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Center For Public Integrity

The two top groups of journalists out there doing investigative journalism in the public interest are the Center for Public Integrity. and

OpenSecrets.org

Both groups aren’t afraid to go after the polls and power brokers/lobbyists whoever they are. Stories like-

• 97% of the violations happened at 2 BP refineries
• The companies with the most lobbyists have turned this into @ 15% greater profit in each of the first two years
• Top ten lobbyist firms take financial reform to the Bank

The main focus of YOUR comments over the last few days has been on BP. These two sources above will help. The Huffington Post today echos what YOU said yesterday British Petroleum’s is Worth More Dead than Alive. Yesterday’s -15% drop in BP stock price, if continued, means that YOU – the Tax payer could end up paying for this disaster because BP may soon become bankrupt.

Rolling Stone, sorry Obama fans, front page story is The Spill,the Scandal & the President The Spill is clearly BP’s fault, and Cheney/Bush put the lobbyist and former business executives in place in far more than the energy industry. But, Obama has failed to clean house. Not the change we can believe in

Big Political Shift?

The lead NYT story today focuses on what Investors411 mentioned yesterday – California’s overwhelming passage of Prop 14 -

“traditional party primaries will be replaced in 2011 with wide-open elections. The top two vote-getters — whatever their party, or if they have no party at all — will face off in the general election.”

There are positives and negatives in this legislation. But overall it seems to give more power to moderate voters or have candidates appeal to a broader base in order to win. There are lots of variables, but its certainly a change.

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!

Index	Percentage	Volume
Dow	-0.41%	down
NASDQ	-0.54%	down
S&P 500	-0.59%	down
Russell 2000	+0.10%	-

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

Technicals, Fundamentals & Analysis

Stocks are dancing on the cliff’s edge. Last few Investors411 have focused on how close the major indexes, especially the benchmark S&P 500 are from breaking their last major support level. The S&P (SPX) yesterday closed at 1055 and that edge is at @ 1040.

Major indexes are down @-13 % from their highs. Two different talking heads on the financial channels have mentioned -15% down is a significant figure. Because if its reached over 80% of the time it means -20% or an official bear market will follow.

When you combine this with the fact that we are close to this years low/support level its like dancing on the edge of the cliff.

Good news is stocks fell in decreased, below average volume = Bullish

Bad news volume increased as stocks fell & we ended the days near the low= Bearish

Bernanke spoke to the markets and created a bright picture in the AM. He emphasized “Don’t Cut Spending.” and our recovery while slowly progressing was still “fragile.”

Besides the dollars decline from highs what Yankee Bob brought up – BP - was behind the late day selling. Of course its impossible to exactly know since perhaps 80% of the trading is done by the huge sophisticated computers of mega institutions and their proprietary algorithms.

Futures are up dramatically this AM = Bullish

Significant Indexes

• McClellan Oscillator rose a bit yesterday to -21.25 [+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 are a smidge overbought, but basically = NEUTRAL
• US Dollar –  The dollar fell about the same amount for second day in a row -0.35% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar had fallen @ 1.00% but rallied in mid afternoon, sending stocks lower. NB – The currency markets dwarf the stock markets in size.

Reading the Tea Leaves – The dollar will probably dominate stocks till earning season. That’s along time for a lot to go wrong or other shoes to drop in Europe. If you want to get really depressed here’s The Black Swan author Nassim Taleb on Debt, Spreading Like a Cancer

Hopefully you don’t share his gloom and doom, I’m more optimistic. But he makes some relevant points.

Traders – Rally day that gets sold into because few want to hold longs over weekend. Watch for news out of Europe.

Positions

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

Investors -It’s simply NOT a time to be in stocks. The long Term Outlook is negative – CAUTIOUSLY BEARISH. Why invest when it looks like stock will be lower over the next 6 months.  The single largest positive we have is stocks become so oversold they stage a counter rally and over the period of perhaps a week to a month you can make profits going long.

The second way to score (make money) is to use the ETF’s that are short the market like SDS (2X short S&P 500), UUP – that is an investment in a rising dollar and/or GLD. The strategy remains the same – buy the dip.

One reason to invest so that you make $ if the markets fall is a hedge. Your income may suffer, so at least on the other end you’ll make money.

Investors411 opened a 2% position in UUP (ETF tracks the dollar)at @25.60 (Have to double check this figure) Will buy more on dips.

