India

Jobs, Jobs, Jobs

India, India, India

Globalization is the Mega Trend and its reality behind jobs growth exploding higher in India and drifting lower in The USA. Our GDP just came in revised significantly down Friday to 1.6% for the last quarter. India’s GDP just came in at a phenomenal  of 8.8%. “Manufacturing” was cited as the #1 growth area.

Cash Rich & Jobs Poor

According to Talking Heads on CNBC, The financial channel, American companies are sitting on $1,240,000,000,000 of cash. Each Talking head , sometimes breathlessly, asks CEO’s what are you going to do with all that cash , buy back stock or buy another company?

What about investing some of that hundreds of billions on American workers? Nope. CNBC doesn’t even mention them because all the jobs go to China & India and/or another emerging markets where the cost of  labor was @ 1/20th that of the USA in 2008.

New Jersey – Whose Lying?

This could be about your typical corrupt politician like (D) Maxine Waters and Charles Rangle (“allegedly”) feathering  their own nests. But that’s typical.

In New Jersey it seems that the newly elected governor (R) Chris Christie or his appointed, now fired Education Commissioner Bret Schundler  have lost out on “$400,000,000  in federal money” for education in their state. More here

Whose lying? From story it looks like Christie. But the real losers are the teachers & children of New Jersey.

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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.”

Stop for a moment and think how radically altered stock trading has become. Example – The HFT’s and their super computers often find an imbalance in trades between the # of shorts on stocks in an index and the actual price of an ETF that shorts the same index perhaps by a factor of 2. They execute a trade and get out a few seconds minutes later when the short ETF comes back into balance. They do this across currency markets, commodities and just about anything.

In the long run fundamentals are going to matter, but the old Wall Street saying is now more true than ever before -” The market can remain irrational longer than you can stay solvent.” The reason for this being even truer now is the BB/HFT traders.

They have an enormous advantage – so why trade or invest? In the longer term fundamentals are going to win out. Realities like – Emerging markets are growing faster than the USA or stocks become so oversold/overbought they run out of buyers/sellers does matter.

Unfortunately, with the BB/HFT’s speed everything moves a whole lot faster than it used to and windows to invest in with some hope of a decent longer term reward happen a half dozen times a year if you only go long & perhaps a dozen times a year if you also go short.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar rose +0.30%. and closed above its 50DMA. For Stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Again rose a marginal +o.33%. This gives some stability to the 5 week long rally after two down days in a row. 5 week rally trend is still in place, but not entirely back on track = 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 -42.64. Our #1 Buy sell Indicator again approaching oversold or buy. But still = NEUTRAL

Reading Tea Leaves

Investors411 has beat the drums for the concept that stocks,the dollar & commodities are all moving in greater harmony because of the BB/HFT’s 80% domination of stocks and their involvement in currency and commodity exchanges. Therefore UUP (ETF that tracks dollar bulls) was suggested as the interday ETF to watch as an inverse indicator of stock market direction.

Our # 1 forecast tool now continues to be the MO. But its the dollar that clearly leading stocks “like a dog on a leash.”

Positions

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

Current positions - Small positions in EWS (Singapore) USO (commodity-Oil)

Traders – Got stopped out of TYH at 24.98 – the price it was bought for.  The dollar was rising (UUP – the ETF) and stocks had formed a series of lower highs and lower lows so it was a no brainer to get out.

Investors – Our #1 forecast tool, the MO, is again approaching oversold territory. While -43 is not yet turned into -60 or -80 its headed in that direction. Investors411 believes this is “Buy the Dip territory,” where stocks get so oversold they have to take at least a short term bounce.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Jobs – Millions Created

The non partisan Congressional Budget Office came out with its assessment of the Obama stimulus yesterday. “The massive package of tax cuts, construction spending and enhanced safety-net benefits was passed in February 2009 in the midst of the deepest recession since the 1930s.” Some highlights-

• Boosted real GDP between 1.7 & 4.5%
• Job growth between 1.4 & 4.8 million (depends on how you count).
• Cost estimate down from $862 to $814 billion

If the middle class is NOT working you’re never going to get out of recession.  Some are worried about deficits so here’s the deficit figures by Presidents since WW2.

