The Battle for Castle Bear Skull (See Stocks below)

The New Gunslingers

Today’s Investors411 is using analogies to violence, wars, and brutality because we have all become so brainwashed by it. My mind is totally desensitized to violence because of a lifetime of TV. This weekend’s football & violent TV shows have taken their toll. I watched well over 100 people, killed, brutalized, raped etc.

How desensitized to Violence are You? Short Video presentation on how violence is used to brainwash YOU & get your attention. Thanks to Sherwehe for finding this. Dr George Gerbner is the expert

Economically, here in the USA we have been wounded. But for the US stock market and other Stock Markets throughout the world there are new Gunslingers that control/manipulate stocks. [NB - US economic's is often NOT in synch with stock markets] Their firing high powered machine guns to your singe shot rifle. This is a wealthy worldwide oligarchy of investors.

• The BB/HFT’s (see many past Investors411s)
• Sovereign Wealth Funds – (Think big exporting countries/Oil rich dictatorships)
• Emerging Market Investors – (Perhaps some not as filthy rich as everyone else – a growing upper middle classes along with controling oligarchy)
• Hedge Funds (Depositories for wealthy investors whose top managers can make  $900,000 per hour and get taxed at 15%)
• Central Banks (Not exactly new gunslingers, but most countries try to manipulate their currency lower so their exports cost less abroad)

YOUR Comments

Coming tomorrow is Jim J. list of candidates to invest in. It’s rare, but there were comments over the weekend on Stocks Paul R & The Critic) and Yankee Bob takes on one of the major industry groups that makes up the growing Corpocracy (vs. Democracy) in 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!

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 -Technical Analysis (TA)- From Investopedia

“Technical analysts believe that the historical performance of stocks and markets are indications of future performance.

In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst’s decision would be based on the patterns or activity of people going into each store.”

For me TA is looking at charts and finding patterns- Reasons TA works as a forecasting tool tomorrow.

US Markets -

Friday’s was what’s called “options expiration Friday”. Hard to use as a forecast tool because the increased volume is traders covering (buying) options that are coming due the third Friday of the month. We will go over options later this week.  YOU can look it up in Investopedia.com today.

Below is the same chart of the benchmark S&P 500 (SPX) that 10,000+++ technical analysts are showing their clients and 1,000,000+++ traders have already identified. It’s from Stockcharts.com - A free site that Investors411 uses for all its charting data.

To everyone who follows Technical analysis this chart screams today (perhaps this week) is REALLY important.

The SPX is at a triple top. Three times the bulls have charged the bears cave or Castle Bear Skull (my term for wannabe victorious bulls to call the bears resistance level) and twice before the bears have held. Everyone knows the bears are tough at this point. Lots of bets are being placed on the bears or bulls will win. Bears win markets go down and the level @ SPX 1130 becomes a super strong resistance level. Bulls win and its rally on.

The annotations on the above chart were written by John Nyaradi

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, rose  +0.20% Friday. The dollar broke down below its short term support level, but recovered – Bearish short term (daily) sign for stocks. 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 -2.23% Friday.  The BDI does not have the immediate impact that the MO or Dollar does. Fifth down day in a row, with rate of fall decreased. 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 slightly to +24.97 yesterday. Note – While zero is the center of this chart the 50 DMA is at 19.29 That’s a support level. = NEUTRAL

Reading Tea Leaves

From Friday -If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise…Perhaps Monday will be the key.

Let the battle for Castle Bear Scull begin.

This battle is going to get manipulated by everyone from HFT’s to Hedge Funds (that often are HFT’s)

Lots of bears believe that the bulls are depleted – too many up days have created over bought conditions and the US/Europe economic news is lousy. Oil prices have fallen recently and are near support levels.  The advantage the bulls have is

• Momentum – The rising blue line on chart – That’s the 50 Day Moving Average of Price.
• Many Emerging Markets have already busted out and taken over their castle Bear Skulls.
• The MO has a lot of “wiggle room” to move higher – The MO’s 50 DMA is high and its got 35 points between where it now stands and 60 – overbought territory.

Monday’s are usually the day of the week that bulls make their charge. Ironically, my major concern is too may analysts are thinking/predicting a bull’s victory.

Almost forgot – Watch the dollar – UUP (ETF for Dollar) If it breaks down, bulls have another army of reinforcements.

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)

Traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble. 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.