Still holding very minor positions in VCI, ESRX & SDS

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Congressman Alan Grayson

War is Making YOU Poor

There are many ways Americans can cut deficits to make the future more solvent for our children. One presented by Democratic congressman from FD Alan Grayson (short video) Here’s some major point from The War is Making YOU Poor Act

• We spend 1/2 the world’s entire military budget
• NATO allies #2 in military spending – Are we going to war with them?
• Distant third China. War with them would devastate our economy and theirs
• Keep $549 billion in yearly pentagon budget & eliminate the $159 Billion for Iraq & Afghanistan.
• Video (link above) has great chart & more complete explanation – so check it out.

How he would spend $

• No taxes on the first $ $35,000 for every American
• No taxes on first $70,000 per couple
• Plus $16 billion a year to reduce deficit.
• Moderate and low income people spend that tax break money and this would stimulate our economy generating both jobs and further taxes.

So you might spend it differently. But the main point is clear – The War is Making YOU Poor

Sign up to be on Grayson’s newsletter list.

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!

Index	Percentage	Volume
Dow	-0.23%	up
NASDQ	-0.12%	up
S&P 500	+0.04%	up
Russell 2000	-0.19%	-

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

Technicals, Fundamentals & Analysis

At the open stocks on all major indexes reached lower lows than even the “flash” mistake trading meltdown a couple weeks back. This achieved a lower interday low for stocks. We already have had a lower closing low. The pattern now is lower lows and lower highs. Until that breaks = Bearish

From yesterday - The only silver lining to the up coming storm, is McClellan is oversold and when we get down below -135 we could have another oversold bounce. A 2 to 3% Dow fall in big volume could put us in -120 to -135 territory.

The above happened at the open. In the afternoon the giant institutions with their giant algorithm computers bought into a very oversold market. We rallied  about 200+ points on the Dow to close near even in increased volume. = Bullish

Markets moved higher despite poor global news = Bullish

Analysis – Would expect oversold bounce to continue today. If you are a trader as opposed to investors you could make some short term profits long.

Significant Indexes

• McClellan Oscillator was flat for the third day in a row. Now at -90.45.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish.
• US Dollar – Uncertainty reigned as the dollar had a massive range from a new high to almost below Monday’s open. The dollar rose +0.27% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Yesterday = Mildly Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Yesterday close to open Sold 1/2 position in ESRX at 99.51.& 1/2 position in SDS at 37.21.

Traders & Investors – Reasoning – ERSX was just plain fear on my part of overall bear market. Not a good reason to trade because it was holding up well despite early meltdown. SDS had mad a 5% profit. Because of the extreme volatility and oversold nature of current market I plan to take 5 to 7% profits on 1/2 of all trades and let the rest ride.  This, is because uncertainty/volatility is a clear pattern in the current market.

Looking for dip to buy EUO It’s rallied in weak volume the last few days. May sell SDS (short ETF)

Investors – Until we technically get out of the woods and break the newly established downward pattern only those who love risk should buy. Would suggest the Financial area ETF’s –  XLF.

Traders - UYG & FAS (@2X & 3x what XLF does) Financial reform has basically failed and these institutions should continue to exist in the unregulated, over leveraged, shadows of Casino capitalism. Therefore, make profits while they will make privatized profits while your FDIC insurance subsidizes or protects them from any losses.

Apologies - ran out of time to do YOUR stock list. See past comments from Paul R & Monitor Both have made some excellent suggestions in past few days. YOUR stock list is holding up quite well. While major indexes are below their 200DMA’s almost all of the stocks on YOUR Stock List have not reached that big a breakdown.

They both have good ideas that traders can take advantage of in a rally today. YOUR stock list also has good concepts. to pick from.

NB – I’m trying to make a clear distinction between short term Traders who are comfortable holding a stock/ETF less than a week and longer term Investors whose goal it is to hold positions for months and hopefully years.  Everything Investors411 mentions in Positions section is hopefully a long term position

.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Putting Money Where You Mouth Is

Charging Bull- Bowling Green NY

Investors in everything from Wall Street to the Dollar (a much bigger market) put their money down because they believe that at some future time they will profit from their investment. These are primarily the world richest people and money managers investing in the future.  Of course, it also includes a lot of upper and mid level middle class people who the money managers (mutual, hedge, 401k university, institutional etc) invest for.

Lets say there are two groups – one willing to invest in riskier assets and the second group (perhaps burned too many times) who seek safe havens – Put  money under the mattress, low yield CD’s, government bonds.

Government bonds are popular . Right now across the world and in the USA almost every time our government sells debt (usually in 2, 5 10 year  and longer term treasury bonds) there is an over abundance of buyers in this safe haven This is great for the USA . Not only does low rates mean the gov’t borrows at low rates, but it is an investment in America’s financial future.

The dollar is rising . The short & mid term trend for the dollar is higher (see explanation below). For the sake of this editorial (putting money where your mouth is) a strong or rising dollar says investors from around the world have confidence in the direction the USA is heading .

Wall Street rising . The fact that equities have now basically moved up over the last 8/9 months is a positive signal for the economic direction of US companies. Wall Street historically looks 6+ months into the future. (This does vary radically from day traders to decades long stock holders.) Wall Street is saying confidence is rising in the USA.

Bottom Line – There are a whole lot of connected and wealthier people around the world who are optimistic on the future of the USA. This does not mean there are not problems. You can also argue over who is responsible for this rising confidence from Obama to emerging markets. But the bottom line is people are putting money down and expect better economic results in the future of the USA.

You can argue that there is not a lot of volume behind the stock move higher is a bad sign. However when you see people flocking to buy our treasury bonds, the dollar rising, and stocks still near yearly highs – Investor’s mouths may be saying one thing, but they are investing in our future. That’s a good thing

Afghanistan and $

The Huffungton Post & TMP  this AM is headlining a story (Surge 2) that there will be 56,000 private contractors in Afghanistan to rebuild there economy. Sorry I’d rather see those 56,00 rebuild our economy. LINK

Bernanke, Time Magazine’s Man of the Year

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	-0.47%	up
NASDQ	-0.50%	up
S&P500	0.55%	up
Russell2000-	-0.57%	-

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

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

Technicals, Fundamentals & Analysis

Fed Chair – Ben Bernanke is Time Magazine’s Person of the Year (more later)

The Fed meets this week and makes an announcement tomorrow. Any change in outlook (unlikely) will impact markets. Trading usually light before Fed meeting. No change in the Fed statement about interest rates would be bullish.

Dollar went up so stocks went down yesterday. This inverse correlation has weakened recently. However stocks couldn’t rally in the face of a major move higher in the dollar. (See below)

Again were seeing down days with increased volume. Historically a bearish sign .

FEARLESS WEEKLY FORECAST – Up to flat week . But be careful we are entering overbought territory (see below) and if rally continues I’ll be taking profits rather than adding to stocks.

If you don’t understand a term look in up at Investopedia.com dictionary 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  fell (was flat) -12 points yesterday and closed at 3518. It’s interesting how smooth and seemingly predictable the BDI is in the short term. The rate of the decline is declining and with about 80+% certainty you can predict a flat to up day today.   Since Mid November highs the BDI (see chart) has established a clear downward trend = bearish signal

What it means long term – Since the low of Oct 2008 technically the long term chart is = Bullish. However we are now in a month+ long correction. Mid term trend = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets.

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The Dollar is currently the #1 forecasting tool (now weakening as a predictor)

$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 was rose a significant yesterday +0.76% . Anything close to or over +/- 0.50 is significant The dollar closed at $76.93 . Technically have broken up through the 50 day moving average resistance level and now broken out through another significant resistance level the Oct/Nov highat 76.82 = Bullish for dollar & bearish for stocks

The mid term trend is now bullish and the long term trend (looking at weekly or monthly charts of price) is bearish

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

There’s been a dramatic change in the last 4 trading sessions. We broke out of the range (see below) and are close to  overbought/sell positions . The index closed at +21.20 This is a slightly Overbought Position

From past updates – It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 for a month+ =  There has been no clear buy or sell signal for over a month.

Oversold conditions (@-60) = buy, Overbought positions (@+60) = sell The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Bottom Line – Start thinking about taking profits, especially into any continued rally.

Positions

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

(again a little behind on latest moves)

Will wait to buy some ETF’s and stocks when McClellan Index/Oscillator approaches overbought (@+60)

Recommended ETF’s and Trades

SELLING & BUYING

Your Comments - (See “Monitor’s” comments on side of blog – About a week  ago Investors411 sold its positions in GLD. DGP, AMZN & NVS ) – Not interested in opening any new positions right now Waiting for a clear signal from MCellan Index to commit additional capital or sell existing positions .

If we rally into the end of this week I’d take some more profits

Near bailing out on small investment in BAC

Long Term Outlook = CAUTIOUSLY BULLISH