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Want To Live

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Go To Denmark

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Denmark and almost every other Western Democracy has

more upward mobility than the USA.

Even the Latest Republican presidential star Rick Santorum  agrees

See Jason DeParle front page NYT article

WHY?

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Income Inequality

How Income Inequality Harms Societies

Click on Photo for Video

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Dr Richard Wilkinson presents what is perhaps the best TED presentation of 2011, You all know the Truth of what Wilkinson is saying…

“Income inequality is divisive and socially corrosive, its been around since the French Revolution…What’s changed is that we can now look at the data and see what that inequality does.”

Using UN and World Bank data Wilkinson starts out comparing gross national per capita income of 20+ market democracies – Gross income has no or little relationship to the well being  of countries (the USA is at the top in income)

But when Income Inequality between countries and within  countries is measured,  well being has a massive correlation on the following categories (the USA is at or near the bottom in every category)

• Life Expectancy
• Trust
• Math and Literacy
• Infant Mortality
• Homicides
• Imprisonments
• Teenage Births
• Obesity
• Mental Illness
• Drug Addiction
• Alcohol addiction
• High School Drop out Rate
• Child Well Being
• Education Scores
• and of course Social Mobility

You can view an entire list of the data and charts in a couple minutes HERE

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Rich Developing Societies have reached

A Turning Point in History

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“Politics should be about social relationships and how we develop and sustain societies”

Bottom Line – Wilkinson genius – The measurement with hard economic data of what gets worse in countries and societies when the rich and poor move too far apart.

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STOCKS

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Wall Street Bull and OWS Symbol

• The correlation between Europe and the USA is wakening, but still significant. The Bulls are gaining more control in the USA

• Our #1 technical forecasting tool, the McCellan Oscillator (MO) fell to +41.14 . 50DMA at +2.02 A wee bit of bearishness, but still room for rally to grow (for more see  STRATEGY link at top of blog) = NEUTRAL/bearish

• The major trade war between the USA and Iran has consequences. Investors/traders should be long Oil. USO, UCO or Oil related stocks (See YSL 2012)

• My single largest holding remains EUO (double short the Euro) This is because it sure looks like the Euro will continue to be devalued.

• Over weekend I will try to update Positions section of blog to reflect changes made this week and 2012 outlook.

For those who have an options expiration on the 21st.

Remember if you are out of the money the option will degrade even faster the closer you come to the 21st. (12 days)

MOS has traded between 44.7 and 55 over the last 12 days. If your Call/Put was placed at 52.5 you need about a 4% move either way to make a profit. One item in your favor is that we are entering earnings season next week and things almost always become more volatile.

As stated in the comments section lots of yesterdays rally was short covering and not fundamentally based.

Odds are you will see a 4%+ move above or below 52.5 in the next 12 days, but the trade is no longer based on the earnings report. MOS is currently at 53.50. Technically, because it gave up 1/2 its gains yesterday its outlook for today is a wee bit bearish. But that’s just for today.

All – Also remember you can sell the Put side too if its value is more than the commission.  Example MOS goes up and you sell your call next Wednesday when MOS is 54.5 You make (guess) 30%  By Friday  MOS has lost 5% of its value and each Put is then worth (guess) $30.

MOS could also shoot up to the moon. MOS is up a bit in pre market trading.

Photo of Lake in Iran

War In Iran?

Is the US already in an undeclared war in Iran?

• Latest – US drone downed in Iran

• Stuxnet/Conflicker worm computer virus attacks Iran nuclear facilities.

• Assassination (bombing) kills top Iranian nuclear scientists

• Other assassination attempts?

• Plot to kill Saudi ambassador in US linked to Iran

Investors411 has reported in the past that Obama is 10 times more likely to use drones in targeted assassinations than Bush.

This sure looks at least like a cold war. Will it get hot? Betting odds from Intrade on an overt US and/or Israel air strike on Iran by June 2012 = 30%

Payroll Tax Cut

Obama makes case for extending Payroll tax cuts for middle class Americans. Most Republicans oppose this. Romney, of course is flip flopping. Taxes would increase by @ $1000 for most middle class families. LINK to story

Presidential Poll Numbers

Most folks realize Newt Gingrich is up in the polls for Republican Presidential nomination. Voting starts in a month. In the first four voting states Romney is moving in the opposite direction. LINK to story. – Poll compilation.

Newt’s rise has been too meteoric, but this is also a significant sign that Romney may be in trouble.

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STOCKS

The Reality

At the end of the year more conservative fund managers (mutual, hedge 401k managers) have to INVEST their money or explain to INVESTORS why their $$$ are earning next to nothing in a money market account.

For the last four+ months worldwide equities have been in turmoil. These conservative fund mangers hate high risk often measured by the VIX (see chart) As you can see the VIX has basically been above 30 for 4 months and recently dropped below.

The below 3o is kind of an all clear signal, and these conservative investors are sitting on 4 months worth of money.

Therefore – There’s a strong possibility we’ll see Santa Clause.

Of course, some strong fundamental factor can  disable Santa’s sleigh.

Yesterday Standard and Poors (a major rating agency) did put most of Europe on “negative credit watch” for a downgrade. Not enough to stop Santa but  a series of events like this my put the sleigh out of commission.

Strong correlation between Europe and US stock opening price

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The Winter Democracy Bloomed

The desire for self government, jobs and bread has exploded across the Arab world. In over a dozen countries people are demonstrating for basic human rights. Perhaps the biggest looser in all of this is Islamic fundamentalism and al Qaeda, because the cries of the people are not for religious fundamentalism, but for the common human dignity that we all share. Demonstrators are putting their lives on the line for democracy.

Libya and Iraq are the latest to have demonstrations. Today the NYT focuses on American reaction to Egypt, Bahrain and Iran’s demonstrations

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Shadow Banks Rule

The Chamber of Commerce and Shadow Banks were caught with their hands in the cookie jar,  just as a congressional committee was to convene to amend rules on “casino capitalism.”  How ironic it is that over a 1000 bankers were issued jail terms in the Savings and Loans crisis decades ago and NONE have over the 2008 meltdown.  That’s how powerful the shadows and their lobbyists have become.

Andrew Ross Sorkin from NYT story and MIT prof Simon Johnson. – Derivatives Industry Report Collapses.

But that’s just for openers – The Chamber of Commerce & their shadow allies are not beyond investigating the families of critics and printing false accusations. If you support Wikileaks or speak out against The Chamber, BAC or those who want to run capitalism in the shadows this could happen to you. Glenn Greenwald reports.

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 Analysis

Investors411 record - 6 years of beating benchmark S&P 500

Nothing’s change much in overall outlook since Monday. Short term because yesterday’s moderate loss the McClellan Index is at a  more buyable level of  +6.97. But not yet near levels bulls would like. The bubble-icious stock market continues.

So today were going to focus on technical analysis. I call technical analysis looking at the pretty pictures/charts of  a stock’s price and volume and being able to make a forecast of future directions from those charts.

Stockcharts.com, the best free site on technical analysis on the web has a school/tutorial that will help you learn more about it.

Technical analysis works best when the markets, the sector and then the individual stock are in alignment or moving in the same direction.  The sum is greater than the parts, but in most cases it the individual stocks that matters most.

So here’s a list compiled by Paul R who has oodles of experience in technical analysis and uses a powerful HSGI program to augment his technical analysis skills.

Below is Your Stock List #3 and Paul’s recommendations. Most importantly use this a a learning  tool it technical analysis. He published it in the comments section of the blog a day ago, so its a bit dated and I’m sure he wants you to read his mea culpa. You can look up each chart pattern by inserting appropriate ticker symbol at Stockcharts.com. (link above) - His comments in Green and technical analysis below.

“In no way am I recommending a buy or sell of any of these stocks. These comments are for education only. (Understand?)

BIDU – getting extended, a hold and not a buy at the moment.

NFLX – getting extended, a hold and not a buy at the moment.

BEXP – went through a buy the dip correction in late January. Broken out, buy if it dips.

JNPR – leader in it’s group, broken out from a strong base, extended now, buy if it dips.

SKWS - Good chart, extended, buy the future dip.

KSU - Good chart, extended, buy the future dip.

DECK – Gone through a correction as has it’s group, buy the future dip.

PCLN - good chart, buy any dip

COH – Gone through a correction as has it’s group, buy the future dip

IMAX – basing, buy any dip if you want as long as if it’s above the 50.

SOHU – broken out, way too extended for my stomach. Not a good chart, it needs to tighten up.

IVN – basing, buy at any time at current chart position

ALV – basing along with it’s group at the moment. NOT buyable at the moment.

SAM – basing, sitting on the 50, buyable at any time

SPRD – Good chart, wee bit extended, wait until it touches the 17 dma again.

FFIV – NOT buyable at the moment, chart needs some serious work.

These observations are just that, observations. My observations are usually worthless. If you buy any of these dogs…blah blah blah. Did I mention these comments are for education only? Pay attention for crying out loud!”

An additional comment from Paul on how to Buy the Dip

Always watch the comments section for different ideas and comments on stocks, economics, trends and politics.

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Positions

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Look for Paul R‘s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.” (YSL#4 is under construction.)

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Egypt Burning Series from Al Jazeera

Lessons from Revolutions

Iran, Tunisia and now the Egyptian revolutions have brought home some tough truths or lessons -

• The Egyptian people are the epicenter of democracy and freedom for the world, NOT the USA.
• The USA supports a gulag of dictatorships throughout the world because these dictators support our interests.
• A vicious, brutal dictator is a vicious brutal dictator. The term “moderate” applied to our dictators is a lie. Mubarak killed far more than Ahmadinejad in his revolution.
• These revolutions clearly were based in a desire for freedom, bread, jobs, and humanity NOT Islamic fundamentalism.
• The US and other supporters of dictators fear mongering a false doctrine of incompatibility between Islam and Christianity  (Glenn Beck) We all share the common ground of humanity and respect.
• There is a universal concept for human dignity and respect that transcends religious boundaries.
• The G 20 nation leaders and other dictators showed only minor lip service to the Egyptian people until the outcome was apparent. Only the secular democracy in arab Turkey and al Jazeera called the people of Egypt “their brothers.”
• The fear mongering used to overshadow  efforts for peace will NOT stop in the USA, because it benefits politicians and a massive military industrial complex.

I love my country and love the fact that I can still speak out against what it does wrong. However-

We have an American foreign policy that is riddled with hypocrisy and its way past time we break the chains of fear and start to think openly and intelligently about building democracy and hope for more than a privileged few.

