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Did You Know?

Almost 12 million people have viewed Did You Know (Again thanks to HG for the heads up on the Video) on just how fast the world is changing. The entire video screams how important EDUCATION is. Just one example from video.

• There are more “honors” students in India than there are students in the USA. The CEO of Honneywell stated on CNBC that the best engineers in the world were in India. Over the weekend a former chair of the Economics department of a major university in Boston told me that 80 to 90% of the PhD candidates in economics at his school were foreign students

Bankruptcy

In one sense you have to admire Ben Bernanke. Our Fed chair is manipulating everything at his disposal, including an attempt at changing public opinion (a 60 Minutes Interview) to keep a bankrupt country afloat.  It comical and tragic that those who created or are oblivious to the imbalances that caused a worldwide “Great Recession” can recognize the problems in Europe but ignore them here.

The Bottom Line is if Bernanke and the Fed’s smoke, mirrors and manipulation do NOT succeed were all toast.

There are lots of  people out there with doomsday scenarios who document and state - From Zerohedge.com

The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default.

Game over!

STOCKS

Investors411 tries to keep it basic.

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

-

Technicals, Fundamentals & Analysis

Flat day & light volume for US stocks. – The NASDQ has joined the Russell 2000 and both are now broken out & trading at yearly highs

WikiLeaks founder was arrested in London this AM – so look for BAC stock (his next target) and all shadow banks to rally today.

A Most Important reminder to Investors and Traders

When trading gets light the Black Box/High Frequency Traders dominate more. They do NOT trade on valuations & fundamentals like markets historically used to do. They use arbitrage and buy discrepancies within stocks,sectors & markets. We take risk. Their risk is like “taking a shotgun and shoot fish in a barrel.”

On heavy trading days they make up over 50% of the volume and on light trading days over 80% of the volume. (CNBC’s Jim Cramer figure is 80%)

Bottom Line – Trading rules have changed. Best example – volume used to be the #1 confirmation behind any sector/index price move. It now maters little and why Investors411 uses the MO as a forecasting tool is because it doesn’t use volume. There are much less pure traders and investors in stocks today, but our size is still considerable.

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Reading The Tea Leaves -

The FIX is in (See last Friday’s blog) - Today the Fed will be buying another $6 to $9 billion in bonds from its 21 primary dealers ( aka shadow banks or the ones that got trillions in loans after 2008 meltdown) Its by now is no longer a secret that they will (wink, wink) take that money and go long the market. The BB/HFT’s that the Shadow Banks & hedge funds use have already adjusted their algorithms for a fresh supply of money today.  Many other investor/traders now realize what’s happening, they will probably front run this stimulus to stocks that usually starts about 2:30 PM EST.

CAUTION – Time to start to pay attention to MO getting too high. We’re not their yet, but keep an eye on it. Also too many people are catching on to the 2:30 Fed stimulus money is coming into the market train.

Positions

• EEM - (Emerging Markets ETF)
• UWM – (2x small cap stocks ETF) (1/2 this position was sold)
• UCO – (2X oil ETF)
• UWM – small cap stocks -
• UWM – Bought more yesterday at 39.75
• DGP – Bought at 42.49 (see comments section of blog for buys& sells)

Still view any dip as a buying opportunity because of the Fed’s market manipulations. When the MO gets closer to overbought I’ll stop buying.

You’d really love a dip this AM to buy, but I doubt you’ll get the chance.

Why so much UWM? – Small caps are leading the breakout. YSL – is also  full of small and mid cap stocks.

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.” – I’m sure Paul will remind you yesterday and since its inception YSL is kicking butt

Anne Paterson – State Dep’t Whistleblower

Corporate Profits Highest Ever in USA

The Recession and unemployment is for working class Americans. Wealth is raining down like never before on American Companies. Corporate profits are the higher than ever before even after taxes. What do most major corporations do? Watch the media – They cry, they whines, they finance political campaigns  of those that will even further increase their wealth and limit any benefits for America’s working classes.

“The recession is for chumps, Corporate America is doing  just fine.“ American companies in nominal terms are making the highest profits ever.

Globalized companies send their skilled jobs like software engineers to China where it costs 1/5 the money it does to do the same task as in the USA. (LINK - You have to play with this link and convert currencies) From Apple to Wal-Mart jobs growth is flourishing overseas and even though American’s think, by far, jobs and the economy is the most important problem we have.

Our corporate controlled media, and politicians focus is on fear mongering and distracting American’s from their top priority which is jobs growth and the economy.

WikiLeaks

THE major headline throughout the world has been another WikiLeaks information drop of American military/state department data showing media fabrication vs reality. –  In the following Patterson illuminates that the Bush/Obama foreign war policy (example Pakistan) is like the Titanic heading toward an iceberg.

She –  pleads that Washington’s whole policy is counterproductive: it “risks destabilising the Pakistani state, alienating both the civilian government and the military leadership, and provoking a broader governance crisis without finally achieving the goal”

The WikiLeaks data dumps will probably prove more damaging than the Abu Ghraib photos did in exposing the reality  on the ground.

Will WikiLeaks last? – Its one thing to go after the puppet American government, but when you go a some of those who pull the strings – Shadow Banks. then you can get in real trouble – The next data dump is on a major US Bank.

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

Technicals, Fundamentals & Analysis

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

World Markets -

The Bulls

• American corporate profits are the highest ever (see above)
• The Fed has announced $600 billion will be dumped into US economy.
• The  POMO Fed program dumped $9 billion yesterday afternoon and stocks rallied.
• India GDP a robust surprise at +8.3%

The Bears

• The Korea Situation could explode
• Smaller European countries are getting roasted in the crisis that began with the 2008 meltdown.
• Now a major country Spain is now seen as the #1 problem.
• Bad news in housing keeps growing

Reading The Tea Leaves -

Technically we challenged support levels again yesterday (1173 on benchmark S&P 500 – closed at 1188) That’s the line in the sand. 1173 is a strong support level and we are approaching it again with the Bears being weak (MO at -35)

The dollar is soaring which should drive stocks lower. Its NOT happening???? WHY – Fundamentally the only plausible answer is the Fed’s printing and dumping of money will go faster the more bad news there is.

Right now holding 1173 is @ 50/50. But even if the 1173 falls. The emerging market side of the globalization mega trend (see India above) is still carrying the world economically.

Three stocks/ETF to watch to help forecast market direction.

• BAC – Bounced off its low yesterday. If this shadow bank breaks low watch out.
• AAPL – #1 Globalization play. Hot technology that makes a huge chunk of its product in China. Rallied recently
• EWY – South Korea

Positions

• EEM – (Emerging Markets ETF) -
• UWM – (2x small cap stocks ETF)

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.” -

India

Jobs, Jobs, Jobs

India, India, India

Globalization is the Mega Trend and its reality behind jobs growth exploding higher in India and drifting lower in The USA. Our GDP just came in revised significantly down Friday to 1.6% for the last quarter. India’s GDP just came in at a phenomenal  of 8.8%. “Manufacturing” was cited as the #1 growth area.

Cash Rich & Jobs Poor

According to Talking Heads on CNBC, The financial channel, American companies are sitting on $1,240,000,000,000 of cash. Each Talking head , sometimes breathlessly, asks CEO’s what are you going to do with all that cash , buy back stock or buy another company?

What about investing some of that hundreds of billions on American workers? Nope. CNBC doesn’t even mention them because all the jobs go to China & India and/or another emerging markets where the cost of  labor was @ 1/20th that of the USA in 2008.

New Jersey – Whose Lying?

This could be about your typical corrupt politician like (D) Maxine Waters and Charles Rangle (“allegedly”) feathering  their own nests. But that’s typical.

In New Jersey it seems that the newly elected governor (R) Chris Christie or his appointed, now fired Education Commissioner Bret Schundler  have lost out on “$400,000,000  in federal money” for education in their state. More here

Whose lying? From story it looks like Christie. But the real losers are the teachers & children of New Jersey.

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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!

Technicals, Fundamentals & Analysis

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

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

Stop for a moment and think how radically altered stock trading has become. Example – The HFT’s and their super computers often find an imbalance in trades between the # of shorts on stocks in an index and the actual price of an ETF that shorts the same index perhaps by a factor of 2. They execute a trade and get out a few seconds minutes later when the short ETF comes back into balance. They do this across currency markets, commodities and just about anything.

In the long run fundamentals are going to matter, but the old Wall Street saying is now more true than ever before -” The market can remain irrational longer than you can stay solvent.” The reason for this being even truer now is the BB/HFT traders.

They have an enormous advantage – so why trade or invest? In the longer term fundamentals are going to win out. Realities like – Emerging markets are growing faster than the USA or stocks become so oversold/overbought they run out of buyers/sellers does matter.

Unfortunately, with the BB/HFT’s speed everything moves a whole lot faster than it used to and windows to invest in with some hope of a decent longer term reward happen a half dozen times a year if you only go long & perhaps a dozen times a year if you also go short.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar rose +0.30%. and closed above its 50DMA. For Stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Again rose a marginal +o.33%. This gives some stability to the 5 week long rally after two down days in a row. 5 week rally trend is still in place, but not entirely back on track = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell  to -42.64. Our #1 Buy sell Indicator again approaching oversold or buy. But still = NEUTRAL

Reading Tea Leaves

Investors411 has beat the drums for the concept that stocks,the dollar & commodities are all moving in greater harmony because of the BB/HFT’s 80% domination of stocks and their involvement in currency and commodity exchanges. Therefore UUP (ETF that tracks dollar bulls) was suggested as the interday ETF to watch as an inverse indicator of stock market direction.

Our # 1 forecast tool now continues to be the MO. But its the dollar that clearly leading stocks “like a dog on a leash.”

Positions

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

Current positions - Small positions in EWS (Singapore) USO (commodity-Oil)

Traders – Got stopped out of TYH at 24.98 – the price it was bought for.  The dollar was rising (UUP – the ETF) and stocks had formed a series of lower highs and lower lows so it was a no brainer to get out.

Investors – Our #1 forecast tool, the MO, is again approaching oversold territory. While -43 is not yet turned into -60 or -80 its headed in that direction. Investors411 believes this is “Buy the Dip territory,” where stocks get so oversold they have to take at least a short term bounce.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

+48% Profit in TYH in 1st quarter of 2110

For more see Positions section below

Who Creates Deficits?

Chat from zFacts.com

Scott Herwehe has produced another worthy editorial in the comments section of the blog. Your comments section is an excellent source on politics, economics and markets. Suggest you check out, not only Scott’s editorial on Republican hypocrisy over the deficit, but  all other comments.

Here’s his conclusion on the deficit -

“Even the financial bailout is significantly small compared to just Bush’s tax cuts. Social spending doesn’t even compare. Our corporate controlled media will never talk about the Bush tax cuts because that would be acting against their own interests. Who benefits from a tax cut for the rich? The wealthiest among us. Who control and finance our corporate media? The wealthiest among us. The only way to get out of this recession of the real economy (not Wall Street) is to spend money in a manner that creates jobs or in other words benefits the majority and for once not the minority.”

India Ascending

Economically, India only experienced collateral damage from the 2008 meltdown. Why? – Dr. Yaga Reddy, the former head of the Bank of India, did not buy into the American concept of unregulated free markets. Bob Kuttner editorial on India, King’s College and those who withstood the breakdown of our unregulated capitalism that had to be bailed out by taxpayers.

Dem’s to Attack Wall Street?

Democrats seem eager to attack Wall Street was the headline, by Lisa Leher, on centrist web news site Politico over the weekend. Will we finally get some financial reform? If so expect Wall Street to get hurt in the short term. But in the longer term this is good for the economy of the US and world that we fix the problems that caused the 2008 meltdown.

If the Democrats follow through with this they will salvage the 2010 elections. Most Republicans will protect Wall Street. Problem is so many of the Democrats are owned by Wall Street. So much of Wall Street money will go to candidates that protect them.

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

Another up day in reduced below average volume. The major indexes are even further above their 50 day moving averages than last week. This means they are even more overbought than last week. None of the major technical factors that have historically worked as prediction tools have correctly predicted US market direction in past months. – We should according to volume and distance from the 50 day moving average already be falling.

However, our McClellan Oscillator is holding up fairly well. Still NEUTRAL and not OVERBOUGHT. Lesson here is different technical indicators or theories work better at different times

Of course, the fundamental that’s behind all this is we have failed to fix any of the root causes that caused the 2008 financial meltdown that was created by  the almost completely non regulated US “free market”) financial system.  If anything they are even less regulated today.

This is the beginning of earnings week

Fearless Forecast for Last Week - “Up week”   Another correct call

Fearless Forecast for This Week – How markets react to earnings will be key. Earnings start to trickle in this week. The dollar again (see below) rules.  The Greek crisis seems settled (see below) and this will help stocks.  

Best read of the Tea leaves – We are in an “irrational exuberance” period – The trend is higher  so predicting up week.

Significant Indexes

• McClellan Oscillator rose  to +3.26 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 NEUTRAL territory – technically neither overbought or oversold.
• US Dollar – fell a significant  -0.60% yesterday. [Anything over +/- @0.50 is significant.] There has been some settlement in Greek debt crisis so Euro should rise and dollar fall in short term. Mantra – right now The Dollar Rules Remember, dollar down = stocks up.

Positions

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

+48% Profit in TYH 1st quarter of 2110

TYH is the ETF that does @3x what technology does & ROM (suggested, but not used) does 2X what technology does

Before we go over these figures and there are 2 important points.

• Caution Don’t let it go to your head. For the most part these stocks were chosen when the US markets were oversold, other reasons, plus we were lucky
• Re-read point 1

The dumbest thing you could do go out any buy TYH today.  Investors has a 0% stake in this ETF today.  Its way too far above its 50 day moving average and markets are in a neutral and not oversold condition. To see actual buys and sells link to Positions section of blog . Why TYH worked -

• A bull market
• Oversold conditions – Investors uses the McClellan Oscillator or as Monitor named it the Mickey O. The more oversold the better. Investors411 bought TYH in more or very oversold positions.
• Technology and small cap stocks generally outperform in a bull market. (Its not quite this simple)

.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iran

What was supposed to be demonstrations marking the 29th anniversary of the Iranian revolution turned into a night and day that members of the Green Revolution let their voices ring out. Professor Juan Cole’s website has details and video. Its heatening to see so many protest (“huge crowds”) despite those that have disappeared into Ahmadinejad’s Iranian prison system. LINK

Vietnam & Iraq/Afghanistan – Optimism

Even though many including this blog have focused on the negatives surrounding the “unjustified” invasion of Iraq and long term consequences,there are some major reason for long term optimism.

In Vietnam we used chemical weapons (agent orange) carpet bombing and even resistance was slow to organize. These weapons were not used in Iraq. Democracy was insisted on by Sistani (the #1 Shia religious leaders) and after a year of demonstrations the US relented. In Afghanistan the poll numbers have already turned negative LINK This poll was before the election debacle.

In no way does this excuse our growing nation building disaster in the Mideast under Bush and Obama. But, it is a long term ray of sunlight in an otherwise dark cloud.

US Elections

Republicans won two governorships in NJ and VA formerly held by Dems. The Dems won a congressional seat in NY – formerly heavy Republican district.  Overall a better night for Republicans and bottom line is about the economy.  Three out of mainstream observations

• NJ Democrat Gov. candidate was a mucky muck at Goldman Sachs.  GS & Wall Street are loved about as much on Main Street as the New York Yankees outside NY metro area.
• The “conservative” running in NY congressional race considered radical right wing FOX commentator Glenn Beck “his hero.”  He had huge support from the “tea bagger” or dominant wing of the Republican party.
• Long time incumbents spent huge money and had difficulty getting elected – example mayors Bloomberg in NYC and Menino in Boston.

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, Fundamentals & Analysis

This is the last post for the week

Friday’s jobs report is the news for the week .  What we have is an oversold market going nowhere. Wall Street term for this is “churning.” Because we are so oversold a good jobs number (loss less than 200,000) would probably move market higher.  Oversold also limits downside risk.

Best Read of Tea Leaves – We will not get a sub 200,000 number.

For traders – A high unemployment figure means the stimulus will keep flowing  and I’d buy the dip. Even though everyone is watching Friday’s employment figure – keep an eye on the dollar. If we have a significant break through of the resistance level expect a meltdown in stocks as the dollar rises.

In Asia and Europe oversold markets rallied last night, so this could carry a positive bias to the USA today.

FOMC meets to day – expect no change.  Any changes in wording would be negative and a shock.

The Dollar War - (Part 2) The big news of the day was India buying $6.7 billion dollars worth of gold from the International Monetary Fund. This is an investment in gold not dollars. Still, obviously central banks did buy enough dollars to halt any dollar decline yesterday.

FYI - Best 25 preforming stocks since Obama’s election LINK

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 24% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +62 points yesterday and closed at 3247. The rate of change is diminishing slightly. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1100 points since late September. =  Bullish for stocks & world trade right now

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

US dollar rose a modest -0.12% yesterday. The dollar closed at $76.33 . The dollar did briefly rise above its 50 day moving average.  The dollar is technically doing what prices do in front of major resistance/support levels – hesitating. The longer it hesitates the better the chances for reversal.

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.67 this AM . So dollar is only 0.34% away from major resistance. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions  as we get close to this resistance level.

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Our major core positions into weekend. (See Monitor’s post in comments section)

NB  – These core positions have been long term positions for years and are STILL OUTPERFORMING the benchmark S&P 500 – For more see overview section

GLD – Gold rose a significant 2.41% and broke out to a new all time high in huge volume. This was based on the news of India buying a huge hunk of the shinny yellow stuff. (buy the dip)

EWZ – Brazil – has gone up too far too fast and was overdue for a correction. (see past updates)It had about a 10% correction (see chart) and its 50 day moving average is acting as strong support.  Think those of you who bought the dip will be rewarded in the long run.

FXI – China -  too recetly had almost had a 10% correction, another buy the dip opportunity.

Both China and Brazil could go lower if the jobs number is bad or the dollar rises too high. They go down faster than US markets, but rise much faster than US markets. The BDI recent move higher is favorable for both.

Considering diversifying into Indonesia & Vietnam ETF’s Also, for traders as an individual stock AMZN – great technicals& fundamentals, but also a swine flu play. If the flu ends up keeping folks housebound AMZN should profit. (more on Monday) It is currently dipping.

Concerns – 10 even 20% corrections are healthy for FXI and EWZ in the long term. Yes, these and other emmerging markets are recovering fundamentally far faster than the USA. But anything that goes up to too fast forms a bubble and they burst.

SPX – Selling entire position as soonas I get back from art show – taking profits and freeing $ for other investments.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Note: Last Investors411 for the week.

Health Care, Obama and Leadership

Huffington Post Photo

Does anyone really know what Obama’s heath care plan is? NO. Unlike Hillary over a decade ago he has set broad goals – he wants to save Money. Congress has come up with a slew of different plans. Perhaps this attempt at consensus building is the best way to achieve results. After all Hillary Clinton failed.

However, the best way to show leadership is simply to lead.  Congress is fighting like chickens in a hen house over health care, each individual and side protecting her/his specific interests. The powerful interest groups who want NO change are spending huge amounts of $ to shoot down reforms health care. It’s a waste of time to go on TV to defend a non existent plan that has no concrete structure.

Obama set a charismatic vision and followed though in his campaign for president. American’s back someone who leads and right now all Obama is doing in health care is following.

Stats on Tax Rates

10% on income between $0 and $8,025

35% on the income over $357,700.

15% on investment income

For single individuals – From the Fed tax tables

An interesting editorial by Tohm Hartman called The Great Tax Con Job is worth reading. One interesting point he makes is that both times we had massive tax cuts for the wealthy they ultimately lead to a period of growing over speculation and collapse.

• Massive tax cut in 1920 from 73% to 25% led to the roaring 20′s and the Great Depression
• A 70% to 90% tax rate from 1930 to 1980 on the uber wealthy lead to America becoming the strongest economic power on the planet.
• A Reagan tax cut from 74% to 38%, later followed by cuts on investment income, and another 3% cut led to the biggest meltdown since the Great Depression.

There are some mitigating factors, but the bottom line is clear a culture that focuses on  giving massive breaks to the wealth does NOT prosper

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

All the major US indexes are screaming OVERBOUGHT conditions. You can only go up so many days in a row. Only the NASDQ has shown  some moderate volume behind the move higher. This increased volume acts as confirmation of the trend.

The major US indexes have all reached new closing highs, except for small caps (the Russell 2000 is almost there) This does set up a longer or mid term bullish trend for stocks.

Check out on the bottom of the charts for the major indexes ( see list on side of blog) the CMF (Chalkin MONEY FLOW) We are over 3 standard deviations away from the mean. ( the green color is above 0.3) This is about as overbought as markets gets without some kind of reversal.

Fundamentals (earnings reports) have driven this rally.  At first company’s like Intel surprised. Others followed, but now that surprise is built into stock prices. Last night AAPL (Apple Computer) hit another grand slam home run earnings report. More here

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 rate of decline increased on the BDI yesterday.  We have had a series of lower lows and lower highs since early June. We have a way to do before we establish a new low (see yesterday’s update), but we definitely have a momentum change. Bears are gaining momentum

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Here’s an ominous forecast on global trade from the Director General of the World Bank. – Pascal Lamy.

$USD - The Dollar went down and tested its major support level yesterday.  It held. Dollar ended up flat +0.04% . The last remaining support level is the June lows at @78.4. The dollar index closed at 78.90 . Breaking this support would be very bearish for the dollar and bullish for stocks.

Conclusions

The “Fearless Forecast” predicted a down week because we are overbought.  Now we are way overbought , the BDI has turned negative and the dollar stopped dropping at its support level. Technically everything is turning negative. Bears are growling

Both the dollar and the BDI are the indexes to watch. If the rate of fall in the BDI increases – take more $ off the table. No one ever went broke taking profits.

Positions

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

IFN - (India)  Sold entire position yesterday. Gain @ + 3.5% See Positions section of blog.

FAS – Perhaps the third time is the charm. Last two times (see Positions) Investors411 took defensive position we got burned. Opening a small position (2.5%) in FAS (3X short the financial sector) Overbought markets & BDI falling call for some caution.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Debt/Globalization

Debt is  bad. Globalization, and economic planing has led some countries to grow and others to suffer. Take a look at China and South Korea . Their managed economies (as opposed to our free market economy) have prospered over the last decade and continue to have stock markets that that are outperforming ours again this year.  In both these countries you see 10′s of millions of people who tended rice paddies a generation ago becoming the computer programmers and manufacturers of today.

These economies severely restricted their imports and benefited from other countries going into debt buying their exports. – part of globalization and managed capitalism. The USA went trillions of dollars into debt buying their products ( add some other countries especially those that sold oil) over the 8 year Bush administration.

Some companies and wealthy individuals grew rich in the USA as we personally and as a government fell further into debt running our unregulated free market system. This all collapsed when adding to this debt we discovered that shadow financial institutions were running a giant ponzi scheme of fake profits called credit default swaps on home mortgages, and other forms of credit.

Baddaboom, we almost had a world wide economic meltdown when just one shadow bank, Lehman Brothers,  collapsed. The cumulative debt hole is enormous.

Historically, in good times and wars (Iraq) you are supposed to pay down debt. We didn’t.

Historically in bad times you stimulate the economy and this does add to debt. We are.  The problem is that we re already up to our necks in debt. This debt was is not as bad as the debt that flatlined the world’s #2 economy for over a decade, but its very bad. To this you add a shrinking work base caused by globalization.

The real problem is we are sending more of our citizens to the rice paddies (unemployment) and our companies to maximize their profits send jobs overseas. This is one major part of the globalization mega trend.

We have fortunately seen a decrease in job loss since January from about 700,000+ in January to 500,000+ now. A good trend, but still a big loss. When many small companies reaches a certain size, (let’s guess 50 people)  they realize that everything from bookkeeping to information technology can be done for a cheaper price abroad. Where are the new jobs going to come from?

So simply as an Investment adviser – You’re far better off with economically growing managed capitalism rather than debt ridden free market of the USA – This is why Investors411 has a record of beating the S&P 500 . Why FXI, EWZ, EWS , and other managed economies are better investment choices.

The catch 22 – Of course, the more a US company outsources the better it will do (cheaper labor cuts cost), but the greater unemployment here will grow 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)

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

Technicals and Fundamentals

The leading NASDQ again moved higher in increased volume. Even though it was not above average volume, the increase coupled with the break down of the dollar (-o.84% )(see below) is bullish for stocks.

Other major indexes have reached new closing highs, but have NOT had as much volume behind their moves higher.

Obviously US markets are now overbought and need a breather

Bernanke reports to the House today and the Senate tomorrow.

Whole bunch of companies reporting this AM. These fundamentals will drive stocks. Merck , DuPont, Coke , UTX. & Caterpillar all seem to have better than expected earnings. So many major S&P companies are hitting doubles triples and home runs. Rally is on again

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 turned lower yesterday and the short term bullish pattern is getting wiped out. Longer term this is not good for the global recession recovery. BDI at 3511 and 2975 is the line in the sand support level that must hold . So no reason to throw in the towel yet but Bears are gaining momentum

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern
  

$USD - The Dollar broke down through support levels yesterday . Down a significant-0.84% . The last remaining support level is the June lows at @78.4. The dollar index closed at 78.87 . The dollar goes down usually = stocks gold and oil prices rise. This contributed to yesterday’s rally. Obviously this is bearish for the dollar, but Bullish for US stocks. (not small but important one word change – this is bullish for US stocks in the short/mid term)

That 78.4 support level is very important.  A weak dollar does have its downside, but it certainly fueled the last rally stocks had this spring.

Positions

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

QLD – (2X what the NASDQ 100 does) which was bought at 38.2 was sold at 41.1 for a 7+% gain yesterday.  Why be greedy? We added a lot of positions last week. (QLD, IFN, EWZ, EWS ) Time to take profits on one.  Will buy back in on another dip. Taking profits now looks like a mistake . If the dollar keeps breaking down OLD will keep going up.

IFN - (India) The technicals behind this trade are just not as good at all the other trades. India has not broken out to a higher high and developed a series of lower highs and lower lows. Going to take profits. – Will put in what’s called a stop sell order (send me an email if you do not understand this)  Looking at S Korea (EWY ) as a better foreign investment.

Another reason to sell India is the BDI seems to be establishing a bearish pattern. (see above)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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"That Big Sucking Sound"

Some of you might not be old enough to remember Ross Perot’s famous line about globalization (in this specific case it was about a treaty called NAFTA) "That big sucking sound " was jobs getting sucked outside the USA.

Globalization is a multi edged sword. For more on the good, bad and ugly of globalization see Investors411 here Globalization helps developing countries (think China, India , etc.) explode in job growth, but it sucks jobs out of the USA at all but the very top levels of American business.

One of the biggest economic lies you are constantly overwhelmed with is – Cut taxes on private business and this will mean more jobs .  This is a pure Bulls__t . The jobs go overseas . Everything is outsourced and practically all that remains is the tip top upper management.

It’s "Shocking" just how little jobs growth in the USA was created by the private sector over the last decade. Michael Mandel , the Chief economist for BusinessWeek chronicles private sector jobs growth over the last 10 years here

Some rough quotes

Private sector job growth rose by 1.1% in the last decade…the worst decade for private job growth since the Great Depression…a lost decade for the American economy…big job growth in health care (mainly government funded) , education, and government…this growth was funded by growing trade and government deficits…Its just horrible, just horrible… private industry is just not a jobs creator… and manufacturing is in free fall… an unalloyed bad.

Needed to be done according to Mandel – Innovate, help keep manufacturing jobs, take a step back and look at what  globalization means to us.

Take a look at a country like Germany that protects and builds it’s manufacturing/export sector. Germany is seeing the light at the end of the recession tunnel here.

• I nvestors411 can’t emphasize enough what a bad investment the USA is relative to counties like China and India because of globalization. This mega trend will continue until the dynamic of globalization change.
• This economic meltdown is not going to significantly recover in the USA until there are some dramatic changes in both financial institutions (see past Investors411) and how we look at globalization.
  

Many thanks to one of you who spent 30 minutes going over this with me yesterday

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

Finally above average volume.  A major battle yesterday between bulls and bears . We hit the 875 support level of the benchmark S&P 500 and there was blood (volume) everywhere .  For a while the bears crashed through the barricade, but the bulls fought their way back and the index closed above 875 .

As predicted at the beginning of the week we are already challenging the major support level.

We did briefly establish a lower low, but the bulls held.  This is significant because of the volume.

Reading of the tea leaves – The longer we stay above 875 the better a chance of a rally has of getting started.

Huge bullish factor – No matter how you think this impacts the USA in the future. The Obama administration is NOT going to let any big banks fail. Also, they keep kicking the can down the road on any major fix of the problems that created the economic meltdown.

Earnings season around the corner.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

The BDI has become the best of these three forecasting tools .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell for the 6th day in a row. However the rate of decline decreased slightly. After a 5 month rally the last six weeks have seen a decline where the BDI,technically, has had lower highs and lower lows.   We are currently establishing a lower low for price. WARNING -  The breakdown in trade is very significant to any worldwide recovery . BEARS RULE

The BDI is now the first chart I look at each day. – Globalization has greatly added to the interconnectedness of the world’s economies. It’s a worldwide recession, and if trade prices break down so will individual economies.

$USD - The Dollar was flat yesterday -0.07% The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. Dollar closed at $80.66 and has been trading for  a month between @$81+yesterday= and $79+. So the dollar nearing the top of its consolidation range. Long term Bearish pattern for Dollar ( bullish for stocks ) We bounced off the lows in early June and are now in a consolidation pattern .

WTIC – Oil dropped a huge -4.43% yesterday, and 15% over last week+. (see chart) The 6 day fall has been significant and has NOT been accompanied by a significant rise in the dollar. (dollar works inversely to oil prices) What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. The entire move higher for oil prices may have been manipulated. (see above WSJ article)

Therefore, Oil prices are no longer accurately acting as a decent tool in forecasting stock prices. Investors411 will keep an eye oil prices, but no longer use it as a forecasting tool for stocks. In fact, right now falling oil/gasoline prices are good for the overall economy, but bad for related companies (energy & alternative energy)

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Our Positions (For more see Positions section of Investors 411-scroll down)

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875. Perhaps lower. Wait on Brazil EWZ – too tied to oil prices

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

JUST STOCKS

Economics – What’s happening — We have moved away from the edge of the economic cliff and now folks are realizing that the world’s economy is in trouble. Its possible that Brazil, China and India will lead us out of the mess created mostly by the USA. Time magazine’s Justin Fox has an interesting article on what has been the mantra of Investors411  here

The Baltic Dry Sea Index is a critical gauge of the world’s economy (trade) and is has broken support levels. This is NOT good news. (see below) Can’t over emphasize this chart enough!

I’ve mentioned before, the problems with Larry Summers and Obama’s economic plan .  One major problem is that the stimulus plan is back end loaded and we need the help now. We’ve only spent 10% of the stimulus so far. A lot of states would have gone under and employment would have rocketed if there was no stimulus, but the new jobs were NOT shovel ready.

Until we rebuild our financial system its hard to see any long term recovery.  So far all we’ve done is talk about it.

However, the major problem is in underestimating just how huge  the economic mess really is. See Overview & Strategy Section of blog and lots of past daily updates.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results click  6/25 & scroll down)

Technicals and Fundamentals

Another major meltdown in below average volume. The S&P has now fallen back down through two major support levels – its 50 & 200 day moving average. As stated before the line in the sand is 875 support level (see past updates and look at chart on side of blog) SPX at 881.

As predicted at the beginning of the week we are already challenging the major support level.

Earning season starts as Alcoa (AA) reports at the close of US markets today.

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor .

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 sharply again on Monday & Tuesday. Trade has broken through its support level and that decline was confirmed by another drop Tuesday. WARNING -  The breakdown in trade is very significant to any worldwide recovery. BEARS RULE

$USD - The Dollar rose +0.34 % yesterday The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. Dollar closed at $80.72 and has been trading for  a month between @$81+yesterday= and $79+. So the dollar nearing the top of its consolidation range. Long term Bearish pattern for Dollar ( bullish for stocks ) that is consolidating pattern now ( neutral but turning bearish )

WTIC – Oil dropped another -1.75% yesterday. and 11% over last week. (see chart) The 5 day fall has been significant and has NOT been accompanied by a significant rise in the dollar. (dollar works inversely to oil prices) What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. = More Bearish news for stocks

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Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500 .   Both of these have happened.

Our Positions (For more see Positions section of Investors 411-scroll down)

Monday/Tuesday’s  Recommendation -  take some $ (1/3) off the table in China (FXI ).

The Hedge – So far the QLD has lost -10.39% and the SDS has gained +10.88% Check out Positions section on top of blog = total gain +0.49%

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875. Perhaps lower

Bottom Line – The BDI has rolled over. This is important.  Investors 411 has closed a lot of long positions over the last month or two. The last being 1/3 of China investment. The short term may not look good, but it should also son be another buy the dip opportunity.  We will use the BDI turning back higher as a reentry point.

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

140+ Dead in Demonstrations in China

You’ll here a lot more about Iran, but the Muslim minority has demonstrated or rioted (depends on which side your on as to which term is correct) in a far western Chinese Provence. The BBC headline story here

China owns a huge part of our debt and we need her cheaper goods. Will condemnation here be as great as Iran or hypocritically silent?

Biden – We “Misread”  Problems

Photos – Huffington post

Since last fall Investors411 has continuously repeated “The problem in the financial sector is far far far far far bigger than fist imagined. Impact of this mess is going to take years to resolve.” See positions section of blog.

Investors411 continually cited a significant group of economic thinkers who clearly demonstrated just how bad the economic problem was. Investors411 also criticized Larry Summers and the economic crew of the Obama administration.

The only good news is they finally woke up and smelled the coffee . Tax cuts good, Stimulus plan good but way too back ended (only 10% spent so far) The same problems that led to the financial meltdown are still out there. Yes, we’ve moved back from the edge of the cliff and everyone starting with Paulson, Bernanke and Geithner do deserve some credit by throwing the car they were driving into reverse as we approached the cliff.

However Greenspan, expanding deficits, wars, housing and unregulated capitalism have created a massive economic black hole. Short term stimulus usually worked as a solution in the past. The problem here, besides the holes massive depth, is the accumulated debt was already humongous. Biden’s admonition of misreading economic crisis here

For in depth previous prediction and solutions see Overview section of blog.

Iran (Week 4)

Huffington Post’s Nico Pitney’s daily blogging on events here

There has been one group of cleric’s come out in support of demonstrators and he wonders what’s happened to the head religious leader in Iraq – Sistani. He supported democracy for Iraq, but has remained silent on Iran

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results at 6/25-scrolldown)

Technicals and Fundamentals

A huge price decline, but again in weak declining volume Friday. How markets react to news is just behind Volume as a prediction tool. In this case it was the Unemployment figures that sparked the fall are lagging indicators.  Therefore, the huge downside reaction is way more than expected = Bearish.

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor. Weakly forecast below.

Earnings season begins next week. Historically, this week companies that are not going to do well warn – this is bearish

Oil futures are way down this AM trading at $63.88 at 7:15 EST. = Bearish

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 sharply Friday.  This index is winding up like a spring, within a consolidation pattern and is close to a downside breakout (3452 is breakdown point and index closed at 3529)  See chart  Watch out! Long term Bullish rise from bottom, but coiling right now for next move . Potential bearish breakdown possible this week

$USD - The Dollar rose 0.74 % . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up = markets down. That’s just what happened Friday Long term Bearish pattern for Dollar that is consolidating pattern now (neutral) = Bullish for stocks

Fearless Weekly Forecast – Last week Broke Investors411 winning streak of forecasts for the week  as US markets fell on some bad consumers confidence and unemployment data. Momentum is with the Bears as we enter earning season. Check out all the red bearish signs above.

The S&P resistance level (@875 & SPX now at 896 )  should at least get challenged, especially in the beginning of the week. Watch BDI. Forecast – Bears Rule

Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500.

NB – Volume has confirmed nothing. So confidence in above predictions is a bit shaky.

Our Positions . -  China, Brazil, & India (FXI, IFN & EWZ )(Partial list)

Unlike the USA that has seen two economic bubbles burst housing and financials these growing countries have been relatively less impacted. The decline in trade with US is going to impact all 3.  China and India have positive GDP’s predicted for the year and resource rich Brazil’s GDP is predicted to be close to zero. The World Bank predictes a -2.9% loss of GDP for the rest of the world..predicts a-2.9% loss of GDP for the rest of the world.. For more see Positions section of Investors 411.

Recommendations – Investors has a very big position FXI a very small position in IFN , and a closed position in EWZ .  Again see Positions section of blog. Short term traders might want to take some profits in FIX and both traders and investors  should look at possible “buy the dips” opportunities that should emerge this week or next in IFN & EWZ .

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING