Was getting Saddam worth it?

Blood, Sand & Dollars

Obama last night gave a major address on Iraq as we have decreased the number of US troops (private mercenaries?) to 50,000 supposedly “non combat” troops. One can give Obama some point because he brought the troops out faster than McCain would have.  But lets look at the fractured mess of blood, sand & dollars left in Iraq and its impact on the US & the world.

• The fractured coalition of former US support and condemnation by UN for this war has seriously undermined our worldwide credibility
• How many lies, distortions and fabrications told by the US government to its citizens and the world?
• The strengthened positions of Hamas, Hezbollah, Iran, & the Taliban as US occupation acted as a recruiting tool for every terrorist group in the world and kept troops tied to Iraq.
• 75,000 US troops killed or wounded in both combat & non combat rolls. Many more coming home with deep psychological problems.
• Costs on the ground will go over $1 trillion and according to nobel prize winner Joe Stiglets and additional $2 to $4 trillion caring for those returning etc.
• Up to 4 million displaced Iraqi’s. 1.7 million still living abroad. Who really knows over the  projected 100,000 dead Iraqi’s there really are?
• Stalemate in Iraq elections for over six months and majority of officials friendly to Syria or Iran.
• A country in shambles, corruption rampant, and police stations still getting blown up. (level of violence has decreased from two years ago, but still higher than when we first invaded.
• The damage to our constitutional laws and international laws were deeply wounded in this disaster.

The list could go on & on. Nailing a brutal dictator that was an insignificant threat (the Germans’, French, Russians, UN and others realized this) to us was simply not worth the cost.

Israel & Peace

It’s fashionable for some to lay the blame on Israel in the upcoming peace negotiations. They have made mistakes. But how do you make peace with Hamas when on the verge of peace talks they ambush 4 civilians (one pregnant women) and hold a 3000 person joyous rally in celebration of and taking credit for the “heroic “massacre of civilians?

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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.”

Sure was a whole lot of volume going on for a flat trading day. In Wall Street technical language they call this “Churning.” More often than not a big battle like yesterday between bulls & bears means a reversal in direction. In this case that would be a rally.

YOUR stock list is now contained in the POSITIONS section of the blog. It’s at the bottom.

Another strategy that some of YOU are using is more conservative and it involves buying stocks with high dividends. Here another list of the top 10 dividend stocks of the Dow. The obvious benefit of these stocks is the second revenue stream from dividends for long term investors. Example CVX offers 3.4% or VZ 6.3%.

The same, but longer term buy/ sell strategy can be used. But when conditions are oversold and the Dow is lower and at a certain date in the future sell when conditions are overbought. Use the MO as a guide.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar rose +0.03%. and closed just above its falling 50DMA. For Stocks = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Again rose a marginal +o.04%. After a 5 week rally the BDI has flattened out. Now consolidating. = Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to -32.52.  We’re on the minus side of Zero, but not yet near -60. Therefore = NEUTRAL

Reading Tea Leaves

Sure looks like the calm before the storm – flat markets & neutral forecasting indexes. One anomaly was a massive -3.33% drop in the price of oil yesterday.

Overall think the BB/HFT’s are setting up for a rally. Flat dollar & MO on the negative side of zero. The “churning”  has also been a fairly reliable indicator.

Nation Building in Iran, Afghanistan etc. is a trend that’s is is doing serious economic harm to the UA.

Positions

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

Current positions - Small position in EWS (Singapore)

USO (commodity-Oil) hit the stop I had placed on it. This position is now closed with no gain or loss. Still plan to buy USO & UCO (ETF that is 2X USO) on dips lower.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Iraq

The USA is pulling combat troop out of Iraq by end of August & only 50,000 to remain. “No combat troops will remain.”

So without the bells, whistles, victory celebrations we’re kind of  leaving Iraq. Like Osama Been Forgotten, Iraq Been Forgotten. Here’s what remains.

• The Sunni’s got toasted in the civil war and there are still probably millions of refugees in Jordan, Syria, & Iraq
• There has been NO resolution of an elected government in Iraq for 5 months. Two leading sides each have @ 90 members of a @350 member parliament.
• American’s & Saudi’s back Allawi faction. Iran backs Maliki (current PM) faction.
• Kingmaker seems to be Sadr (actively courted by all) who fought Americans and hid out in Iran. Sadr likes Maliki’s side but hates him because he imprisoned his followers.
• All that oil, everyone own a gun, religious hatred/killings and huge amounts of corruption. Not a good mix.
• July was deadliest month in two years according to Iraq government. But this is still down from 2008 levels.

Reasonable to assume as US withdraws and no or a weak governing majority formed - violence will grow. If the Allawi faction gains power the Iraqi dinar could pop higher.  Obviously great risk here. But where there is great risk there is great gain.

Best place to go for more is Informed Comment blog.(scroll down)

For the US this obviously was an oil war (the peak oil mega trend). It is in the US interest, and that of all the corrupt officials no matter what side they are on, to keep the oil/money flowing. However the hatred is very very deep and religious between Sunni’s & Shia. The other major group – Kurds want the same oil that the Sunni’s claim. This is all very very confusing and I could go on & on.

Bottom Line – Dinar pops on Allawi taking over (most likely winner because Saudi’s & Americans will fix it for him) Then you have a power vacuum with US leaving and all those guns, hatred, and money/oil. Violence already growing and the kingmaker is the most radical Shia religious leader (Sadr) in Iraq. Not a pretty picture.

So if you love great risk buy now on the hope of Allawi forming a government. But I’d sell into Allawi taking power because American’s don’t want to go back.

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the vast majority of trades.

Last big week for earnings reports.

Significant Indexes-

• McClellan Oscillator (MO) fell  to +42.72 over the last few days [+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. A minor price fall ( yesterday’s -38 Dow points) creates a major 24 point move on the MO vs. a major gain (Monday’s +200 Dow points) creating almost the same move higher. When the MO falls 24 points on such a small loss its usually bullish. Again “wiggle room” has opened up for the MO to go higher – High two weeks ago 90 minus 42,.72 = @ 47 points or wiggle room for bulls. NEUTRAL
• US Dollar –  The dollar  fell  -0.43% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar  is in a two month long fall and is divectly above a major support level.(its 200 Day Moving Average – see chart) The fall for stocks = 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 two week rally and is up +17% rally and is at 1977 Monday. Yesterday the BDI fell slightly to 1964. We’d have to break support at 1700 to turn really bearish or go back up above 1977 to turn bullish = Neutral

Reading Tea Leaves-

Investors purposefully chooses the three indexes that have perhaps the most significant impact on the market. They all measure different areas. Here’s the BASICS

The McCellan Oscillator -MO BASICS (see above)

• The MO measures if the market is oversold or overbought.
• It does NOT use volume to caluculate this (see above)
• The BB/HFT traders are making day and swing tardes that almost ignor old technical rules like volume as a confirmation of a market move.

The BDI – BASICS (see above)

• Measure costs to ship goods worldwide.
• Transparent figure – Unlike many economic figures – think shadow banks.
• Without exports/inports our globalized economic structure collapses.
• Lower prices = less goods shipped. Higher prices = more goods shipped & good for stocks.

The Dollar – BASICS (see above)

• The BB/HFT pay close attention to what the dollar does.
• Currency markets dwarf stock markets.
• When the dollar falls it means all those companies that export US goods will make more profits and markets will move higher. (& visa versa)

Analysis –

The US Dollar is in a two month free fall. (see below) . Today’s a big day because the dollar’s price is right on its 200 Day Moving Average. It certainly looks like the 200DMA support level is going to fall and therefore stocks will move higher. If you want to track (or invest) in dollar daily see UUP (Dollar Bullish index) This is where the action is.

Bulls are still in charge of mid term trend and we have more “wiggle room.”

Positions

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

EWZ is the only long position at this time. Will sell 50% at 5% gain or if it returns to the price it was bought for.

Interested in buying more (ETF’s based on major US indexes) on any further dip. Especially a dip in stock prices as the dollar rises like yesterday.

YOUR Stock List

BIDU, AAPL, SNDK, PCLN , F, CREE (8/10), SAM , GMCR, HMIN (8/10), SWKS, RADS (8/5), SKX, VCI, UFS, IMAX, UPS.

Paul R has posted some information on some of these stocks – see comments section of blog. Will get to in depth analysis next week.

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!

The Dynamic Duo – Petraeus & Bush or is that Obama?

The Afghanistan Quicksand

Please tell Tea Party Patriots the three single largest reasons the deficit has grown over the last decade are

• The 2008 meltdown and consequential bailout/stimulus.
• The Bush tax cuts
• The Iraq/Afghanistan war spending and consequences.

General McChrystal yesterday became the fall guy for the failed surge stratagey in Afghanistan. In effect his insubordination was like taking a hit for the military industrial complex. The new chief in Afghanistan is General Petraeus. Petraeus/Bush planned the first troop surge in Afghanistan. Petraeus/Obama surges two and three.  All have failed But American media is dares not state this reality.

Remember when American media was falling all over itself because American caualties were down due to a surge in Iraq? Now that casualties are up with the 3rd Afghan surge you hear almost nothing. Interesting!?

OK Obama looks tougher because McChrystal got canned. Big deal. Has this changed anything? Pehaps - Petraeus and Obama get to dump blame for their failed Afghan policy on McChrystal. The military Industrial complex grows stronger as does the call for more violence (deficit spending) as the solution.

Informed Comment blog by Professor Cole paint a picture of today’s Iraq (where less American’s are dying) as a failed state with @ 4 million refugee’s, a hung government,(elections were last winter) and an ongoing Shia/Sunni civil war killing at least 300 people per month.

Your deficit dollars continued to be poured into both sink holes.

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

Repeat – ” Any analysis of stocks has become an analysis of what the “Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.”

The new homes data for last month was much worse than expected. Worst fall in 4 decades - 33% Everyone expected bad numbers because stimulus was withdrawn, but the news drove the Dow over 100 points near the open. The fact that stocks recovered to slight losses in , of course light volume, is Bullish

Technically the fact that stocks held onto Tuesday’s more significant losses is Bearish

The Fed announcement was nothing new – Interest rates are going to stay between o & o.25% for a long time & Europe has hurt things here.

The dollar started out the day higher and fell. This is what the Black Boxes saw and the reason stocks moved higher throughout the day. Right now, the Black Boxes have focued with lazar like intensity on currency fluctuations.

Significant Indexes

• McClellan Oscillator (MO) fell a smidge to -2.25 [+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.NEUTRAL
• US Dollar –  The dollar fell yesterday -0.30% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The one day the trend = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped. BDI is in free fall from @4200 to  2515 yesterday. This is a huge -39% drop in 5+ weeks.  Often a leading indicator for stocks. Now at/just above a major support level. Rate of fall declined again yesterday. This index often makes slow changes, so diminished decline (@40% less) could be the start of a reversal. However, clearly long term  = Bearish

Positions

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

Have not yet had a chance to Update over last weekend but there are NO positions held at this time

From Yesterday – “DGP is ETF that is double long gold. Investors411 plans to buy the dip in this ETF.”

Big Black Storm Clouds - Every major stock indexes 50 day moving average is heading lower. Right now it would take a pretty massive rally to change that direction. Every “Old School” technical interpretation of this is  Bearish.

However, Currency markets are the dog that’s wagging the stock market tail. If the dollar falls stocks will rise. Black Box traders control what’s happening not “old school” analysis, so for now the long term outlook for US stocks is still NEUTRAL

CAUTION – At some point the Black Boxes are going to stop looking at the economic relativity between Europe and the USA. Unfortunately, when this happens the realization they come to may be the USA is growing weaker too, just not as fast as Europe.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Football lover Karl Marx

Football and Karl Marx

Football is America’s #1 sport. The Superbowl where (economically shattered) New Orleans Saints beat another small market team the powerful Indianapolis Colts, was watched by more viewers here than any other American sporting event.

Football reins supreme because there is parity in the league or socialism. There is a market cap which no team can go over in payment for all combined players, and a draft for new players where the worst teams choose first.  This is a socialist goose that has been laying GOLDEN revenue eggs for the NF. Unlike baseball that’s hurting for revenue and is in decline because of a less balanced revenue program. In Baseball any team outside major media markets has a far less chance at winning. Each stadium gets packed in football, while only a half dozen do in baseball. Karl Marx would clearly be a football fan.

Now owners and players both want to change the system in a rush of unregulated capitalist greed. So if anyone asks you if socialism works in the USA – you say it sure does – its called the National Football League. Socialism Makes Everbody Rich. Why change it?

Elections – Iceland/Iraq

Two major elections took place late last week

• Iceland – Remember Iceland was perhaps the country worst hit in 2008 meltdown because their shadow banks believed in Greed based capitalism. Over 98% of the voters there voted to renegotiate loans of foreign investors who had put their $ in Icelandic banks.  Seems they did not want to pay back billions with their tax dollars.
• Iraq – Over 2 million Iraq refugees voted from Foreign countries. They are too afraid to return. Still the world’s largest refugee crisis. Even with the elections there are many signs that the different religious/ethnic factions have no intentions of compromise. Oh well, neither do the two major parties in the USA.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

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

US equities rallied significantly on Friday. but volume was just a wee bit higher. Long term capital is just NOT flowing into equities in the USA. Unlike the start of the bull market in 2009 when we saw massive amounts of volume. Investors are staying on the sidelines. Volume has been for decades the #1 confirmation factor of a price move. However for the last 6 months its been pretty anemic & useless as a forecasting tool.  Basically this looks technically like we are building a bubble and obviously investors are doubting the rally

The Russell 2000 has already broken out to new highs

Overbought US markets (SPX up 6 days in a row, and up 11 of the last 14 trading days) are all close to new highs. The NASDQ is o.o2 points away from a breakout to a new high.

Last Week’s Fearless Forecast

Investors411 predicted a rally at the week’s start that would get sold into because of an overbought market & the unemployment report – Therefore a “flat week” As stated last Friday - ” The unemployment numbers Friday were as good as it gets for US stocks.” The fact that employment is NOT declining means interest rats will stay low and the Fed will keep flooding the economy with money. From Friday AM -  “Expect a rally.”

Miscalculation about the jobs number (I expected worse than a flat -9.7%) and ignoring looking at the exploding BDI (see below) were the reasons for last week’s miscalculations.

This Weeks Fearless Forecast

The McClellan Oscillator hasn’t been this high (+75.33) since last April. We are also approaching a major resistance level – the January  high of 1150 on the benchmark SPX or S&P 500 (now at 1139).  It seems likely that this level will get challenged.

• Fundamentally it sure looks like the FED has reason NOT to raise interest rates (employment numbers) and that will keep interest rates low – great for stocks.
• The BDI is exploding higher. (see below)
• The Gree debt problem seems to have settled and “will not spread.”
• Any serious attempts at financial regulations seems to be disintegrating.

So fundamentals are moving in one direction against strong technical resistance. Look for a week where at least the NASDQ joins the Russell 2000 and breaks out to a new high, Even though volume is lacking – momentum should make this an up, but volatile week.

Significant Indexes

• McClellan Oscillator jumped significantly to  +75.33 yesterday We are now well above +60 or Overbought territory. StockCharts has a better version of the McClellan chart ($NYMO) LINK. The only other time we saw numbers on the McClellan move higher than this was three times from November to March 2008/2009. The all time high was +121.86 in the last week of last year.
• BDI – The Baltic Dry Index, which measures the cost of world trade (also a good indicator of how China is doing since they are huge exporters/importers) has exploded higher in the last few weeks = Bulls rule
  

Because Investors411 recently changed the Long Term Outlook to Cautiously Bullish - any pullback in the McClellan Oscillator to say +20 would be an opportunity to nibble again.  This market wants to move higher.

Positions

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

Wish Investors411 had more stock positions (only @20% invested in stocks because of overbought technical situation) Will keep selling into any major rally the remainder of the portfolio.  Certainly a breakout over SPX 1150 would be one of those situations.  Right now what to look for is are stocks going to go “elliptical” (continue to move higher at a rapid rate) and blow through last years high.

Would sell more into that rally and buy/nibble more on any drop in McClellan to @ +20.

IMAX – 3D Alice in Wonderland had a HUGE $116 million dollar opening. Avatar’s opening weekend was $55 million.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

2010 Future?

Pakistan, Iran, Iraq, China and Future Wars

The NYT is carrying an ominous front page story on 3 Americans dying in Pakistan . And you thought there were NO US troops in Pakistan.

How the Pakistan media portrays the US – 123 civilians killed & 3 al Qaeda fighters in drone attacks January. US to increase drone attacks by 75% Only 9% of Pakistani’s support these drone attacks. The opposition Muslim party is by far the now the most popular and their mantra is “Go America Go ” – Hint – they are not cheering us on, but telling us to get out.

Combine this with our growing problems in Yemen, Iran & China (see yesterday’s Investors411) and 2010 is shaping up to be another year where animosity between the US and the rest of the world grows. Recently the NYT reported that over 30 other US companies besides Google were hacked in China. The China/US economic relationship is key to the growth of their and the world’s economic well being.