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS – The New Investors411 term for the stock market – We are all riding on the outside of an ever expanding stock bubble.

• Bubbliciously, once again stocks rallied as volume fell
• Mantra till it no longer works - still endorsing the concept that the Fed POMO [schedule] is and will be the key factor in keeping a long term rally going. .
• Mantra #2 - 50% to 70% of the volume on US stock exchange is soaked up by High Frequency Trades ‘s chasing imbalances in trades. This means 30% to 50% of volume is made up or real or valuation investors.
• WSJ has come up with a problem for stocks – Prices for commodities are rising faster than stock profits
• Two significant reasons allow the Fed to keep the liquidity tsunami flowing – Housing prices are hurting & Unemployment figures are high.
• NYT on this week’s outlook. Emerging markets (in a deep correction – see past Investors411)are rebounding

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose  yesterday  +0.27%.  Two day rally in dollar is bearish for stocks. Today will act as a conformation the doll breakout last week to a short term high.= Neutral/bearish
• McClellan Index – (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] Fell to to +28.50. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level.  Stocks outlook = Bearish/Neutral

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Helicopter Ben Bernanke - Dishing out a Tsunami of liquidity to US economy

Reading The Tea Leaves

Same mantra - A manipulated US stock market is moving higher on stimulus, low interest rates and quantitative easing. Financials and stocks have received unbelievable support from our government and the Fed to pay off their over leveraged debt.

Our short term forecasting tolls are turning bearish. They’re almost in the red/bearish territory. Will this be enough to sink the Fed tsunami of liquidity from driving stocks higher?

Monday’s are usually great for equities, but a consolidation or pull back would be more than healthy for this market.  Let’s not have the bubble burst too soon. However, the rebound in oversold emerging markets may be a leading factor this week.

Longer term-  As long as housing prices are hurting and unemployment is high the Fed should keep flooding liquidity into the market. This greatly benefits the big shadow banks that have not had to reform the casino capitalism that had and now continues to make them rich.  All of this is bubble-iciously good for stocks.

What to watch today

UUP - (Tracking ETF for dollar)

Remember - The dollar is a contrarian indicator. Bad dollar = good stocks

AAPL –  The tech general broke out to a new high and continues to trade above those levels. Volume was poor for a breakout, but  as long as the market’s Fed manipulation is dominant the rally will continue.

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Positions

RJA is up 4%, so considering taking profits soon.

Commodities are being driven higher by inflation fears in emerging markets. The Fed’s POMO program/QE#2 is a/the major driver of this.

UCO -(2x oil prices)  Wait till it consolidates lower  and returns to pre Egypt crisis levels or below.

REMX (Rare Earth ETF) – Really believe this a good long term holding. Considering buying more on a dip today

DGP – (ETF is 2X gold) .

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy. Perhaps preferable or a good alternative would be *DJP that is more agriculture and metals or RJA (all agriculture)

RJA (Agriculture commodities Index)An  ETN, not an ETF.

UWM (2x small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#4 is under construction.)

Mea Culpa – They changed the Cancer Sexy Bra site on me. Link HERE

Israel & Iran

Let’s forget the Islamophobia that’s enveloped the USA. The fear monger’s couldn’t even tell you that the two largest Islamic nations are democracies or know nothing of the patriotic fireworks and 4th of July parades in Dearborn MI (40% Moslem).

The #1 predictable  foreign policy problem is the fanatic religious zealots in Iran possessing nuclear bomb capability. In June Secretary of War (sic) Gates said this will happen in 1 to 3 years. “To Israel that means 9 months .” [From a must read article in Atlantic]

Yes, the bombing of the nuclear facilities in Iran will create a whole dynamic of new problems, but if I were an Israeli I’d toast the nuclear facilities just like they did in Syria. The questions are when, and what will the US do? For latest odds see Intrade (bid 25.2% ask at 30.0% by 12/31/11 and increasing since last time I looked – click on current events)

• Jews were powerless to stop Hitler & 6 million died, “Never Again.”
• One or two atomic bombs would decimate Israel.
• Iran is the most virulent anti Israel nation on the planet and look what they did to their own freedom loving Moslems after the religious zealots stole the election. Trusting Iran current government is laughable.
• Israel can completely shutdown Iran in Cyber Warfare like they did to Syria when they destroyed its potential nuclear reactor. Russia did this to Georgia in their war. Richard Clarke has a book out on Cyber War. (Thanks to Robert H for info on this)
• Obviously, it would be better if Iran stopped producing more weapons grade material NOW.
• It would be better for Israel if the USA and  the world if we toasted them first. Might not be better for USA.
• Remember in this Iranians are Persian not Arab and they are Shia not Sunni Moslems.

This is Obama’s problem, The Israeli’s are coming. The window on a diplomatic solution is collapsing. I wish this were not so, but its reality.

Bottom Line for Investors – When Iran ‘s potential nuclear bomb making sites get hit, stocks are going to fall off a cliff. Oil prices will rise dramatically. (part of the reason Investors411 has started to buy oil commodity ETF’s on dips). GLD on dips is the #2 play.

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.

Stocks held onto/confirmed Thursday’s major move down. Earnings season is behind us and economic news dominates.

Small investors are still leaving the stock market in large numbers ($32.7 billion domestically YTD) and fleeing to safety of bonds. This means that the BB/HFT’s (the uber wealthy) are dominating/manipulating even more.