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.

US stocks had yet another “distribution day.” This translate to major price drop greater than 1%, in increased above average volume. Volume was just slightly above average. We’ve had almost a handful of these hits in the last two months. = Bears Rule

Almost every market technician, especially after the benchmark S&P 1070 support collapsed sees more bad news to come and no real support until @ SPX 1020. (this years low)  SPX 1052 now

To make matters worse, The third Hindenberg Omen occurred yesterday. (see last week’s Investors411)

This fall is happening despite the Fed pouring money into the system. Could be that the Fed money is the only thing holding things together – Cushioning the fall.

Critical Mass – Every pro knows about the distribution days, the Hindenbergs, Sept. is the worst month of the year, uncertainty of elections , etc. At some point this will become a self fulfilling reality that can even overwhelm the BB/HFT’s.

The BB/HFT’s have made a killing on low volume rallies and are the dominant traders by volume. Their plan (always short term) seems to be to catch everyone in short positions. Then as the dollar falls – make a quick killing in an oversold market.

Yesterday’s housing numbers were twice as bad as expected.  That’s a huge amount. = Bears Rule

Significant Indexes

• The Dollar (USD)  [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar was flat for second day in a row, +0.02% yesterday.  Two week rally in place. Now facing resistance at 50DMA. Two flat days in a row could signal a reversal of trend & the dollar start to drop. But until this happens, for stocks outlook = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rally +0.70% yesterday. 5+ week Rally trend is strong but weakened yesterday = 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 -67.59 Officially we are oversold, but the MO has (last May)gotten below -120. = Bullish

Reading Tea Leaves

There probably a better than 50/50 chance we’ll reach support at @ SPX 1020 (This year’s low) within a couple weeks.

The dollar is still what to watch. UUP is the ETF.

Positions

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

Current positions – Small positions in EWS (Singapore) & USO (commodity-Oil)

Threw in the towel on EWZ at 67.68 for 2% loss. The other 1/2 of this trade sold earlier was a +3% gain.

Investors wait for -80 or below on the MO and/or we fall close to 1020 on the SPX to buy the dip. Traders its going to take lots of guts to buy right now.

Investors411 seeks to educate you to make choices for yourself. I trade in six different accounts from a consertive non profit corporation to a far more aggressive acount for someone much younger than I. Everyone is different. There is NO right choice.

I do like NFLX and will include it on YOUR Stock list despite its bad day yesterday in moderate/increased volume

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

No Repeat Depression

Two highly respected Economist have completed  a major study saying, “A Second Great Depression was averted” for the following reasons. Quote -

• the Wall Street bailout,
• the bank stress tests,
• the emergency lending and asset purchases by the Federal Reserve
• the Obama administration’s fiscal stimulus program

Without this GDP would be 6.5% lower this year and there would be 8,500,00o fewer jobs.

Most economists usual use cautious approaches in quantitative models. They forget – the panic of  banks collapsing, fed by an over hyping media would have cause a far more serious problem.

Investors411 and many of you have been beating the drums on this for 2 years, and its good finally to see a major study come out. Especially one that supports our thesis. Now besides Greenspan, Paulson, Bernanke, Geithner , etc., telling us we would have gone over the cliff, we have some academic support.

Alan Binder Princeton Prof. & former Vice Chair of Fed

Mark Zandi – Chief economist Moody’s Analytic

Smoking Hot Debate

If you’ve missed the comments section of Investors411 you’ve missed the some of the best thing this blog offers – Information and debate on stocks & politics. Right now Jsovjani & Popeye are going toe to toe. Hard to tell if they agree or agree to disagree.

Jsovjani has produced a set of statistics that show the concentration of wealth before Ronald Reagan took office of the richest 1% of Americans was @ 20% and when he left office it was @ 36%. Popeye believes that he has finally found some common ground with Jsovjani our resident “deficit hawk.” The rich getting richer coupled with the fact that President Reagan raised the deficit by over 400% makes “Ronald Reagan, economically one of the worst presidents we ever had.”