There’s lots of choices (see Positions sections of blog for ETF choices or Paul’s analysis of individual stocks). I’ll probably play SSO (ETF that’s 2X S&P 500) on smaller dips (if I have the time)

Do NOT chase over extended stocks/ETF’s

Investors - Wait for a bigger drop in MO before going long. Also recommend a long term position in USO that is dipping right now. ( See Positions Section of blog & comments section Friday)

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

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Regulating the Casino’s

This is the week some sort of financial regulation begins to emerge from congress. Baseline Senerio has the best stuff on this here and here and here

It’s truly unfortunate that Obama is NOT leading the charge to regulate shadow banks or even substantively backing Volker.

Casino Capitalism

It’s critically  important if you are an investor or trader in stocks  to recognize stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers.

Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged. They’re staying out of investing.

They trade 24/7 worldwide in currency/bond and stock and are in and out of a company like SNDK often in a matter of minutes.

The best we can do is to follow the footprints (perhaps a better analogy would be is to follow the elephant droppings) of “masters of the stock universe.”

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

Another low volume rally occurred in the last 45 minutes of trading.  The key technical that’s showing the most correlation with the US stock market – The Dollar – dropped a bit less than -0.50% (see below) in this 45 minute period and this sent stocks on late day rally.

Some auction of Spanish bonds went well. Spain is the S in PIIGS + H (Hungary) – those countries we know are NOT doing well across the pond. Spain EWP (US ETF) gapped higher at the open for the second day in a row, fell, then consolidated mid – day and rallied into the close. At the end of the day Spain’s ETF shot back led all world markets higher up +3.45%

Spain, because of its size and seriousness of its debt is key factor in Europe’s debt problem. Good news here = Bullish

A double gap higher off a low is certainly bullish (even in long term), but a triple gap higher often means a stock is over extended and will correct. = Bullish

UUP is the ETF that tracks the dollar. EWP (Spain’s ETF) is now the cutting edge to focus on. It goes up, the dollar goes down and stocks rally. France and Germany are more important than Spain (bigger stronger economies). But if Spain tanks its big enough to take a lot of  Europe then the world down with it.

Right now we’re still in the discovery stage,  of which countries in Europe are in what size trouble. This extends from Russian satellite countries on the East to Spain in the West.= Bearish

The most important thing to recognize are stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers. Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged.

Fearless Forecast for Week – Rally Ho on European Sovereign Bonds & Spain at the end of the week. Should continue this week. Another successful sovereign debt auction in Europe could really move the dollar lower and US equities higher.  I haven’t the knowlege to to understand how deep the European debt problem is. Like the USA it’s hidden in the shadows of unregulated derivatives.

#2 reason for arally is regulatory mandates on shadow banks and casino capitalism seems to be loosing.

The low volume gives the Huge institutions and hedge funds even greater advantage in manipulating markets.

The area on the benchmark S&P 500 around 1105 to 1110 is the next resistance level. SPX at 1091.

Here’s the problem – The MO is starting to reach overbought territory (see below) and this could limit stocks up side (see below) The last time the SPX got up above 60 (high of 75) the SPX was at 1220. We could be at 60/75 well before the SPX reaches 1120 (one hundred points lower)

Nevertheless, those algorithms created by the super computers are spitting out buy signals.

Significant Indexes

• McClellan Oscillator rose to +43.30 [+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. We moving close to overbought, but still basically = NEUTRAL
• US Dollar –  The dollar rose Friday +0.33% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ +0.50% higher and fell into the close.

Reading the Tea Leaves -

Currency markets>Bond Markets>Stock markets. Stock investors are the tail and the tail does not wag the dog. The action is in Europe. If European debt is bought at a reasonable rate, US stocks will improve. Right now EWP (Spain) is the ETF to watch. Of course, there will be more European shoes to drop. But none did over the weekend.

Positions

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

All the stocks on YOUR stock list as well as ETF’s like FXI (China) EWZ (Brazil) and those that mirror the US indexes (long or better) should do well until ovebough conditions exist.

Expect some sort of dip when the MO gets into the 60/75 range. Perhaps tomorrow.

CAUTION – I don’t have the inside knowledge to predict what will happen in Europe. What I can tell you there is a strong bounce off the bottom in Spain that’s leading the charge. Those huge institutions with their super computers have recognized this and are buying dips in US stocks.  The real question is who is buying European debt?

Best guess – Institutions/govenments that can hide their books and would get hurt by a collapsing Euro.

Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but framnkly, fundamentally I sure don’t see the light at the end of the tunnel.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Frank Rich

“The… Obsessed and the Deranged“

There is a symbiotic relationship between governments and capitalism. Without the checks and balances, or regulations from government capitalism will allow greed to run wild. The catastrophic 2008 economic meltdown was just another example of the long line of history that keeps repeating itself. Obviously capitalism works economically better that pure socialism, but when human being whose only bottom line is profit are left alone their schemes explode in bubbles of over leveraged greed.

The NYT’s Frank Rich has another excellent editorial similar to the one in Investors411 last Monday. His focus was on Francis Joseph Stack III, the terrorist/right wing hero who drove his own plane (he was rich enough to own a plane) into an IRS building to protest his tax situation. Rich has a far more extensive list of anti tax right wing zealots and politicians who give Stack III a pass or praise.  Urge you to read his editorial  “It’s enough to make you wonder who is palling around with terrorists now.“

George Soros

Economic Hit Men

(Part 2)

Banks are the good guys – It’s the loan sharks, or almost  totally unregulated entities that bring economic systems, taxpayers and countries to their knees that are the economic villains. Technological innovation is great for financial institutions, but unregulated it can also create over leveraged Frankensteins from AIG to Lehman Brothers.

Niall Ferguson, in his book The Ascent of Money points to two other financial entities that are today’s “economic hit men” – Hedge Funds and Sovereign Wealth Funds. Both can place massive amounts of highly leveraged capital in short positions against a currency,stock,  bond, or country.

• Hedge funds are almost totally unregulated entities that pool money of ultra wealth individuals and can leverage it in a multitude of ways. There are thousands of the hedge funds who often take highly leveraged short positions on for example the survival of Greek bonds. (A current example). The “capo dei capo” of hedge funds is multi billionaire George Soros (also a major Dem. fund raiser)
• Sovereign Wealth Funds have even more capital than and they can use their power as an economic weapon to take over or crush other economic entities.  “More powerful” than hedge funds and centered primarily in Arab dictatorship’s and China their power is staggering. Ferguson cites (page 358) a 2007 Morgan Stanley report “That within 15 years they could control just over 9% of total global financial assets.”

Bottom Line – There’s a Financial war out there. Some may call it a competition. There are some major sharks that are circling debtor nations (us) – Shadow financials, hedge funds, Sovereign wealth funds. SHARKS BITE AND GO INTO FEEDING FRENZIES. The more in debt you are the jucier you look to hungry sharks

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.(No changes this weekend)

Last Week’s Fearless Forecast

“Everything technical (volume & McClellan) is showing that we are running out of rally room…Rally Ho, but it gets sold off at end of week.”  US Markets were down 0.4 to 1.5% for the week, so the Forecast, for the most part was accurate.

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Chili earthquake is going to impact copper prices – Chile world’s #1 producer of copper. Earthquake means copper prices going to rise.  In Boston all we’ve had is some rain, but up and down the East cost huge amounts of Snow will have a negative impact on the US economy.

Internationally the acronym to remember is PIIGS – Portugal, Ireland, Italy, Greece & Spain – These are the European countries, like the USA that have over leveraged debt problems.  The difference is these problems are peaking now & ours have been covered over by less transparency ant trillions of dollars. This comparative weakness will continue to make the dollar stronger & a stronger dollar usually means weaker stocks.

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This Week’s Fearless Forecast

The US markets are trying to rally, but economic fundamentals seem to be moving in a different directions.  Similar situation to last week. Markets looking to rally, but economics keep declining.  Call – Flat week. – Rally gets sold into at end of week.

Significant Indexes

• McClellan Index rose slightly  to +31.71 We are somewhat oversold, but have a ways to go to +60 Oversold territory.

Positions

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

No change in major ETF positions.

ETF Positions

• 10% of portfolio EWZ (Brazil)
• 6%of portfolio FXI (China)
• 10% of portfolio MOO (agriculture)
• 3% of portfolio IMAX (3D)
• 2.5% of portfolio TYH (3x what techs do) (Down from 7.5% last week)

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

Also,  Set what’s called a stop/sell orders on at @ 3% above what it was bought for

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

Stocks

• 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.
• Looking for entry point to buy PRLN & VPRT as well as some other stocks on YOUR watch list (scroll down on link)

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

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

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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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