Most technical analysts are hyping 1070 as THE support level for the benchmark S&P 500. We traded below it  Friday but closed at 1071.69. = Bullish

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar rose +0.74% yesterday.  Almost two week trend higher. Now facing resistance at 50DMA = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rally +4.22% Friday. 5 week Rally trend is strong = 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 -34.69 Starting to approach oversold, but still= Neutral

Reading Tea Leaves

The good news is the BDI (see above) in a strong 5 week rally. Very positive for economies of emerging markets. Also, we did hold onto major support levels on Friday.

The bad news is, even though emerging markets are rapidly catching up, the Big Kahuna is the USA. Stimulus funds/additional Obama tax cuts are running out. Without any additional stimulus to small business its going to get worse economically in USA.

Even more importantly for stocks the dollar is rising despite poor economic news here. The +0.74% rise Friday is too big to ignore. Unless, there’s some sort of reversal early this week Hemet Kitty turns into Danger Will Robinson Danger Danger Translation for first time readers – bad to really bad.

Index to watch is the dollar (ETF – UUP)

Of course if the MO drops down far enough a decent trading opportunity will exist. See YOUR Stock List Below.

*YOUR Stock List*

These stocks are chosen on their technical basis first. They must also have a fundamental growth story that would make investors want to buy in the future. Many are more influenced by major mega trends than others. YOU have sent in these stocks and both Paul R & I have gone over them, weeded out some and added a few. Explanations are purposefully very short and assume you have some knowledge of fundamentals and technicals. Paul will probably have additional information in comments section.  I have tried to make this as simple as possible.

Additional notes

• Ideal conditions to buy would be when the MO is overbought (@=60 or greater).
• Ticker Symbols are linked to charts. DMA = Day Moving Average.
• All stocks chosen must be outperforming major US indexes.
• This is a traders market and NOT safe for buy & hold investors (It’s possible some trades might turn into longer term trades)
• If you buy any stock you need to know when you’re getting out  & how to use stops

BIDU – [Baidu]

• Fundamentals (F) – China’s Google.
• Technicals (T) – Broke out to new high 8/1 and currently fallen to back to breakout point. Not overextended from 50DMA. Has potential.

AAPL – [Apple]

• F – The innovative top dog of American Tech companies
• T – Closer to bottom of 4 monthlong consolidation pattern
• T – More comfortable if AAPL was above its 50 DMA

PCLN – [Priceline]

• F – You’ve seen the Captain Kirk adds. Great earnings report
• T – Breakout gap higher in big volume and still climbing. Too over extended right now from 50DMA.

F – [Ford]

• F – Didn’t take bailout $. Good but #2 to GM in China.
• T – Fallen back recently and is directly at support/50DMA.
• T – Probably will build a base at this level

SAM [Boston Beer Company]

• F  - Great Beer – Barr’s favorite. (Wish I knew what beer Chinese drank because they just surpasses the USA as the world’s overall #1 beer drinking nation)
• T -After major rally run near the bottom in a three month consolidation pattern.
• T – Another stock that would be in a better position to buy if it was above its 50 DMA

GMCR [Green Mountain Coffee]

• F – Great tasting Vermont based Coffee
• 3 month rally to new high in moderate volume and has just pulled back into consolidating pattern. Now somewhat over extended from 50DMA,

HMIN [Hotels Inns & Hotels Management]

• F – China based hotels
• T – 5 month long rally. Near new high. Just a bit over extended from 50 DMA.

SWKS [Skyworks Solutions]

• F – Leading semiconductor company that benefits from trend to high end multi band width mobile phones
• T – Since 2009 in an uptrend. Last 3 months higher highs and higher lows with big volume up days. Dipped and is now moving along its 50 DMA
• Like to see upward some upward movement before buying

RADS [Radiant Systems]

• F – Global provider of innovative tech to hospitality, entertainment and retail industries (China penetration?)
• T – After 4 month consolidation big break out with volume on earnings report. Has dipped & now at new high. Bit overextended right now.
• Paul  will have some interesting posts on this

VCI [Valassis Communications]

• F – Market and media services in America’s & Europe. Think coupons
• T – Had a great 6 month run,but for last three months just marginally better than US Indexes and echoed their performance.
• Too volatile/risky to buy now

UPS [United Parcel Service]

• F – Huge package delivery service with exploding growth in emerging markets.
• T – Not a major mover, but solidly outperforming US Indexes. After move higher looks to be consolidating over last month. A bit overextended from 50DMA

IMAX [Imax Corp]

• F - Innovative 3 D technology & moving into China market.
• T – Big drop from May to July. Reached short term high on 8/1 and since formed lower high and Friday a lower low.
• T – Wait for it to form a base.

UFS [Domtar]

• F – Paper producer /packaging
• T – After rally has formed a three week base. Has potential

Paul will have additional information on many of these. So check out the comments section.

Positions

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

Current positions - EWZ (Brazil) & EWS (Singapore) & USO (commodity-Oil) The later was bought Friday at 32.75.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

See Stocks Below for Hindenburg Omen

Pakistan Disaster

“The magnitude of the problem; the world has never seen such a disaster. It’s much beyond anybody’s imagination,” – Pakistan flood where over 7 million are homeless UN President Ki-Moon.

When Bush/Americans sent Tsunami relief to Indonesia American popularity soared. Today America has far better relationship with the world’s largest Muslim democracy. Indonesia is not without problems, but it’s a whole hell of a lot harder to Islamic Jihadist to recruit where the population is pro American rather than one that hates Americans.

Someone is going to step into the vacuum created by Pakistan’s economic disaster in the world’s second largest Muslim country and  Democracy (@170 million people) Will it be the Islamic Jihadist’s or Americans? Obviously, right wing politicians are absorbed with trying to limit religious freedoms of all Muslims and fear monger political advantage. Its hard to be tollerant when so many on all sides are shouting hatred and fear. Also many of you want the $ to stay at home (unemployment and/or the deficit)

In this case not only will you be helping those in need, but you’ll also make it a whole hell of a lot harder for the lunatic Islamic jihadist to gain support. Here’s a list of places you can donate or simply donate by texting “SWAT” to 50555 to donate $10

Bombing Iran

Intrade puts the odds of the US or Israel bombing Iran at @22% by the end of 2011. Atlantic’s Jeffery Goldberg says odds are much higher (50+%) & In Asian Times Gareth Porter says Goldberg’s wrong.

Investment Bottom Line –  Stocks would obviously take a huge hit on this event.

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. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Emerging Markets [EEM] turned positive on Friday while US Indexes took a hit in extremely low volume. Emerging markets are once agin outperforming major US indexes and the trades/country ETF’s that Investors411 has used seems to be working again. = Bullish

If you look at the DOW Transports (Friday -0.83) instead of Dow Industrials (-o.16) you’ll find even a gloomy senerio than in last week’s losses. = Bearish

The Hindenburg Omen

Named after the blimp that crashed in 1937, The Hindenburg Omen, is a somewhat accurate predictor technical analysts use to forecast a market crash using the McClellan Oscillator. The WSJ and many other financial outlets picked up on the fact that we had a Hindenburg Omen last week. Here’s the bottom line from the above Wikipedia source. Within the next 40 days the chances of the following happen (using back testing) are -

• a 5% loss = 77%
• panic sellout = 41% & stock crash = 24%
• every NYSE crash since 1985 has been preceded by a Hindenburg Omen

Since we just had Friday the 13th, September is historically the worst month for stocks, you know how susceptible American’s are to fear mongering, I thought I’d let you know what’s in the back of the minds of every technical analyst including those who run the BB/HFT’s.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose +0.38% Friday. This confirmed Dollar on a week long bull run. For US stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.27% Friday. Has broken up through 50 day moving average. But upside momentum slowing shows possible trend reversal. Overall trend still = 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 -40.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

No mater what help we get from emerging markets, the dollar is still key to stock prices and  has shown no signs of slowing down. Closest resistance level is about $1.00 away (50DMA). Monday’s recently have been the best day of the week and Chinese markets were up +2.11% overnight.

However, dollar bulls & stock bears rule,  the MO has yet to reach -60, and the BDI rally is slowing down. Bulls seem safely locked in the corral.

Positions

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

Current positions - NONE

NB – The whole Positions Section was updated over the weekend. (see top of blog of link here.) I’ve listed many emerging market and foreign ETF’s with links that are again outperforming US markets. Also, references to ETF’s that do +/- 2 & 3 time US indexes and links to YOUR stock list.

More aggressive traders could start to buy/nibble the dip. Longer term investors may want to wait for stocks to move lower. The MO is at -41 and ideally you’d like to see at least -60 before buying. It has reach @-120 in the past. None of these figures are written in stone.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Bulls & Bears

The case for a rising or falling stock (not economics) market

The Bears

• At best unemployment in the USA has stabilized around 9.5%. The stimulus that has caused the reversal will soon run out and employment will grow.
• Housing prices have at best stabilized. 90+% of mortgages are now in some way backed by the US government  (Fannie & Freddie)
• Not only is the middle class in the USA shrinking, most people are saving more than they used to. Money flows are therefore diminishing.
• The European bank stress test was at a best a PR exercise. US banks are not loaning like they used to. They’d rather make more profit in other areas and are still in after shock from the original crisis.
• European Union with the world’s largest GDP, has many shattered economies (PIIGS &  Eastern Europe) and the others are no better off than the USA.
• The US has an exploding military budget $1,003,000,000,000 ($1.03 trillion) last year. If you count all our military expenditures it is over 60% of the world’s military budget.
• Iraq ‘s March elections created a stalemate with no government. The two leading candidates lavishing praising Hezbollah’s founding ayatollah and meeting/praising  Sadr (anti American ayatollah in self imposed exile in Iran) to beg he joins their side in new government.
• Afghanistan – WikiLeaks has just released 90,000 documents showing “devastating portrait of the failing war.”
• China, the leading emerging market has a housing bubble.
• Stocks are overbought according to the MO (see below)

The Bulls

• The dollar is falling and close to breaking out of chart pattern to downside. Lower dollar = higher US stocks because US goods will cost less overseas.
• Oil prices near breakout to new 3 month highs. Higher oil shows greater consumption = bullish, but not if you’re a consumer.
• Shipping prices have rebounded and are moving higher. See BDI below.
• According to International Energy Agency China surpassed the USA in energy consumption in 2009.
• Most US companies that reported better than expected profits cited emerging markets (China specifically) as where they were growing the fastest and creating jobs.
• China will spend $738 billion over the next decade on clean energy. = growth. The USA can’t get a weak climate or energy bill passed congress.
• Unless you want to invest in some European bonds (example Greece) there is almost nowhere to go besides stocks to get more than a couple % growth for your $.
• Black Box/High Frequency Traders dominate the market and they are ONLY concerned about short term results. They can go long or short.
• Weak banking reform means shadow banks can again get over leveraged.= more profits=higher stock prices till another crash.

I’m sure I missed some. To see the positions Investor’s411 is taking see Positions below and also click on POSITIONS at top of blog.

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 -The Black Box/High Frequency Traders control the vast majority of trades.

The NASDQ volume was slightly above average, but the other major indexes had a typical light volume rally that has become the norm for the Black Box traders that control the markets.

News on the earnings week ahead

Significant Indexes-

• McClellan Oscillator (MO) rose dramatically to +79.48 [+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. 79.25 = BEARISH
• US Dollar –  The dollar  fell  -0.16% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. At bottom of trading range. = Neutral/Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a 6 day +7% rally and is at 1826 = bullish

Reading Tea Leaves-

The McClellan Oscillator at +79.46 shows stocks as being overbought. I’d be just a little more cautious about using short ETF’s too early because of the strong bullsh sentiment right now among Black Box traders. But, its clearly time to think about using those ETF’s that short major indexes. Click on POSITION at top of blog for more info.

The MO has not been above 80 since the big spring rally in April of 2009 – then it reached @ 105. In early Jan. of 2009 it did reach 120.

Positions

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

Updated over weekends Investors411 holds ONE position in SDS at this time

Strategy – From Thursday - The same as before - If/as US major indexes become more overbought the more ETF’s that sort the market will be purchased. Starting out with SH. Then the higher above 60 the MO goes, the more SDS (200% short the S&P 500) and other even 300% short ETF’s will be used the higher the MO goes.  See POSITIONS section at top of blog for more. Therefore what is happening is a series of trades (Short ETF’s) the more overbought the market becomes.

The same entry/exit strategy applies. Considering dropping exit/entry point to 4 instead of 5%. See Friday’s Investors411 for more. The following trades were made Friday.

• SH (ETF that shorts the S&P 500) was sold for 51.26 – a -2% loss. The other 1/2 of SH was sold earlier for a 3% gain
• SDS (ETF the shorts the S&P 500 at 200%) was bought at 32.50 Nibbled with just a 2% of portfolio position.

Reasoning - The majority of technical analysts seem to be bullish, the BDI has reversed its 8 week fall & the dollar is right at its major support level.Therefore they may be room for 3 week bull rally may continue. We could reach a high above 100 on the MO. However the MO chart has not gone over +80 (where it is now) since April of 2009. Translation – There is some greater risk in this trade than if we had long term bearish outlook. However the more overbought thing get the safer the trade.

Longer term investors may want to wait to see of the MO goes up another 20 points before nibbling. Please recognize that right now this looks like it may only be  a trade  and NOT a long term investment

EWZ (Brazil) an ETF Investors411 owned for years is again outperforming and is a buy the dip opportunity.

GLD – (Gold) has come down off its high and any further dip Investors411 will buy.

The Long Term Outlook has been changed to NEUTRAL from Cautiously Bearish As explained/predicted Friday, the benchmark S&P 500 broke through the first of 4 different resistance levels. Another 3% move higher and the remaining 3 levels will fall.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Hope symbol from Iran’s Green Revolution – See Iran quiz below

Financial Hypocrisy

Investors411 has thrown a lot of venom at deregulated, over leveraged, opaque, Shadow Banks. However, the reality is the Pied Piper that led the Shadows down their path is a conglomerate of US politicians.  These same politicians are the ones who have been spanking Goldman Sachs and attempting financial reform.

The head line on lefty blogs is something like Republicans Filibuster on Financial Reform Crumbles. However Popeye in the comments section of the blog recognizes the enormous conflict of interest the leading Senate Democrat Senator Dodd (Chair Financial Committee) has. What good is breaking the filibuster if the end result is going to be milquetoast?

Tuesday, Investors411 referenced Luke Wilson’s (from Seeking Alpha) grading system for financial reform Today Peter Schiff (Yahoo Finance) Slams the Senators trying to reform the system.

Iran Quiz

On June 14th 2009 Investors411 began along  series on Iran’s election results. “Democracy Hopes and The Dictator Replies.” The dictator, of course was holocaust denying Ahmadinejad &( supreme leader) Khemenei. The whole world watched in horror as the dictators slaughtered innocent demonstrators in the Green revolution. Obviously Iran is the #1 country in the world you’d least likely want to see have nuclear weapons.

In the USA many stereotype, fear monger, and over generalize – Examples – All Arabs are the same, Let’s go war against Islam, The only good Muslim is a dead Muslim.  So lets take a pop quiz.

1. Is Iran an Arab country?
2. What percentage of students entering university in Iran is female? (be within 20% of correct answer)
3. What percentage of the Iranian population attends Friday prayers? (be within 20%)
4. What percentage of Iranians in 2008 said they had an unfavorable view of the American people? (be within 20%)
5. True or False: Did Iran considered the Taliban to be an enemy after the 9/11 attacks

I’ll Publish the results later today in the comments section of the blog.

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

Markets recovered a small portion of the previous days losses in decreased volume = Neutral/Bearish

The Fed came through – held interest rates and issued basically the same we are going to keep interest rates low a long time statement. This plus a ever so slight improvement economically had the support of all but one Fed governor who also in the past has been somewhat more aggressive in raising rates.

The big news was still the Greek debt crisis. Massive indecision over what the future holds – See the dollar below. = Bearish

XLF - The Financial sector ETF is the indicator to watch as Senate begins to debate Financial Reform. XLF is dominated by the big shadow banks – If it goes down that means financial reform is going to force transparency and actually make a significant difference. If not the shadow banks and their lobbyists have won.

The XLF could also be impacted by the widening Greek debt crisis.

We’d need some continuing bad news on the spreading Greek debt to stop the bulls. When all is considered (Yields on 2 year  Greek bonds are 20%) the fact that major US indexes are a few points off their highs is remarkable = BULLISH

Stimulus packages across the world, emerging markets improving GDP are still driving markets higher. = BULLISH

Significant Indexes

• McClellan Oscillator rose slightly to  -24.82 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is  NEUTRAL territory, but we are closer to oversold than overbought.
• US Dollar – broke out to a new yearly high yesterday. Up +0.24% yesterday. The trading range was a huge 1.75% This indicates huge indecision. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules. Is very important.  Dollar closed at $82.33. This high is virtually entirely due to problems coming out of the Greek debt crisis. Rising dollar almost always + falling stocks.

Positions

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

Waiting for a lower reading in the McClellan to invest. Although for traders who can tolerate the risk (not longer term investors) a -25 is better than 0. A risky buying window is open. Long term  Investors should wait for more oversold conditions. .

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

HMS Titanic

Sipping White Wine

Every year major capitalist leaders from around the world get together at Davos Switzerland and to sample the world’s best wines. This banquet usually sings the praises of globalization and unfettered free markets. But the tone decidedly changed.  France’s President Sarkozy took the lead. What’s unique was wealthy wine sippers went after banks (David Ignatius editorial) in arguably the banking capital of the world – Switzerland. Populism (going after the too big to fail banks and using YOUR tax dollars to bail them out) was popular.

Bottom Line – Volker (who goes in front of Senate Banking committee today) & Obama have both spoken out against the too big to fail shadow banks. The Supreme court has given them added power (see past updates). Remember – for something to get done it has to pass the Senate and Chris Dodd (D – CT) is the chair of the Senate finance committee.  He’s the guy who approved the HUGE bonuses for Wall Street Shadow Banks.

Betraying a Nation

Thanks to Yankee Bob for filling in and bringing to light some credible and different ways of fixing our deficit problem.

If we are on the  sinking economic Titanic and the passengers are running from side to side frantically looking for an answer –  the real question is what is the crew (political leaders) doing about their boat. Even an idiot realizes you cant keep cutting taxes and increasing weapons, social security, medicare/medicaid, which combined with the increasing debt make up 70+% of the budget.

Senators (D – ND) Kent Conrad and (R – NH) Judd Gregg worked for 2 years to form a bipartisan commission to deal with the sacred budget cows that both parties have. Two weeks ago it came to a vote in the Senate and even sponsors of the Bill like (R) John McCain switched sides to vote NO .  In all 22 Democrats , 23 Republicans , 1 Independent were too afraid to vote for this bill.  It failed to win the necessary 60 votes to break a filibuster. (53 yes to 46 no) Here’s a David Broder editorial and a list of the cowards who “Betrayed America. “

Obama promised to form a Presidential Commission to look into this, but it lacks the power of a Senate commission.

Future Wars

We supposedly want China’s support in backing harsh sanctions against Iran .  So The US (Obama) goes ahead with selling $6.4 billion dollars worth of weapons to Taiwan.  China want to have a reconciliation with Taiwan and wants the island to be part of China. China embargo’s  Think we will ever get China to join us with harsher sanctions on Iran?

Like the giant alien plant Seymour in Little Shop of Horrors – the Military Industrial Complex in the USA keeps crying FEED ME

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.

US markets rallied significantly in decreased below average volume. Volume did NOT confirm the rally. Only the NASDQ had volume that was even average.  Yesterday’s trading was an oversold bounce.  Technically, so many traders/investors had sold conditions were oversold (see McCellan Oscillator below) and we ran out of sellers.

Volume, our #1 technical forecasting tool, has indicated a major reversal is potentially underway. Three+ big volume combined with major declines shows major players heading for exits in the last 2+ weeks.

The major event of this week will be the Monthly jobs report at the end of the week. Earnings season is basically over.

Significant indexes

• McClellan Index at -53.52 =  Yesterday we rebounded from over -90 .  We are just below -60 or oversold levels. If everything eles is equal both  long term investors and even short term traders should buy when markets are oversold and sell when they are overbought +60 .
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is falling. Yesterday the BDI closed at  2745.= Bearish – especially for China. More on this tomorrow)
  

Fearless Forecast (for week) The US jobs report is critical for Americans, but not Wall Street. Wall Street can grow on profits from abroad. In fact, earnings reports which are getting better each quarter, are mostly improving on growth from emerging markets. China, the #1 emerging market has moved to slow growth and prevent a bubble – this has slowed their economy and stocks over the last month. However, the FXI has rebounded over the last few trading sessions in strong volume = Bullish The BDI is showing the exact opposite of a rebound, but an economy that’s slowing.= Bearish

So we have conflicting signals on China’s growth story. We also know from past experience that US which is still the economic leader worldwide (this position has diminish for a decade and continues to do so) can move significantly higher in weak volume. We saw this form Aug to the end of last year.