What will Jsovjani reply?

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

Another typical light volume day which saw rotation (a bullish thing) out of high beta stocks into more mundane stocks. Overall things were flat.

There was one big bearish sign out there - crude oil – took a big hit right at its resistance level.

Earning continue.

Significant Indexes-

• McClellan Oscillator (MO) fell  to +75.69 [+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. Yesterday’s close = 75.69 = BEARISH But, the MO fell 21+ points and major indexes were flat. Plus its 50 DMA is crossing its 200DMA, and the chart shows a series of higher lows and higher highs. Best read of tea leaves is we are now looking like the MO will drop more on flat days and get us out of overbought territory. Then rally as stocks go higher.
• US Dollar –  The dollar  rose slightly  +0.12% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar just broke a major downside support level two days ago = 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 7 day+10% rally and is at 1869 = Bullish

Reading Tea Leaves-

The highly overbought position of US equities eased yesterday. We are just overbought now. See MO above. Another day/two of easing will give the bulls another chance to charge. There is so much bullish momentum behind the move higher, its hard to see it all stop now. At least retail investors should buy the dip. If we continue to fall out of overbought positions with stocks remaining flat – This would be a signal to go long.

However, Black Box/High Frequency Traders rule, and they may think its time to take profits from this rally. If you’re a trader what to look for (probably on the SPX daily chart) is that every time the SPX rises to a certain level it gets sold into by BB/HFT’s

Positions

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

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

Sticking with overall strategy on short ETF’s. However, Probably selling 1/2 of SDS today. Reasons stated above under MO.

EWZ (Brazil – chart on side of blog)) an ETF Investors411 owned for years is again outperforming and is a buy the dip opportunity.

GLD – (Gold) has come down off its high. But a big dip in big/above average volume is a signal to wait.

Going to try to put together YOUR Stock List with Paul R (if he has the time) before I leave for trip.

S&P 500 at 1113. Breakout point to turn Long Term Outlook to CAUTIOUSLY BULLISH is 1131

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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Jobs, Jobs, Jobs

Ever since the 2008 meltdown Investors411 has stated financial and economic conditions are “far far far far far bigger than first imagined.” This statement that has been made many times and is still bolded in the position section of the blog.

Poll after poll (except among Tea Party supporters) have said “To Hell with the Deficit, Its Job, Jobs, Jobs.“ See yesterday’s Investors411 for  a list of historians and economists who make the same case less colorful language.

Immediate Help

• Extend unemployment benefits its “the human thing to do.” Republican Billionaire Mort Zukerman
• Extend unemployment because (the average American unemployment check was under $300 a week in 2009) it will stimulate the economy. These people will SPEND the money and we all benefit because money flows.
• Republican’s know that the longer they can delay a vote on this the less money will flow and consequently the more people unemployment will grow before the November elections. Every day they delay = the more votes they get in November, because they can blame Obama for unemployment.
• It’s certainly hypocritical to endorse the Bush tax cuts on the wealthy. Next vote for unnessesary war funding outside the budget for over 10 years. Then play politics because our own American families of former workers are going hungry.

Longer Term Help

• Infrastructure projects get you the most bang for the buck according to Mort Zukerman (who I usually don’t agree with) and most economists.
• We need an Independent Infrastructure Bank Not one where a powerful Senator like Democrat Harry Reid can take $350 million for a high speed train from LA to his home state of (Los Vegas)Nevada.

Bottom Line – Andy Grove, Intel’s CEO had it right – Globalization has created a major “scaling” problem in the USA. Unless we somehow change that direction the ultimate result is going to be very negative economically for 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!

Technicals, Fundamentals & Analysis

The High Frequency/Black Box traders (that are focused on the here and now) pushed the markets higher in weak trading. This has been the typical headline for many moons in what’s been a falling market since April. – Lower price highs and lower lows.

IBM was the earnings report of most interest and its down @-4% in pre market trading = Bearish

APPL – Both Monitor and Paul R have warned about today’s earnings report at close.

YOU have pretty much reached consensus that holding a stock, especially in a declining economic environment, is highly risky before its earning report. If you are an insane lover of risk (short term trader) and AAPL continues to drop before earnings – it does take some of the downside risk away.

Ruptured oil well leaking again and possible leaks on oil on ocean floor related to BP oil spill. Best site for this is The Oil Drum = Bearish

Significant Indexes-

• McClellan Oscillator (MO) rose to +21.91 [+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 Friday was basically flat +0.04% [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – 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. Earning have trumped this indicator for now & we have consolidated for last two days. = NEUTRAL
• 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 1700 yesterday. This is a huge -60% drop 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks the BDI rose Friday & +0.70% yesterday. At long last the BDI finding a bottom - a bullish sign, but too early to tell.Fundamentally the -60% drop is very BEARISH

Reading Tea Leaves-

Don’t think the negative fundamentals of the BDI (Trade and China) & Europe have been fully integrated into stock prices yet. Sure fells like we are going to have a negative day. But, with Black boxes in control (almost everyone else has fled to safer investments of bonds and treasuries) – you never know.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

From Yesterday – SH – The ETF that shorts the S&P 500 was bought at 51.45. It’s up over 3% now. 1/2 will be sold at 3% profit and a stop/loss has been put in place at what it was bought for. 1/2 of SH was sold for 53.02 for +3% profit.  Letting the rest ride and will sell when conditions on MO near oversold.

No other positions long or short are contemplated in immediate future because MO is neutral. Sorry, there is little to do but sit tight,  be happy you’re almost all in cash, and wait till we get oversold or overbought.

One exception is GLD or DGL (@200% GLD). Its dipping and if it falls to its 200 DMA – would consider buying on fundamentals.

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Hottest 6 Months Ever

The last 6 months have been the hottest ever on the planet. The record breaking heat waves of the East Coast are part of this

“The record temperatures we’re seeing now are especially impressive because we’ve been in “the deepest solar minimum in nearly a century.” It now appears to be over.”

This NASA news should have been the headline of every major paper. Instead the top link I found was the following minor site. If you want some science data on greenhouse gasses, global warming & how it works see National Reasearch Council of National Acadamy of Sciences

Alternative you can laugh with the Drudge Report or Fox News when they headline a goup of climatologists meet and it snows. Or read when they healine a couple climatologist who have seemingly fudged data, but are later exonerted. They, of course ignore or bury the NASA data.

“We’re getting a dramatic taste of the kind of weather we are on course to bequeath to our grandchildren,” says Tom Peterson, Chief Scientist for NOAA’s National Climatic Data Center.”

Reboot America

16 of America’s Leading Economists/Historians have come together to fight the Tea Party/Fox/CNBC/ Libmbaugh/Bachmann/Palin (Thanks to Popeye for his Bachmann comment) message of cut the deficit NOW. They realize that Jobs is the #1 priority NOW.  Their conclusion-

The urgent need is for government to replace the lost purchasing power of the unemployed and their families and to employ other tax-cut and spending programs to boost demand. Making deficit reduction the first target, without addressing the chronic underlying deficiency of demand, is exactly the error of the 1930s. It will prolong the great recession, harm the social cohesion of the country, and continue inflicting unnecessary hardship on millions of Americans

Obama’s Address

Republican’s have been blocking aid to small business and unemployment compensation for weeks. Here’s Obama’s weekly address.

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

Economic fundamentals, some bad earnings report, and an options expiration Friday seemed to have made the Black Box/High Frequency Traders dive for cover.

Volume was a bit above average for the older DOW & S&P 500. Still it was NOT the kind of volume you’d associate with a major stock meltdown, but more the kind of volume you’d expect when options expire (The 3rd Friday of the month) Translation – Black Box traders clearly in charge of markets.

Almost 3% decline – Bearish

Earning come out big time week.

You can check pre market trading here – Just type in ticker symbol

Significant Indexes-

• McClellan Oscillator (MO) fell to +7.53 [+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 Friday was basically flat -0.09% [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – 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. This inverse relationship is part of their algorithmic system. There was a delayed reaction the last time the dollar fell over 1.00% – The next day we had an almost 3% rise in stocks.  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 is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks Friday +1.18% yesterday. At long last the BDI finding a bottom – a bullish sign, but too early to tell. Fundamentally the -60% drop is very BEARISH

Reading Tea Leaves - I haven’t figured out the algorithms associated with High Frequency Trading. So its near impossible to make an accurate predictions of what they will do. However the majority do seem generally to follow the basic +/- 60 indicator on the MO.

Answering The Critic - (see comments section of blog)

• The Good – Yea with a little luck did call the top and the last bottom. This came about by using both the meltdown in the BDI and MO reaching oversold.
• The Bad – Why not invest more? I did set up a probable group of trades (short ETF’s) if the major indexes became more oversold Wednesday and/or Thursday.  Bottom Line – Its not the old time stock market any more. – Phony capitalism rules along with High Frequency Trades. Those ETF’s you mentioned are impacted by phony capitalism and HFT’s so you have to be more cautious. My trades tend to be more conservative (example SH last week instead of SDS) YOU can be more aggressive.
• The Ugly – Fixing High Frequency trades (or phony capitalism) Most of the trades in the 1000 point meltdown were cancelled. However HFT and phony capitalism (example-shadow banks) banks are a reality. In the USA (the leading GDP capitalist country), if the moneyed class keeps getting richer and the middle class poorer market fundamentals will continue to deteriorate.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

SH – The ETF that shorts the S&P 500 was bought at 51.45. It’s up over 3% now. 1/2 will be sold at 3% profit and a stop/loss has been put in place at what it was bought for.

I’m not so sure Friday’s meltdown was as bad as it looks. It may have been something exaggerate by HFT and Options experation.

No other positions long or short are contimplated in immediate future because MO is neutral.

Lincoln Douglas Debate

Great Debate

The comment’s section is often the best part of Investors411. Jobs, China, Deficits and revenue have highlighted this debate. Jsovjani has come up with an informative data base on revenue deficits, & revenue.

How much tax revenue growth was there under Clinton vs. Bush vs. Reagan?

I look at the numbers relatively, so this (mostly) avoids having to compensate for population growth, inflation etc. I used the year each President took office as the base. Each new president built on what was already there.

• Clinton inherited Bush Sr.’s budget and by the end of his first year 1993 it was $1,i54 billion.
• During his 8 years in office he raised tax revenue to $1,991 billion in 2001
• The total gain in revenue under Clinton was $837 billion or @ +72%
• Bush Jr. started from the Clinton base of 1,991 and ended in 2009 with yearly tax revenue of $2,105.
• The total gain in yearly revenue under Bush was @ +5%
• Reagan in 1981 yearly tax revenue was $599 billion and when he left office in 1989 it was $991 billion
• Reagan gained @ +65% Of course he did raise taxes many times. Something Republican forget.

You  use the previous year as a base number but the stats come out basically the same. There are cases where cutting taxes can raise tax revenue. But when you consider what Bush inherited and what he left us with and compare it to Clinton or Reagan – Bush tax cuts over 8 years in no way raised significant revenue.

• Clinton beats Reagan and their is a vast improvement in tax revenue building.
• Bush comes in last by a wide wide margin.

As Robert H says numbers are relative.

Stocks

The Black Boxes want to take this market higher. They did yesterday confirming the previous day’s rally.

• The MO moved up to +27.04 NEUTRAL but approaching +60 or oversold levels.
• The BDI took another big -3.87% hit yesterday= Bearish

Looks like another 1 to 2% gain will get us to overbought territory on the MO and a time to take some short positions.

Barr

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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!

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

Economic Whirlpool

Yesterday, Andy Grove described the scaling process as the reason American jobs may never return.

• Even if we had another internet revolution those jobs would go to an educated emerging market country. In fact the environmental green jobs are going there now.
• Grove himself points out his solution may/would lead to a “trade war.” Jsovjani (in comments section) accurately reminds us it was “one of the major causes to the Great Depression.” It would also lead to inflation.