Check out Popeye’s comments on right of blog. I’m certainly not as strongly anti Obama as he is, but he brings up some good points. Especially, the American media failed to mention that NATO refused to send 10,000 more troops to Afghanistan.  Once again another “coalition of the willing” seems to be breaking down.

Perhaps the real reason for the troop escalation in Afghanistan is preparation for an invasion of Iran . We now will have over 100,000 troops on both sides of Iran – In Iraq & Afghanistan. Best blog for educated inside information continues to be Prof.Coles Informed Comment

Bottom Line – Trend - 2010 looks to be a year of growing instability with the US and the rest of the world. This could have a negative impact on stocks.

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 again.  This time volume increased and was just above average. Increased volume is what bulls love to see in a 1% or greater rally. But these figures were not the BIG volume bulls want to see and were there when stocks fell over the last few weeks.  So far we have an oversold bounce . Time will tell if it develops into anything.

The major event of this week will be the Monthly jobs report at the end of the week.

February is historically a BAD month for stocks.

Markets had every reason to tank as Obama economic adviser and legendary Fed Chair Paul Volker spoke in front of the Senate Finance committee about breaking up too big to fail banks. Instead, stocks move higher.  Much needed financial reform of the shadow banks looks DOA to investors.

Significant indexes

• McClellan Index at -21.79 = We’ve pulled way back from -90 or oversold levels two days ago.
• 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 still falling. Yesterday the BDI closed at  2691.= Bearish – especially for China. More on this tomorrow)
  

Mistake – Unfortunately, I was away Thursday through Monday.  It looks like Thursday Friday when the McClellan Oscillator hit -70 then -90 was the time to buy.

Chinese stocks bottomed 5 trading days ago and are once again leading US stocks higher.  There is a disconnect or contradiction with the BDI falling. China, whose economy is both export and import driven, should see an INCREASING BDI when its markets grow.

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

Stock Watch List

NB – I feel much more confident with ETF’s because they reflect global trends than individual stock. Too many things can go wrong with individual stocks. Click on ticker symbol for chart

• SEED – A China related stock. In a buy the dip position at 50 day moving average
  
• AAPL - Apple’s latest product seems to be a bit of a dud. Former leader now under performing.
  
• HMIN - Failed breakout . China play. Will recover when  China does.  Will drop from list soon
  
• CAAS – Broke down though 50 day, but has rallied last two days in STRONG volume. Tempting
  
• PCLN – Fell below 50 day moving average. Had a good pop in price and volume on Monday. Tempting
  
• F – Now less over extended. Too much recent down day volume. Tempting
• DRWI - Big exporter to China -  Was way too overextended to buy, and now sitting on 50 day MA support level  No big volume as stock dropped= good sign. Buy the dip .
  
• ENOC – New – Reduces costs for utilities – No big volume behind its recent fall. Potential buy the dip .
• ATHN – New - Software reduces costs for health care - Broke its longer term bullish trend in big  volume – Will drop from list soon.
  
• IMAX – Great long term chart – falling back to its 50 day moving average. Outperforming overall market Still a buy the dip opportunity . Investors411 has a 2% of portfolio position in this stock

IMAX still rules. DRWI, SEED & ENOC seem to be the best of the rest. Would open position in any of these on an overall stock market dip.

Looking for a couple new suggestions to YOUR recommended list.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Paul Volker

Shadow Banks – Shake & Break?

The WSJ is reporting that former Fed chair Paul Volker (like Elizabeth Warren one of the good guys/gals in the Obama administration) has finally got Obama’s attention. Perhaps it was the loss of the Senate seat in MA that helped. “Obama on Thursday is expected to propose new limits on the size and risk taken by the country’s biggest banks.”

This should have happened almost a year ago, and we will have to wait to see if this is just political spin or if Obama is serious. Economist Simon Johnson asks all the right questions

How to know if something serious is going to happen – shadow banks stocks will fall.

Author Simon Johnson is the former Chief Economist of the International Monetary Fund, an MIT Professor and author of a must read - The Quiet Coup (referenced in earlier Investors411) This article is about history repeating itself. Financial oligarchies have crushed many developing countries and arguable the IMF helped break those oligarchy. He believes “recovery will fail unless we break the financial oligarchy that is blocking essential reform. “

Remember Iraq

A withdrawal was another one of Obama’s “change we can believe in promises.” Virtually nothing’s happened. A poll in the distinguished Foreign Policy magazine states that Arab publics say that ending the US military presence in Iraq is the single most important thing the US could do to improve its relations with that region.

“What they [Arabs] saw as US atrocities in Iraq motivated many of the terrorists active after 2003″

Bottom Line – You want to reduce the number of people threatening terrorist attacks on the USA – Keep your promise, stop nation building and get out of IRAQ. What ever happened to elections that were supposed to happen there?

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.

Stocks staged a major fall (below 1%) in increased, above average volume. Volume, our #1 confirmation factor did again confirm the move lower. 3 of the last six trading days have seen significant falls in increased above average volume. While the numbers on the downside could have been larger, this is cause for concern.  It shows institutional investors leaving or selling stocks and stocks go no where without the big boys and girls.

Markets did recover about 30%+ of the losses at the end of the day.

• McClellan Index at -17.72 = A little bit oversold.  There’s a long way to go till we reach @-60 or oversold or @ +60 or overbought. Notice a clear trend of lower highs and lower lows on chart. = Bearish pattern

IBM & INTC have both had better than expected earnings results and are down (not much – a few %) This is not a good sign for stocks, especially in technology.  It looks like you’ll need a grand slam earnings report to move higher

US Stocks have been flip flopping between up and down days, but volume has been with the bears.

China , who has led the world out of the recession looks to be in a pull back or correction. Down about 10+% . China could correct some more. Odds are US will follow China and some sort of correction is starting in USA. Not logical to see the country leading the world out of recession in a pull back and the US not follow.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

ETF Watch List

Ideally, you’d like to McClellan index below zero (the further the better) and these all would be better buys. The closer to -60 the more you think about buying and the closer to +60 the more you think about selling.

Strategy – going to hold tight till conditions reach overbought or oversold.

Charts set to 2 years – click on ticker symbols.

• EWZ – Brazil (16% of portfolio) – Reaching a critical inflection point. This chart is either near a low point in forming a base or after an outstanding run of over 100% about to take a hit. Perhaps, like China its time to lighten up.
• MOO – Agriculture (10% of portfolio) – Latest buy had a strong upside run, pulled back a bit and is moving sideways.
• FXI – China (Reduced to 6% of portfolio) – Over the last month or two we’ve been taking profits on FXI. (Down from 24% of portfolio to 6% ) Lots of volume when stock moves down and now FXI has established three lower highs and lower lows over the last three months.
• see Positions section of blog for some considered ETF alternatives

Again – Waiting for McClellan Oscillator to reach oversold or overbought positions before making a major move.

Investors411 opened a small positions in ENOC (2% of portfolio) Bought at 35.95. Of all the stocks on our watch list this one was holding its own on a big down day.  More Later.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Check out the comments from Bob, Monitor, Doggies Mom, D. & Popeye on right side of blog. Are they right?

The Green Revolution

The Iranian Green Revolution has again erupted into massive demonstrations. Today’s lead editorial at NYT Iran’s War on Its People LINK

One video shows protesters stopping a lynching LINK More pro reform video’s of demonstration LINK The BBC (almost always superior to American media) has photos of clashes LINK & Andrew Sullivan (Atlantic Magazine) again outstanding in coverage LINK Al Jazeera (Arab media’s largest outlet) also has lots of coverage LINK Warning some of these pictures and videos are violent

About the worst thing that could happen is if Israel or the USA launched some sort of attack. We didn’t when the satellites of the old Soviet empire crumbled and we should not now. It would create martyrs in Iran and almost all those demonstrating are asking us to stay out. To help - the best YOU can do is spread the news/videos.

The irony here is in Iraq we have put in power the same kind of religious theocracy. Maliki, our supposed puppet head of Iraq, was the first (government/group) along with Hamas and Hezbollah to recognize Ahmadinejad’s fraudulent presidential election. The two major religious leaders in Iraq Sard and Sistani have never even spoken to any Americans.

Yemen & Saudi Arabia

Al Qaeda of Saudi Arabia has claimed responsibility and Yemen was where the attempted bomber of the Christmas plane flight was trained. We seem to be already using drone planes to attack suspected bases in Yemen. These two groups seemed to have merged. For more see LINK

Let’s put together an incomplete list of where these (Sunni as opposed to Shia) al Quaeda terrorists are from or trained – The USA, Saudi Arabia, England, Yemen, Iraq, France, Germany, Syria, Indonesia, Spain,Nigeria, Egypt and the list goes on and on and on and on and grows and grows and grows and grows.

Your Stocks Picks

Perhaps you want to put some of these in your holiday portfolio stockings. I do NOT recommend any but can give you a little fundamental and technical analysis . That said, some many look like pretty good buys. Remember this analysis barely skims the surface and professional investors have a big advantage because they have banks of computers and armies of people going over each investment they make. You can see the Chart by clicking on the ticker symbol. The following are stocks that got the most recommendations I’ve changed charts to 1 year charts to get a long term outlook

• BIDU – Baidu Inc. China’s version of Google. After a HUGE 300% rally tis year it looks technically like this stock is leveling off. The last 3 months it has tried to break out above 350 and failed.  The BDI  which is often used for a proxie on China has fallen for 6 weeks. I’d wait for a turn in the BDI and/or a BIDU breakout over the 450 level before investing.
  
• AAPL – Apple Computer – A company that everyone knows. Along with AMZN & GOOG, AAPL has led tech stocks higher.  Apple has just broken out to a new high. There has been increased volume (a good sign)supporting AAPL for the last few months. Right now US markets & AAPL are nearing overbought levels. Right now this limits upside movement. Still tempting and a buy the dip stock.
  
• AMZN – Amazon – Internet retail giant.  Looks like Christmas season for this giant is going to be better than expected. Investors411 has bought and sold this stock. There was a good buy the dip opportunity a week+ back when AMZN dipped back to its 50 day moving average. Like AAPL a lot of increased volume behind AMZN in the last few months – good sign. If markets move higher these last two will lead. A buy the dip stock.

That’s it – Use the calender at the top of the page and go over all YOUR stock choices made over the last week+.  Some of them are great “buy the dip opportunities”

Next  Stock forecast for 2010

KISS & Stocks

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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

Technicals, Fundamentals & Analysis

Another low volume day. Stocks have been up 6 days in a row on extremely low volume.

Holiday sales estimated to be up 3.6%. This is a positive surprise LINK = Bullish fundamental

McClellan Oscillator at +48.42 (very close to overbought – see below) = Bearish technical

See changes in positions below.

FEARLESS FORECAST – same as before “Up to flat week” – Historically this is an up period (Santa Clause rally) Even though we are entering overbought territory – hope of a positive employment report for Dec. & historical bullish factors should keep stocks on the up.

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

——–

Significant forecasting tools/Indexes for stock markets

The Dollar & the BDI have been temporarily eliminated. Right now how overbought we become is taking on more significance.

——-

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

The index closed at +48.42 This is very close to an  Overbought Position. = Time to start lighten up on positions. This does not mean the markets won’t move higher. I’ve set up a yearly chart of the $NYMO LINK You’ll notice that the $NYMO went all the way up to +100 in the big March rally. So + 60 is NOT an automatic sell of everything, but a signal to lighten up. See buys/sells below.

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

Positions

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

These are positions I actually own

SELLING & BUYING

Sold (6% of portfolio)  FXI at 42.35. FXI now 12% of portfolio – Profit +36% Will add to the this key position when BDI turns positive for over a week and/or the $NYMO is closer to oversold positions

Very tight stop on 1/2 the position of UWM (ETF that does 2X what small cap sacks do) The other stop at 1/2 is at the price UWM was bought.  Will sell 1/2 into any rally

Now 48% invested in stocks. If you count one mutual fund I’ve owned for 5 years (BRSIX ) I’m 54% invested in stocks. Click on POSITIONS section at top of blog for more.

When/If McClellan Index gets back above +60 will sell some more.

Long Term Outlook = CAUTIOUSLY BULLISH

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

——–

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

——-

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!

More than Just Wall Street Horrors

Photo from SeekingAlpha.com

Wall Street

Let’s call it the Halloween Horrors (See analysis below under stocks)

Mideast

Afghanistan – The run off election process in Afghanistan has broken. The challenger Abdulla Abdulla has withdrawn from the process.  The UN, as well as most of the world, determined that the first election was corrupt. The current president refused to even change the head of the Afghan Election Commission who was in charge of the corrupted election so the Abdullah Abdullah resignation is understandable.  This leaves the obviously corrupt Karzi as the only candidate and the future partner of the USA.  Story from BBC LINK

Latest news on tube is that there will be no runoff election .

Pakistan The UN (development agencies) is pulling out of Tribal areas. Story from Pakistan’s Dawn newspaper LINK Hillary Clinton’s recent trip to Afghanistan reviewed by Pakistani newspapers – Reviews basically NOT favorable – “White Goddess Should Leave Pakistan ” LINK Deterioration in Pakistan continues and another massive terrorist bombing LINK

Turkey/Iran – This may come as a shocker, but Turkey, who is seeking NATO membership, seems to be taking a pro Iran stand when it comes to nuclear development. Al Jazeera story (Remember AJ has no reason to have a pro Iran bias – AJ is Arab & pro Sunni and Iran is Persians & pro Shia) LINK

Bottom Line – Nuclear weapons in the hands of terrorist is something no one wants.  But the more we try to nation build the worse it gets. Let’s accept noble prize winner Joe Stiglets estimate that so far our nation building has/will end up costing us almost $3 trillion.

• How much is it going to cost to turn tribal Afghanistan from an opium (heroin #1 economic product) to a viable state?
  
• How much is it going to cost us to maintain Iraq? Remember the Iraq government along with Hezbollah and Hamas was the first to recognize Ahmadinejad. The two main Shia religious leaders – Sistani, refuses to even speak with Americans and Sadr lives in Iran.
• How much is Pakistan – almost 3 times larger than Iraq & Afghanistan combined going to cost?
  

Crossroads moment for Obama – Adding more troops and nation building in the middle of the worst recession since the Great Depression. Can we afford the trillions it will cost? Wouldn’t it be better to economically help Pakistan more right now than have to nation build their later.

Jobs, Jobs, Jobs

The mantra for Investors411 is that job creation is going to be even slower this time than after any other recession. This recession is bigger and badder.  The new jobs from American companies are going to first be in countries with growing middle classes like India, China Brazil and smaller countries – Cheaper labor and you are closer to a growing market.

Nobel Prize winning economist Paul Krugman in today’s NYT offers a short term solution LINK

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

Volume the #1 historical confirmation factor is telling everyone - GET THE HELL OUT. However, the dollar still rules .

The Long Term Long Term Outlook is back to NEUTRAL As mentioned last Wednesday – When the Long Term Outlook is changed we often go back and forth for a while as stocks move above or below key support levels

A falling dollar helped stocks move higher under Bush and its doing the same under Obama . (Check out weekly stock charts of S&P 500 & The Dollar for last 5 years) This inverse relationship between stocks and the dollar was quite different before Bush. (more on this later)

Lots of major economic events this week – The Fed meets and October’s unemployment # comes out Thursday are the big events.

FEARLESS FORECAST -  I’ve never seen volume be so huge on the downside days and the markets not continue to fall.  However, right now the dollar rules. It looks like its resistance level for the dollar (see below) will hold. Still downside risk is growing.

Investors411 has taken profits on its (20% of portfolio) position in the SPX and short term TRADERS might want to take a little of some other positions off the table (FIX & EWZ) in a rally. – There is NOTHING wrong fundamentally with these ETF’s.  In fact, the BDI is bullish,

Fundamentally, long term I see the dollar falling and technically it looks as if the resistance level will hold. This is good for stocks in the short term – next  month or two.

I’d rather have some more cash to buy any possible major sell off.

Long term – Bearish on the US economically. The mess in the Mideast could deteriorate rapidly and the long term cost are astronomical, especially considering the deficit & the recession. We still have NOT changed the same unregulated “free market” system that caused the financial meltdown. Agree with Krugman on stimulus/unemployment. Think things will hold up till the dollar reaches the low it had under Bush or the Mideast erupts.

——–

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 @ 29% 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 +90 points Friday and closed at 3103. . A higher high price on its chart pattern has been confirmed The BDI has rallied almost 900 points since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict the daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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 SIGNIFICANT +0.52% yesterday. The dollar closed at $76.36 .  

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.74 this AM . So dollar is 0.40% 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

Friday – Going to sell some SPX-reasons – Free cash for other investments & take profits

Long term investors should realize that positions like EWZ & FXI are going to have more dramatic moves than American stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!