Best read of tea leaves – since we are technically oversold we should have an up week . There looks to be no major meltdown in the near future – only a question of will there be a further correction. Technically oversold positions should improve in the short term.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

ETF Watch List

Current owned positions

• FXI (6% of portfolio) China – major technical breakdown of “head & shoulders trading pattern. Bought at @40 Now at @40
  
• EWZ (10% or portfolio) Brazil – Between 50 & 200 day moving average, but in correction. Bought at @ 52 & 59. Now at @67
  
• MOO - (10% of portfolio) Agriculture stocks – Moved below 50 day MA. Bought at 42 Now at@ 42
  
• IMAX – (2% of portfolio) – 3D movie theaters and future TV network. (Will keep adding on each dip) Now at 13.50

Since we are closer to -60 on the McClellan this should be a time to BUY rather than SELL 2010 is NOT going to be the kind of major bullish year 2009 was, but if we add when conditions are oversold you’ll do a whole lot better in the long run. The more oversold the better.

Traders should be able to do well today & early this week because of oversold positions.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

The 2nd Maine Militia’s Gazette

To paraphrase the 2nd Maine Militia (See Nov. 17 blog) it’s not about left vs. right, Democrat vs Republican, but up versus down . So let’s take a look at a brand new news outlet only found here  at Investors411. In the style or philosophy of the 2nd Maine Militia – here’s how their paper might look.

• Headline – Crisis in Duba i – Thousands have died (from Bangladesh, Philippines, India and other poor countries) building a wealthy playground for the uber rich Arabs. A place where wealthy Americans and Iranians can rub elbows built on the backs/lives of third world labor.
• The private company that created this years hottest American holiday present the Zhu Zhu dolls/pets has just announced a proposal for three new factories. Sorry no factories in Maine or the USA – they’re all in China.
• Front page editorial-Keeping the Masses Distracted – Will someone tell us why CNBC and CBS business news feature stories are -  the selling of Michel Jackson’s rhinestone glove, the scratches on Tiger Woods face (wife or car accident) & the latest block buster teen vampire movie?  This is America Corporate media news.
• Another local bank collapses . The big shadow banks that caused the financial meltdown are getting bigger with our money while their competition – the small local Maine/USA banks continue to fail in record numbers.
• Guest editorial from Robert Reich – The 3 classes of Americans – #1 Those 25% of Americans whose kids are on food stamps, #2 those Americans who are managing, but worried about loosing value of homes & jobs #3 Those few Americans who have taken home even more winnings since 2007 like Goldman Sachs executive. LINK

Some of you may think that our fictitious Gazette is over the top. It does focus on the ugly side of globalization and unregulated wealth creation (sometimes  misnamed capitalism or free markets). It does pacifies the reader with obsessions about celebrity.  Maybe the scratches on Tiger’s face is what will solve the humanities problems and just maybe you’ll think about forming your own 2nd Maine Militia.

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

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

For the moment the Dubai economic meltdown has stabilized because oil rich Abu Dhabi has promised to bail out the over leverage Mid east playground for the ultra  wealthy.

Big predictable economic news for the week is Bernanke’s approval hearings in front of congress, Obama’s more troops for Afghanistan and the monthly jobless figure on Friday

Black Friday saw a significant increase in traffic and only a o.5% gain in sales according to early reports. reports. Today is Cyber Monday where shoppers do a whole lot of on line Xmas shopping (start of the online buying season)   These numbers are Bearish for retail stores. It probably means far more people were out seeking the bargains and they will do less shopping for the rest of the holiday buying season.

The dominating factor controlling  stocks prices continues to be the dollar.

FEARLESS FORECAST – Last week’s fearless forecast of an up week was crushed by the Dubai crisis .  Markets have rebounded from Dubai across the world and the damage seems limited in investors/traders minds. Looks like we will return to general trend of dollar down and stocks up till Friday’s job numbers. – Outloo k – flat/down week.

Coming up more on - Military escalation in Afghanistan & growing problems with Iraq. Any attack on Iraq would send the dollar higher and stocks lower . Perhaps Obama’s announcement of 30,000+ troops in Afghanistan will have same impact.

Now going to get a bit more technical

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

——–

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 has broken out to new yearly high

The BDI fell -145 points yesterday and closed at 3994. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1900 points since late September. Now, 7 down days in a row & through the former resistance and now support level 0f 4291.

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = 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 .

$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 HUGE +1.00% Friday . The dollar closed at $74.98 . The $75.00 support level crashed and burned on Wednesday but, T he Dubai crisis is going send money back into the dollar and out of the stock market.

——-

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

The index closed at -27.62 This is approaching an Oversold Position 

Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

Positions

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

I did get a chance to do some editing in the Positions Section of the blog. ( Note 2 added positions)

From Friday – Probably going to take some profits today (sell 1/3+ positions) in FXI, EWZ, GLD & all of DGP. Hopefully, will get a chance to buy back into these positions when the McClellan Index gets oversold. Personally I did sell/take profits on 1/3 of FXI & all of DGP .

Long Term Outlook = CAUTIOUSLY BULLISH/NEUTRAL