This puts us in an economic whirlpool-The kind that forms when you let the water out of the tub. The USA is traveling in ever shortening economic circles leading to the dark hole or drain. China ( as well as other countries) obviously employs tariffs, manipulates its currency and severely restricts foreign ownership. We simply go on taking it on the chin for decade after decade.

Winners

• The people in emerging markets that get jobs and improve their economic situation (yes sadly often slave labor)
• The power and money oligarchy in the USA that profits from globalization.
• The politicians that can pit anyone who is foreign or different against whites for the diminishing # of jobs in the USA (think TTP’s)
• The concept of a strong (dictatorial) central government  and tightly managed capitalism (tariffs, monetary policy, censorship, foreign restrictions, etc.) – China’s communist party
• Global companies that find cheap labor abroad.

Losers

• The USA economic growth and jobs.
• Companies that hire US workers andplay by the rules.
• Democracy in both the USA and China. (more on this most important factor later)

Bottom Line – China is the big winner Look how easily they are manipulating a trans national company like Google out and their own BIDU in. The looser is the USA that fears its own shadow and becomes ever more dependent on China’s restrictive capitalism and one party system for its own economic well being. Maybe the Intel CEO is right. Shouldn’t we at least take some further steps to combat “scaling” 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

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.

Reading the Tea Leaves – To analyze what happened in the US stock market yesterday I’d have to read the minds of millions of people including those big Black Box traders who control 80% of the market. For forecasting future price moves, yesterday’s, below average volume trading was both irrational and  irrelevant in the longer term.

In the short term, you could say traders saw an oversold market so they bought. Prices got too high and they panicked and sold. The black box traders who follow currency (dollar vs. Euro) saw a falling dollar and bought in the last 1/2 hr. giving most US indexes a gain for the day.  Most relevant data is rally did not last long = bearish

Here’s What’s Important

The BDI’s (see below) increased its daily decline through its support level is the most significant economic indicator/forecast out there.  What this is saying is that world trade is drying up. More specifically trade of emerging markets – China. Those of you who have followed Investors411 for years know that emerging markets/globalization has been leading world wide growth.

If you look at the 3 year of the BDI below, you’ll see what technical analysts call a triple top, a broken support level and a red line that is descending almost vertically. This s NOT good. The BDI is at @2100 and in the depths of the 2008 meltdown it was at @600 so there is still a long way to fall before we reach that level.

Nevertheless, without the interdependence of world trade [globalization & I realize globalization has its bad, good, & ugly] we face the danger of recession part 2. The BDI says YES worldwide recession part 2 is coming.

Significant Indexes -

• McClellan Oscillator (MO) rose a bit to -45.22 [+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. .= Still NEUTRAL, but close to oversold
• US Dollar –  The dollar rose a significant -0.62% Friday [Anything over +/- @0.50 is significant.]  Mantra - right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. Two weeks ago a -0.62% move in the dollar would have meant an easy 100+ point move in the Dow. This could/will change, but right now dollar is = 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  2217 yesterday.( This is a huge -49% drop in 6+ weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a massive -4.02% Monday. 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 NO POSTIONS at this time.

Investors – Investors411 recommends no long position at this time. Wait for the MO to fall below -60. The further the better. (see past Investors411). Remember – Since 4/23 US markets have formed a bearish pattern of lower lows and lower highs. Hopefully, we will be buying at a low, but the 5 to 7% guideline (sell 1/2 for a 5% gain) because of the bearish trend.

Traders - There is some space to make a trade with a short ETF like SDS. The best read of the tea leaves is because the BDI is rapidly sinking & markets according to the MO are not yet oversold some room for a short exists. So I’d short any rally in stocks.

Answer for Monitor’s Question – I believe Paul R is away till Monday. The 5% rule is really a 5% guideline. Happy you made $$$ and I usually set a stop/loss at the price I bought it for.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Looking at  pretty pictures – reference below *

Drawing by 8 year old granddaughter Emma

The Glamor of Greed

-

Andrew “Andy” Grove,

Andy Grove the co founder of Intel uses a different title than The Glamor (profitability) of Greed. This former CEO calls his editorial “How to Make an American Job Before It’s Too Late” Grove uses the same megatrends Investors411 uses.

His editorial is a well researched, clear, outlined and offers a job centric solution. Here are some major points. [Many thanks to Robert Howetser who is a sometimes contributor to the comment section of blog and brought this editorial to my attention.]

• The Bay Area in SF (Silicon Valley), the innovative machine of the country hasn’t been creating jobs in the USA lately. It has a higher unemployment rate than the rest of the country.
• The scaling process is no longer happening in the US And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.
• From Apple to Dell computer there is a 10 to 1 jobs ratio for former (Silicon Valley) high tech jobs in China vs. the USA. The largest of these is Foxconn ($62 billion in revenues – makes and assembles for Apple, Dell, etc.) and employs more people than the combined worldwide head count of Apple, Dell, Microsoft, Hewlett-Packard Co., Intel and Sony Corp combined.

Without bringing scaling back to the USA, American companies are going to continue to make profits by shifting jobs abroad. –  That why Grove is calling for a jobs centric government.

“We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars — fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations…”

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

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.

Technically the benchmark S&P 500 is down 9 of the last 10 trading days and way overdue for at least a  technical short term rally. = Bullish

The BDI See below) is still in free fall (-47% see below) clear evidence of worldwide economic  (trading) meltdown. = Bearish

Pre market trading in Europe & China is way up @2% (as of  8:00 AM EST)Those of you who took Friday’s read of the tea leaves to heart (you had to love risk) and bought as markets dipped at close – should at least be rewarded in the short term this AM. = Bullish.

*Looking at Pretty Pictures-

Technical analysis is looking at pretty pictures or patterns of stock charts. None quite as wonderful as a grandfather’s view of his 8 year old granddaughter’s work. Who knows why technical analysis works? Perhaps

• We are all creatures of habits, and the trading herd follows patterns
• So many folks think it works and therefore it does.
• We all like to look at pretty pictures.

The bottom line – Investors411 on the right side of the blog offers different financial  charts. Also daily updates on certain charts in text of blog each day.  Those charts on the right side of the major US indexes all show one pattern – a series of lower lows and lower highs for stock prices that started on April 23 2010. If you’re a Bear you love this pattern.

We are currently in one of the lower lows of this pattern.

Fearless Forecast for the Week-

Some kind of technical rebound seems inevitable. If it doesn’t last at least couple of days we’re in big trouble. Some poor earnings results may already be built into stock prices. The accelerating downside of the BDI is a gathering storm. What to watch for is how the markets react to the first few earnings reports. How markets react to news is usually our #2 indicator (see STRATEGY Section on top of blog)

Best read of tea leaves - Good start poor finish = down week.

Significant Indexes –

There’s hundreds of charts, oscillators, systems out there to measure trading patterns and flows. The BDI & MO were chosen because they work extremely well right now for different reasons. (Click on STRATEGY section at top of blog for more) The dollar accuracy as a forecasting tool was shaken last week. If it’s accuracy rebound’s Investors411 will continue to use it.

• McClellan Oscillator (MO) fell a we bit to -53.38 [+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. In May the MO reached two lows – one at -120 and the other close to -130. Therefore, potential for more downside risk. Even after last week’s disaster for stock the MO is still NOT below -60.= Still NEUTRAL, but almost oversold
• US Dollar –  The dollar rose a bit +0.19% Friday [Anything over +/- @0.50 is significant.]  Mantra - right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. Last week this got crushed by bad fundamental news as regular investors fled the market. Dollar flat last two days. = Neutral
• 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  2216 yesterday.( This is a huge -47% drop in 6+ weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell -2.81% Friday. Rate of decline increasing as it nears support level. Looks like support level will get crushed today =Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekends – Investors411 holds NO POSTIONS at this time.

Shoudda, Wouldda, Couldda -

Last Friday Investors411 reccommmended a buy if markets dippped for those willing to take risks. It does look like this trade is going to make $ at the open and perhaps throughout the day. More tomorrow.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Democratic congressman Jim Clyburn

“Baby Killer”

YOU, in the comment section of the blog, have had a rational debate over the tax implication of the health care bill starting started by John Sovjani and now ending with a NYT article from Ewanapat that shows, in part, who benefits and who pays. The rest of the nation has not.

One Texas Republican congressman screamed “Baby Killer” while a Democrat spoke on the heath care bill. Later he apologized, but this calculated move will bring huge amounts of cash into his campaign for congress. Across the country Death Threats, vandalism, break ins, gas lines cut, and even photos of hang man nooses have been sent to at least 10 Democrat congressmen and women who voted for the health care bill.

Here’s a report from yesterday. From today, where families of Democratic congressmen who supported health care are moving out of their districts because of the death threats. Sarah Palin’s website is painting bulls eye’s on targeted democratic congressmen CBS reports

When Black Democrats like congressmen Jim Clyburn (D – Majority Whip) gets a noose & death threats faxed to him it is exactly what happened to those who dared stand up for civil rights in the 60’s.

No matter what side of the health care debate you are on – if you do nothing you condone the behavior. At least tell a co worker or friend that this kind of tactic is unacceptable.

Chimerica

(part 2)

The USA has lost 2.4 million jobs because of the trade gap with China -Study reported in WSJ. Yesterday, our House Ways and Means Committee, announced it was holding hearings China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

Bottom Line – We need many of those 2.4 million jobs back in the USA, but a trade or economic war with China would be devastating to the world’s economy.

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.

The US dollar exploded higher breaking out of its trading pattern. The strong inverse correlation between US stocks and the dollar once again took hold pushing US equities lower. Stocks fell in basically higher volume.

What’s happening is that Greece and some other European countries involved in the Common Market have weak currencies and the relative to them the dollar is stronger. These problems have two root causes -

• The same financial meltdown that hit us is hitting them. Remember, the reckless lending of super banks/shadow banks was a global phenomena. In this case the Greek government aided by Goldman Sachs covered up their debt.
• Greece and some other European countries have swung too far into socialism – example may can retire at 50 in Greece with almost full benefits. This is the exact opposite of the USA which has swung too far into greed based capitalism.

Expect a rebound as momentum is still clearly with the bulls and the McClellan oscillator turned red (below zero)

Significant Indexes

• McClellan Oscillator fell to -1.66 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. – Investors411 manta is its much better/safer to buy when stocks are over sold and sell when they are over bought. When the $NYMO is around zero those who can accept more risk can nibble on stocks & ETF’s.
• US Dollar - Exploded higher +1.34%. Anything over 1.00% is considered a huge move and this move was also a breakout to a new high.

Positions

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

Our remaining China position FXI (Also EWZ & MOO)

Over the course of the last few months Investors has decreased FXI holdings from a high of almost 25% to the current 5%. China has been an investment mainstay of Investors411 for many years. Unfortunately many imbalances (see yesterday’s Chimerica piece) especially with the US and a over supply of public and retail housing is clouding the future.

This is also true for emerging markets that have been under performing US stock markets.  Technically after years of out performance this was bound to happen regardless of the fundamental problems in China. Our other major foreign investment. Brazil, EWZ is also under performing. Again over many months we have reduced holdings from a high of almost 25% to 5%. Brazil has a presidential election and the economically successful “socialist” president of the last 8 years is not running. Markets hate change.

The overall problem is does China have a soft landing or a hard one?  Yesterday, our House Ways and Means Committee, announced it was holding hearings on  China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

MOO is an agriculture ETF whose growth relies on emerging markets buying US agricultural products and equipment.  Investors has cut this from 10% to 5% position.

Strategy – Bottom Line – Will drop remaining 5% in FXI into a rally.  Investors is building it own market basket of 3D stocks and health care stocks. (see past blog posts) Investing in ETF’s  (example TYH) that do 2 & 3 times what US indexes do when they are oversold.  Also considering YOUR stock list for investments.

Apologies for everyone who just wants to buy and hold forever.  It’s just NOT your parents market. Blame technology.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING