We’ve Done it again.

For the Fourth time in a row Investors411′ Your Stock List has outperformed its benchmark – the S&P 500 LINK here (scroll down)

We’re looking for a few good stocks from all of you. Paul & I will evaluate them and come up with  YOUR Stock List #5 - So email to me or post in the comment section YOUR choices for YSL #5

The Borgias

To many the right wing represents a marriage of an uber wealthy banking cartel and religion. This theme can be seen in both Yankee Bob’s editorial and the Greek bailout. It sure looks like Yankee Bob got passionate when he shifted to all capitals.

Lets remember how massively unpopular the Vietnam War became. Now the revisionists claim that we lost because we lacked the will to win. Same as Iraq and Afghanistan. They completely ignore how unpopular the war was and that THERE WAS NO STRATEGIC INTEREST FOR THE US IN VIETNAM BUT WE STILL TRIED TO BOMB THEM INTO THE STONE AGE AND POISON THEIR LAND. NOW WE TRADE WITH THEM.

WE HAVE NO STRATEGIC INTEREST IN THE CURRENT WARS OTHER THEN TO MAINTAIN THE FLOW OF OIL AND OIL PROFITS FOR MULTINATIONAL OIL COMPANIES. WE DON’T HAVE TO BOMB THE AFGHANS BACK TO THE STONE AGE BECAUSE THEY ARE STILL THERE, BUT WE USE OUR SMART BOMBS ON THEM ANYWAY  TO MAKE THEIR BIG PILES OF ROCK INTO SMALLER PILES OF ROCK.

WHY ARE WE NOT IN THE STREETS OVER  ……STOPPING THE SENSELESS WARS OF AGGRESSION,LETTING BP DESTROY THE GULF AND PEOPLE’S LIVES, AND NOT DOING MUCH ABOUT IT?

THE LACK OF WALL STREET REFORM,THE LACK OF A RESPONSE TO HELP THE HOUSING MARKET AND THE FORECLOSURES, THE TOTAL LACK OF JUSTICE AND FAIRNESS IN OUR TAX SYSTEM,THE STEADY EROSION OF OUR CONSTITUTIONAL RIGHTS, THE LACK OF A RESPONSE TO THE WORLD’S CLIMATE CHANGE ,THE WAR BEING WAGED AGAINST THE MIDDLE CLASS THRU DESTROYING THE UNIONS AND OUR SUCCESSFUL GOVERNMENT RUN PROGRAMS,THE DISGRACEFUL STATE OF OUR HEALTH CARE SYSTEM,THE STAGNATION OF OUR WAGES AND HOW CAN WE ALLOW THIS NEW WAR AGAINST TEACHERS,PUBLIC SERVANTS,POLICE AND FIREMAN  BE HAPPENING?

THE ECONOMIC CRISES WE ARE IN IS FROM DEFICIT SPENDING WITH NOTHING TO SHOW FOR IT, AND THE LACK OF TAX FAIRNESS. THE WEALTHY AND THEIR MINIONS HAVE CAUSED IT, NOT OUR PUBLIC SERVANTS AND GOVERNMENT SOCIAL PROGRAMS.   YET THE RICH DEMAND EVEN MORE BLOOD FROM A STONE. WHERE IS THE CHRISTIAN RIGHT ? SURELY THIS GOES AGAINST ANYTHING JESUS PREACHED. IF JESUS CAME BACK TODAY THE RIGHT WOULD TOTALLY IGNORE HIM.

OBAMA AND THE DEMS ARE NOT HELPING! THE GOP IS TOTALLY RADICALIZED! IT’S TOO LATE FOR A THIRD PARTY1 THE ONLY SOLUTION IS TO HIT THE STREETS. REMEMBER! THEY STILL NEED OUR VOTES EVEN IF THEY DON’T NEED US !!!!!!

[Yankee Bob is an old friend and jeweler out of North Carolina]

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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	+1.21	Down
NASDQ	+1.53	Down
S&P 500	+1.29	Down
Russell 2000	+1.51	-

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

• One interesting aspect for those interested in the mechanics and short term trades is the vast majority of interday volume happens not at the major exchanges but in dark pools Here’s the video from Bloomberg

Pope/Banking Cartel Leader/actor – Jeremy Irons

From Showtime Series The Borgia’s

• Obviously the majority who invest in the markets feel the banks are getting a killer good deal over Greece and the people of Greece are getting the shaft. Remember the vast majority of market traders are HFT’s and/or major bank trading desks.

Its what they think that moves markets.

• Oher views on Greece outside the CNBC and mainsteam American media from Arianna Huffington The money quote

“But here’s the bigger issue: Can a truly democratic movement break the stranglehold of corrupt elites and powerful anti-democratic institutional forces that have come to characterize not just the politics of Greece, but most Western democracies”

• The McClellan Oscillator (MO) chart rose to +38.95 (above +30 somewhat overbought , above +60 overbought, above +90 OMG overbought) Repeat - The MO has been unable to get above the +30 to +50 range for 6 months. Somewhat overbought = Bearish

• $USD The Dollar fell  significantly -0.41% yesterday. (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) The trend since May 1 is bullish for dollar and bearish for stocks. Most of this movement is based on Greece. A two day fall from highs has given stocks a big boost. Short term tend for stocks now = Neutral

• Reading The Tea Leaves - Shorter term – Repeat- “Our MO chart has been very accurate in predicting short term tops and bottoms. So tea leaves say wait for an oversold or overbought levels to be reached before acting. The whole roller coaster ride of the last two weeks is a big spring winding.” An MO of +39 gives short term players an opportunity to short (or use ETF’s that short the market) any rally. The higher the MO goes the better your chances of a winning trade.

• The algorithms that the HFT’s use have a pattern of selling when the MO gets this high. (see chart of MO above)

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock. Bought on a dip well over a month ago. Stock was up over +5%. The promised big dip (see earlier posts and comment section of blog) hit yesterday and NLY dipped -4.28% Call activity was big early this week as investors want to cash in on next dividend payout. Translation – This kind of drop has happened many times for NLY and other ultra high dividend stocks. (@13.5% dividend)

It’s the time to buy the dip if you feel NLY, as it has for many quarters, will hold onto the dividend. General market conditions could also hurt stock.

Gold /Silver Trade - These commodities usually move the opposite direction of the dollar. Dollar is going up (mostly because European outlook is bleak) so gold/silver is going down.

Shorting Banks – one major reason major US banks are underperforming stocks is that the Fed will on June 30th stop purchasing treasuries from them. This  cash cow and mortgage problems have have led this sector down. There are some signs (three weeks of flat trading)  that a short term bottom has been reached (see link above)

Repeat longer Strategy remains - Waiting for MO to hit overbought levels before acting. We started into overbought territory and will buy some SDS or TZA into rally.

• Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative).
• Sell long positions into any rally -

Disclosure - I own NLY &  a group of dividend stocks which I have used some short ETF’s to protect. – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies and/or Euro defaults are resolved.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

The NEUTRAL in the forecast will vanish If/when we break the recent lows of the S&P 500 chart

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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Jesus’ Colt 45

Louisiana Governor Republican Bobby Jindal just signed into law that it was legal to carry guns into church. My how religion has changed in the USA.

Deficits

What to do about the deficit? The Center for Economic Progress and Research using non partisan Congressional Budget Office data has come up with some concepts and their impact on the deficit. Thanks to Sherwehe for the site recommendation and Jsovjani for the below insightful  comments on this data

“Very interesting; fin. spec tax raises the most. My question is impact on jobs. However, things I want, like means testing ss and medicare are not included. Gas tax interesting, but I do not trust gov’t to use it for deficit reduction. History has not proven that they would keep their promises. I think trust in gov’t  is major issue to reform. Till then,  spend less (personally) and maybe buy gold. I am not hopeful in healing US till maybe a real depression and massive public riots. Does sound very negative, doesn’t it. I’m very concerned.”

Check out the site and you can see dozens of different possibilities

Jobs Now…Deficits Soon

Like Andy Grove, Matt Miller in the WaPo has some definitive solutions. Miller has a relatively coherent vision but admittedly it would be very hard to accomplish what he calls for politically. Here’s his main point.

That means cutting payroll and corporate taxes now — and offsetting this with phased-in tax hikes on dirty energy and consumption, to take effect only once jobs and growth are back on track.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+2.82%	up
NASDQ	+3.13%	flat
S&P 500	+3.13%	up
Russell 2000	+3.67%	-

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

Technicals, Fundamentals & Analysis

Mantra for week - Fundamentals rule. Old fashion fundamental earnings analysis dominates as earnings season kicks off big time next week. ”Double dip recession” has become an investment mantra starting in Europe and now echos worldwide.

Old Wall Street Axiom - The market can remain irrational longer than you can remain solvent

Yesterday stocks staged a mega rally on virtually no news and on well below (only slightly increased) average volume. Irrational, to anyone who believes fundamentals matter. The Black Boxes (giant institutions that speed trade using algorithms & make up to 80% of the trades) made these seemingly irrational trades yesterday.

Yes, the US markets were oversold and due for the predictable rebound (see Tuesday’s Investors TF&A section) But what happens is Black Boxes magnify what should have been a more mellow rally. Almost no investors returned from the sidelines or you would have seen volume spike higher. That left the Black Boxes on their own.

What’s this all means – We have to adapt to what’s happening & adjust how we make both long term investments and short term trades. In discussing Black Box trades on CNBC (the financial channel) they said that 99 stocks yesterday made up 50.1% of all trades. Also Black Box institutions were using Sector and Index ETF’s as one of their primary trades.

• Everything happens at hyper speed
• Everything is more technically based
• Moves are exaggerated both up and down
• Lots of the old rules that governed the markets are not functioning because of the hyper speed.

In the long run fundamentals are going to have their say. The BDI cannot keep falling 4 & 5% each day without consequences. The cost of shipping goods falling 52% worldwide in almost 7 weeks should be sending off at least some alarms. = Bearish

Earnings Season starts next week.

Perhaps the most important leading sector was financial stocks yesterday XLF (ETF for financials) up +4.33%. Mega shadow banks JPM up +5.01% & BAC +4.62% Perhaps a message on how weak financial reform is in the USA.

Significant Indexes -

• McClellan Oscillator (MO) rose a very significantly to -1.45 [+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..= Now squarely in the middle or NEUTRAL
• US Dollar –  The dollar fell -0.32% Friday [Anything over +/- @0.50 is significant.]  Right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up to 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. For some reason they have changed and the dollar is now = Less Relevant
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  2018 yesterday. This is a huge -52% drop in 7 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a massive and increased -5.13% yesterday. Rate of decline increased as it broke through its support level. = BEARISH

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own - Updated over weekends – Investors411 holds one position at this time. (see below)

Short Term Traders – I opened a 2% of portfolio position in SDS near the close yesterday. SDS is an ETF that double shorts the S&P 500. Price 35.40.  The enormous size of the rally made me hesitate.  A better entry would be in a rally today.

Investors – Keep powder dry and wait for a clear signal from MO. Perhaps we should have gone long when the MO got not quite to -60 (oversold territory), but -54. There are no absolutes in defining oversold. This market is far too wild and Black Box dominated. Better safe than sorry.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Jesus was A Liberal

The Dalai Lama & Scotty

Christianity in America is often portrayed as conservative  -  flamboyant right wing evangelists, the conservative aura of the Catholic church, and, the often loud and sometimes violent abortion issue. Well, there are 10′s of millions of Americans who spiritually believe in something far less dogmatic. One such leader of these Americans is the Rev . Scotty McLennan

Back in the 60′s during the civil rights movement and later Vietnam we were all influenced by a great Christian leader from Yale - Rev. Sloane Coffin . (for those of you too young to  remember you can read about him here ) Scotty, was one of those who not only took this activist preacher’s message  to heart, he followed in his footsteps.  Scotty became University Chaplain at Tuffs and is now Dean of Religious Life at Stanford.

His latest book entitled Jesus Was a Liberal : Reclaiming Chistianity for All has just been published. - here You can follow Scotty at his own blog here

For my kids who know Scotty & Ellen well – your copy of  Jesus was a Liberal is in the mail. For those of you who think Scotty’s picture vaguely familiar – The Character of Reverend Scot in the comic strip "Doonsbury" is fashioned after him.

Iran Day 12



• Same recommended sources in past updates continue to provide excellent information. Demonstrations are diminishing and military presence growing. Protestors have switched to strikes and Thursday as a National day of mourning. Foreign media continue to be arrested. Neda has become the symbol of the movement – from major issue in Obama’s press conference (opening remarks here ) to Iranian government saying video was fabricated.
  
• Popeye in the comment section brings up the behind the scenes story of the power struggle in Iran over whose going to replace the "Supreme Leader." Steve Clemons blog has another yet similar point of view on the power struggle behind the scenes here and his daily blog offers more analysis here

Obama Debate Rages on

The are you happy with Obama ? debate continues to rage in the comments section. See posts by Abby and Popeye

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.19%	down
NASDQ	-0.07 %	down
S&P500	+0.23%	down
Russell2000	-0.62 %	-

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Technicals & Fundamentals

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool - volume – gives no indication of which way prices will flow. But there has been some ominous changes in the secondary forecasting indictors See below.

The World Bank’s downward revision of expected GDP for the planet is having an effect. (see yesterday’s update)  I can’t remember stocks falling so much directly in front of a Fed meeting. Usually everybody waits till the Fed announcement after 2:15 EST today to make their move.  Sure looks like bears are gathering to mount a charge

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD – The Dollar fell-1.16% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. The dollar falling a very significant-1.16% and stocks ending up only flat (the Dow should have rose at least 100 points) is a very bearish sign.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and now the BDI fell Friday and the rate of decline increased Monday and significantly increased Tuesday. Another very bearish sign

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Reading the Tea Leaves

This market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. Look for the areas around 875 and 850 on the benchmark S&P 500 as support levels.  So far because of the lack of heavy volume this looks like an over bought correction and not a total meltdown that tests the old lows.

Our key secondary ($USD & BDI) indicators seem to indicate momentum will pickup on the downside.

This is about as close as I can get to bringing out the old Lost in Space robot who screamed Danger Will Robinson,Danger Danger.

The only missing piece is  H igh Volume confirming a downside move. Therefore, NO warning, but keep an eye on markets.

Yesterday Investors411 recommended buying some downside protection on any minor rally. A 5%+ position in -SDS – An ETF that is ultra short’s the S&P 500

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING