term Bullish sign.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3159 – down last four days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly,

In a nut shell the BDI is

• short term – Bearish trend starting
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning – The BDI falling through its support level at 2975 would be very bearish. BDI fell -9 2 points yesterday. At this rate we will reach critical support by the weekend.

.

$USD - We broke that major support on Friday and dollar took another big hit Monday Tuesday the dollar inched forward +0.19% Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008 .

What this means for stocks – The dollar has a long way to fall before it hits major support. Therefore, stocks (and oil prices that are tied to the dollar) have a long way to rise before this support level is reached .

Support levels have been broken and that break conformed by Monday’s further meltdown. Dollar closed at $77.74. Lots of downside momentum established over sharp fall of last 3 trading days.  So yesterday looks like just a technical pause. Bullish for stocks

Positions

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

The problem here is investors are buying the smallest of dips. We’ll keep adding until the dollar and the BDI fall to their major support levels. The Dollar dropping is key to this rally and it has a long way to go before reaching major support levels. The BDI is close to breaking support and this will impact all exporting economies.

Therefore, by weeks end it may be time to take some profits on foreign investments like the Singapore and South Korea ETF’s. Both the falling dollar and BDI cold hurt these stocks if trend continues. China can hold its own even though overbought right now. Brazil is strongly influenced by oil prices and it should hold up even  better. – Nobody ever went broke taking profits.

Buying EWZ (Brazil) & QLD (2X NASDQ 100) on dips.

Apologies to those of you who are long term buy and hold traders. You could hold onto EWY (S.Korea) and EWS (Singapore). Investors411 has only held these positions for one and three weeks. Plan to reinvest in them again later. Right now they are over extended and vulnerable to falling BDI. So I’s using a tight stop/loss order after opening (I know I’ve lost some of you with this technical explanation)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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Financing Health Care

Here’s the "Pelosi" or House Plan costs It has a direct impact on 1.2% of Americans.

• 1% increase on those earning over 280K to 500k
• 1.5% increase on those earning 500k to 1 million
• 5.4% increase on those earnings over 1 million.

The nuts and bolts (lower costs & greater choices) of the plan explained here

Bottom Line – The growing income inequality is one of the major economic problems that has done  seriously harm to this nation.  No matter what you feel about this imperfect plan the Republicans had 8 years and did nothing while health care prices skyrocketed. The Democrats and Obama are moving in the right direction.

Knowing that heath care costs are covered, 10′s of millions of Americans will be more likely to spend money.

Sotomayor Hearings

The Supreme court has become a highly charged political entity. The 5-4 vote for President Bush in 2000 proved this beyond any doubt.

So naturally the Sotomayor hearings are a circus of political correctness. The OWMP (Old White Men’s Party) or Republican’s are further alienating themselves from America’s growing non white community by going  after an eminently qualified Hispanic women jurist. In the NYT Maureen Dowd has a column appropriately  entitled "White Man’s Last Stand" here

Waiting Game

Huffington Post photo

The NYT has an editorial that reflects similar views of Investors411 over these past month. Why is the Obama administration waiting to act on some critical economic factors? See editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

(see results for last 1/2 year – click  6/25 & scroll down)

Technicals and Fundamentals

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

Markets moved slightly higher after Monday’s big gains in reduced volume. A Bullish confirmation signal

Financials are probably going to continue their charmed existence, because t he Obama administration & the Fed has deemed the big ones too big to fail and they keep kicking the can down the road on any major fix of the problems that created the economic meltdown.

Intel’s earnings report  was a grand slam . Intel is the mother of all chip stocks and chips are the picks and shovels of technology. Therefore, this is a fundamental sign that technology is full of "green shoots," (green shoots is an overused term that of signs the recession is receding) At least technology is one sector of the worldwide economy moving forward.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) As predicted for the last two days the BDI has turned back and yesterday mover significantly (3+%)  higher. So the prediction on Monday about a bullish turn has come true.  Bulls Rule momentum

In a nut shell the BDI is

• short term - turning bullish
  
• mid term – clear bearish pattern
• long term - bullish pattern
  

$USD - The Dollar is still comfortably in its in its 5+ week long consolidation pattern between $79+ and 81+.

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Monday’s Fearless Forecast for week – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week Intel surprise is a strong fundamentally Bullish factor

Changing Long Term Outlook back to NEUTRAL – Both the BDI (world trade) and technology are green shoots

Our Positions

Intel earnings positively impact four positions

• IFN – India We outsource much of our technology to India.
• QLD – This in its own right (not part of the "the Hedge" trade) becomes a buy the dip trading opportunity again
• FXI – Benefits less directly. But anything that helps the US helps China more.
• The Hedge – This should certainly help the QLD or tech part of this trade.

Personally I’m adding to positions early this AM and/or on any dips. (5% to 10%) addition.

This doesn’t mean that the worldwide recession is out of the woods – there are some long term problems that are no where near solved – but Intel’s news and the BDI turn should really  juice stocks.  The benchmark S&P 500 is at 905 and the next resistance level is 930 then the yearly high of 956. Rally ho

Note change in Long Term Outlook up ANOTHER level to CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Afghanistan Escalation

Photo – Huffington Post

US launches major escalation in opium rich province in Afghanistan. BBC story here

By getting side tracked with an "unjust" war in Iraq we have created or ignored a whole host of other problems – Our decline in credibility, loss of allies, Iran’s moving to fascism, Pakistan destabilizing, the rise of Hamas & Hezbollah, Lack of focus on N. Korea and deterioration in Afghanistan are just some of the problems that have emerged.

Health Care

• Wal Mart according to CNBC now backs Obama’s concept of a public health  insurance program here
• AMA (American Medical Association) now "open" to public health insurance program. This group can’t make up its mind. Story here
  
• While the two above indicate momentum toward a public heath plan program the major obstacle continues to be the huge amount of money the lobbyists against the bill give senators and congress. (see past Investors411)

Boycott EXXON

While other major energy companies are  running ads that encourage conservation and alternative fuels  Exxon is still funding groups that are putting out false and misleading info on climate change here

Many of you in the past have sent me boycott Exxon emails. Sometimes this was over high oil prices, sometimes they’re leading opposition to climate change. I still boycott EXXON

Employment Numbers for June

8:30AM EST – Job loss grows from 9.4% to 9.5% with greater than expected -467,000 jobs lost last month. .  Manufacturing was way down – probably duein large part to auto bankruptcies. Markets are going to take a  hit today because of this.

This report was @ -100,000 worse than May, but +100,000 better than the months before May. Jobs are a lagging indicator, but quite important if you have one. More here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals and Fundamentals

All eyes on Unemployment numbers this AM Results =

Prices rallies, but volume dropped significantly/moderately for all major indexes. This is a bearish sign

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell yesterday.  This index is winding up like a spring, within a consolidation pattern. Watch out! Long term Bullish rise from bottom, but coiling right now for next move .

$USD - The Dollar fell -0.64 % . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar down = markets up. We are in a month long consolidating pattern after a multi month fall Long term Bearish pattern for Dollar that is consolidating pattern now (neutral) = Bullish for stocks This strong correlation may break down in future. (see yesterday’s update.

VIX – Measures Volatility in S&P 500.   The less volatility means the better investors are feeling. Yesterday the VIX fell a meager - o.49% yesterday.  Longer term 4 month trend down and we are near Sept. 08 lows. Bullish long term trend for stocks

Our Positions . -  Over the holiday weekend I’ll try to give you an in depth outlook for our positions, especially the new positions.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

I’m away on a business trip till Monday so we have a guest blogger today.  Abby Gold is a PhD in Public Heath that works for both ND State Univ. and MN State Univ. She has posted several comments on Health Care on the Investors411 blog.  

       HEALTH CARE        

Think about all of the things we value as public goods in our country: roads, parks, schools, sanitation services, safety services, and clean water, just to name a few. As a society, we cannot live without these public goods. We also cannot live without health care. Yet health care has never really fallen into the category of a public good. This has cost us dearly.  

For a long time in the United States, we have treated access to health care as a privilege rather than as a right. As employer-based insurance has weakened and the ranks of the uninsured have grown, our national dialogue on health care has shifted as well. We are referred to as health care “consumers,” rather than patients, and care itself has been turned into just one more commodity for us to buy. The societal consequences related to this position are numerous, including the high utilization of expensive emergency care, children getting preventable diseases such as whooping cough, and a skyrocketing diabetes rate.

The historical hesitation of our lawmakers to pass meaningful legislation to create a fair and equitable health care system stems back to at least Eisenhower’s time, when the paranoia over “socialism” was just as alive then as it is today. David Oshinsky, in his book, “Polio: An American Story,” describes the polio vaccination’s seedy and complicated history. When it came to time to administer the vaccination on a widespread scale, researchers wanted to inoculate school children for free. Eisenhower was afraid to provide funding for free vaccination, thinking that it was too “socialistic.”  Never mind that the worst polio cases were primarily found in privileged children who were unexposed to the virus or other germs that could have sparked their own acquired immunity.

We don’t have a national health care system because people are afraid of socialism, and not because of a reasoned argument against assuring accessing to health care for all. But health care is not just about health insurance coverage; it also encompasses the care itself, including readily available, quality primary care. Do you have health insurance? If you are one of the 45 million Americans without health insurance, what sorts of things do you avoid or delay? Check-ups? Visits to the doctor when sick? Annual check-ups, even for young adults, are an important way to prevent disease. Annual exams for men should include sexually transmitted infection and testicular cancer screenings (of which younger men are particularly susceptible). Annual exams for women include pap smears, breast exams, and sexually transmitted infection screening. Early detection of most diseases can save lives and be far less costly to treat than later detection. 

Even worse, what if something catastrophic happens like you fall off a ladder and break your back, cut your finger with a knife while making dinner, or you get cancer?  Some things are more affordable to pay on your own, like stitches in your finger. But, some things are so costly that you will surely be paying the bill for a long time.

My sister, Katie, was diagnosed with breast cancer at age 31. Thankfully, she felt the lump on her own. Mammograms in women under 40 are not routine. She was diagnosed with a fairly treatable, early form of breast cancer. At the time, she was in business school and had just given up her comprehensive health insurance in exchange for the university’s student health plan, which only covered up to $100,000 of all medical costs. Initially, she felt comfortable with her decision to save some money on health insurance because of her youth and good health. The cancer changed that story. The cost of her cancer treatment was twice the amount covered by the university sponsored health insurance.

We need to transform our health care system. As much as we try to squeeze health care into a free market system where we shop around for the best deals, we will fail to solve the problem of providing coverage for all citizens. Nobody should live in fear of a bill causing us to forgo important medical treatment. This puts everyone at risk. If someone has strep throat, tuberculosis, or HIV we need to know who they are and treat them in order to prevent the spread of these potentially deadly diseases.

It’s so simple, yet so complicated. The ideal to cover everyone is simple, but the politics of covering everyone are complicated. We need to de-politicize the process. The question of who receives coverage and who doesn’t receive coverage furthers the disparity between rich and poor in this country. Family HealthCare Center in Fargo has estimated that over 22,000 people in our community do not have access to health insurance and do not have a medical home.

Now that the middle class is affected, maybe we’ll see some change. With heavy job losses in the professional world, people are losing their employee-based health insurance coverage at a rapid pace. Also, smaller employers are being choked by the high cost of insurance for their employees and opting out of paying for their insurance and maybe moving toward offering the option of health savings accounts.

A little bit about health savings accounts (HSAs) . . . HSAs are a free market approach to health care. Employers who offer this as a “benefit,” provide high-deductible catastrophic health insurance to their employees while at the same time deduct pre-tax money from paychecks that goes into an account to pay for any medical services accrued below the deductible. This approach might work for young, healthy people who rarely use the health system. The idea behind HSAs is that if people pay for more of their own health care they shop around for a clinic or doctor to find the best deal creating competition and driving down health care costs. Also, if you are young and healthy, you can save money in your HSA for many years almost like an IRA, so when it comes time to pay for costly health care expenses when you are older, you’ll have the money saved. This approach leaves out a great majority of Americans who need to utilize the health care system on a regular basis. In other words, it is inequitable. We need an equitable system that serves everyone.

Other countries view health care as a right, and their per person health care costs are a lot lower than ours, at least in part because they focus more on prevention and primary care. Our system is backward; only 2% of medical dollars are spent on prevention and public health measures. If we had a health care system that focused on preventing diseases before they emerge, our costs would surely go down. Instead of health care costs strangling state, local, and small business budgets, we could have a system that provides for everyone while also emphasizing prevention, leading to a healthier nation.

Right now, we have the opportunity to find a solution to our health care crisis and build a health care system that works for everyone. President Obama and the Congress have already taken a few small steps: they passed an expansion of the State Children’s Health Insurance Program (SCHIP) to cover millions more children. Also, the stimulus package included funding for the development of secure electronic medical records that will lead to better information management, and funded prevention and wellness efforts.

But that is only a start. Our leaders need to set a goal of passing comprehensive health care reform by the end of this year. The real debate is about to begin. Americans are coming together to have a conversation about how we can find a unique American solution to our health care crisis. It is time that we finally acknowledge and value our health as an American right, and provide quality, affordable health care for every man, woman, and child in America in a way that makes our economy stronger, and fairer, for the future. 

 

Long Term Outlook = CAUTIOUSLY BEARISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!