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Global Roundup
- UK - Slowest recovery in 180 years (Financial Times headline) The right wing in the USA desperately wants us to take the same measures the UK has.
- Syria – The dictator continues to massacre pro democracy advocates – 41 yesterday. Latest
- Yemen - Civil war intensifies, Part of Arab spring/democracy movement Latest
- Best source for Arab Spring Revolutions. LINK
- US – Effective Corporate Tax rate Lowest for US as a % of GDP among 30 industrialized nations in survey NYT LINK Wall Street’s propaganda machine cries about taxes, but the reality is they are among the lowest in the world.
- World News – Global Commission – “Global war on Drugs has Failed.” BBC LINK This is not really news, just a statement of the obvious. We should legalize/tax marijuana sales.
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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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| Index | Percentage | Volume |
|---|---|---|
| Dow | -2.22% | Down |
| NASDQ | -2.33% | Up |
| S&P 500 | -2.28% | Up |
| Russell 2000 | -2.37% | - |
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Technicals, Fundamentals & Analysis
- Bad economic news finally has a negative impact on stocks. Since the announcement of QE #2 nothing from revolutions to nuclear meltdowns could put a serious dent in stock prices. Yesterday this news may have mattered more than other events, because of the proximity of the “announced” June 30th end of Fed liquidity (QE #2)
- On May 20th Investors411 downgraded it outlook to NEUTRAL in anticipation of the June 30th ending of QE #2.
- Most significant event yesterday was a speech by Fed Vice Chair Janet Yelin that basically said to stock holders The Fed no longer has your back One of the money quotes -”…although corresponding measures for small-cap equities (not shown) appear somewhat elevated.” It sure looks like the Fed vice chair just threw small cap/growth stocks under the bus.
- The major question of the summer – How far do markets have to fall, before the Fed jumps back in with liquidity and says – we have your back?
- Today is a confirmation day of yesterday’s meltdown – Same rules as always apply - Basically – if bears hold onto or ingrease losses the rule. If bull can take over 1/2 the losses back – they rule.
Reading The Tea Leaves
- The Good news – 10 year treasuries have fallen under 3% on bad economic news. = Few want bonds at such extremely low rates so this is a positive for potential stock buyers that seek better returns.
- The Bad news – Negative global economic news from Greece through the USA to Japan abounds.
- The Ugly news – How far do stocks have to fall before the Fed says – “we have your back” with more managed/manipulated liquidity? 5%, 10%, 20%, more? This is Impossible to predict, but as losses grow pressure will build for the Fed to jump back in.
Bottom Line - All this will gets played out this summer.
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Shorter Term Forecasting Indexes
There are hundreds of forecasting tools, – These two tools have worked
When they stop working Investors411 will use other Indexes
- The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose yesterday +0.33%. This halted a A five day decline. We’re at an inflection point and today’s move will give a clearer picture of momentum. Still trading below 50 DMA . For US Stocks = NEUTRAL/bearish
- McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] From Yesterday “Very reasonable to assume rally will soon become overbought.” Obviously stocks were overbought and this added to yesterday’s meltdown. MO fell dramatically to -1.72 yesterday. This is almost the exact middle of the range so stocks are not oversold or overbought. Lots of wiggle room up or down, but after a real bad meltdown momentum is with the bears. However overall position is now = NEUTRAL
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Paul’s Corner
ARRRRRGGGGHHHHHH!!!!!
Wow what a sell off yesterday! Was this an honest reaction to a dismal employment report (A private corporation report) Greece or just en excuse for profit taking? It looks like a small bounce at the open, which is usually expected after a big drop.
Looking at the market we find the Treasuries, Gold, Silver and the Commodities at the top of the list yesterday above the indexes, DOW, S&P, Naz 100, etc. As Dave Garlardi reminded us last evening on the HGSI Webinar when we find these indexes at the top you don’t want to be in the market. Is this merely a buy the dip opportunity?
A good search on a down day is for the high demand stocks, 4 of the top 5 were “medical/pharma” groups. 2nd on the list was the “Internet services” group.
Internet-Services (7.00%, 7 securities)
- Cogent Communications Group (CCOI)
- IAC/InterActiveCorp (IACI)
- NetEase.com Inc. (NTES)
- Rediff.com India Ltd. (REDF)
- Sify Technologies Limited (SIFY)
- SINA Corporation (SINA)
- VirnetX Holding Corp (VHC)
It looks like VHC carried the group (in fact it was the top high demand stock yesterday), here is why:
All of the stocks on Your Stock List went down as expected. Most hit support. JNPR down almost 10% from “Cautious Outlook” remarks from the CEO. Since JNPR has been in a constant downward slide for 3 months now I doubt this is a buy the dip opportunity.
The usual warnings of capital preservation come out after days like yesterday, this sounds like a good idea IMO.
So what’s the market going to do today? Let’s load up Quote Tracker………here we go folks another day of fun! (fun?)
Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions.
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Positions
SLV/AGQ (very roughly 2x silver) This is a high beta commodity, full of speculators and therefore will fall far faster than stocks –
Mea culpa – Should have taken profits on 1/2 yesterday. Will do so today – hopefully in a rally.
REMX – (Rare Earth metals) Investors has a 1/2 position in this ETF
NLY - Annaly Capital Management – An ultra high dividend stock.
YOUR Stock List – These are growth stocks that have higher risk.
Strategy - Until we get a sign from the Fed that they “have our back” buying the dip is out and selling into rallies is in. (unless you can find a superior stock – see Paul’ and other bloggers in comment section of blog.)
Investors411 will be adding ETF’s that short the market in rallies. See comments section of blog for when this happens. See POSITION’s section of blog for some alternatives.
The sky is NOT falling. But the bullish fundamentals that have kept the bull market growing since November are changing. This brings uncertainty/fear and investors sell under these conditions.
Disclosure - I own both SLV & REMX
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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday
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Longer Term Outlook
NEUTRAL
AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING
