Jon Stewart

Amerigasm

On Monday night we had the CNN/Tea Party sponsored Republican Debate. “A truly remarkable pairing, as a fringe often derided incopetent bunch of yahoos was granted legitimacy by pairing with the TEA Party.”

How totally incompetent was CNN.? How horribly low and devolved into spectacle has news become? Watch the Jon Stewart video Their debate rivaled The World Wrestling Federation in hype and spectacle.

Our mainstream news media as devolved into a very laughable parody.

Einstein

Relativity

Obama’s Job Program

This week many of you made some excellent comment on Obama’s job program.

• Content credible
• He proposed how to pay for it – again credible with more to come next week on cuts to entire budget.
• It’s political – Obama  intends to run on this.
• Republicans have no plan or ones that include cutting taxes on big business/wealthy, and no specifics on deficit reduction.

Relativity – We have a patient whose dying and Obama’s job plan does offer  the patient  a pint(s) of blood. But the problem is that the wound is open and bleeding.

We have a dysfunctional shadow gambling/financial system that need regulating and regulators. This shadow system is now impacting Europe. Major US companies continue to bleed US jobs overseas.  Until the wound is stitched and closed the prognosis – negative.

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Investors411 Technical Forecasting Tools.

• Investors411 uses the PCR to measure the path of least resistance for HFT dominated stock market. HFT’s love leverage and if there are more puts then calls, there is simply a supply glut on one side that forces a move to the other. See above.

The McClellan Oscillator

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Reading The Tea Leaves

Short Term Outlook

days, week+

• Our forecasting tool are  Bearish/Neutral (see above) - You rather enter oversold markets and exit overbought markets. Advantage to Bears.

• If the PCR was below 0.80, the Bulls would rule. (See Current Positions below for more)

• We do have a technical series of higher highs and higher lows build on major indexes.

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Current Positions

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

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

• Tea Leaves – Any @200 point Dow rally should bring the MO to or above +80.  Ideally we like a lower PCR. However, this (a potential +200 point Dow rally today) could be a risk on trade to nibble at - GO SHORT – Use a leveraged ETF like SDS or TZA or sell some long positions.

• Monday was a risk on to go long. It worked.

• If @+200 Dow points today – HTF will have pump this market higher and some technical levels will have fallen (higher highs). Institutions will get excited and buy, then HFT’s will dump it. CAUTION – This is contrarian advice. Most analysts will see  a +200 point move on the Dow as bullish. Longer term it technically is.

• Risk on = For those that can tolerate the risk you have a fair trading opportunity – GOING SHORT in this case -. It could be better, even much better, but the tea leaves put the odds in your favor

• If Investor411 goes short or buys GLD you will see it first in the comments section of the blog.

Positions

NLY - Annaly Capital Mgt. Ultra high dividend stock –a @14% dividend

GLD – (Long Gold ETF) Bought at 167.05 - Sold 1/2 for 8% gain. GLD closed at 174.40. Gold is contrarian to stocks and More willing to buy tan sell right now into a stock rally.

Disclaimer - I buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

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Long Term Outlook

(for US stocks only – not our economy)

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Lets do some math. To jump star the USA economy. (Compare with a country like China that’s trying to slow down their economy) the US has $700 TARP (almost all paid back with interest), $787 Obama Stimulus, $1.7 trillion of QE #1, other billions/trillions the unaudited Fed loaned out at almost zero% interest and now QE2. (guesstimate $500,000 billion & more later.

Most of this funding has gone to the shadow banks and to help consumers impacted by the 2008 meltdown.

The most remarkable part of all this is the huge amount of money that’s had to be used to just stabilize the US economy at a 9.6% unemployment rate and a 2% GDP. GDP would easily be below zero without it. Yet there are those on the far right who would allow shadow financials and all Americans to become over leveraged again.

Jon Stewart Rally

Politico said there were 250,000 (impressive) at the Rally to Restore Sanity in DC this weekend. Here’s one voice on the rally His closing speech at the above link. Well worth the read.

Mantra - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors. “Looks like next Wednesday Fed meeting is the big event.”

Managing Risk - Lots of YOUR questions in the comments section are on Managing risk (When to invest)

• Ideally we’d like the Long Term Outlook to be Bullish, the market over sold (MO at or below -60) and the dollar’s long term trend – bearish & the BDI to be bullish.
• It seems highly unlikely we are going to get all three at the same time. If we do I’d jump.
• What you do depends on YOUR level of risk
• Right now the dollar rules and which way it breaks will probably have a lot to do with the future of stocks.
• The Long term Trend is – CAUTIOUSLY BULLISH.
• The MO is below zero.

So its not a perfect set up, but it is slightly favorable . The dollar is the key factor & it has NOT broken out of its range. I’d say the Tea Leaves right now are slightly bullish. If you can handle the risk invest. A dollar dropping below its support level and an/or an MO nearing oversold (-60) would be better.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.”

45 Park Place NYC – Former Coat Store

Burlington Coat Store

It seems American media has one again spun, hyped, fear mongered & distorted facts to create a monster controversy. Building a Moslem Culture Center at the Burlington Coat Factory Store (45 Park Pace) building near the former Twin Towers has become Building a Mosque at Ground Zero or “Sacred Ground” (Newsweek Headline)

Now across the country this outrage has spread to protest building of ANY Mosque for the 6 to 10 million American Moslems.  This makes sense to the growing numbers of bigots in America. Why not, there are those that believe no Catholic Churches should be built because it is a religion of terrorist child molesting priests.

If winning the war against the lunatic jihadists who attacked us on 911 shown anything, it is that we must separate them from the moderate Moslems (the 6 to 10 million in the USA alone)  - almost all of whom are not Al Qaeda terrorists. Obama, General Petraeus and even George Bush realized this and developed appropriate strategies to divide the terrorists from the moderate Muslims.

Our American bigots want to lump all Moslem’s together Remember Neda heroic death protesting the brutal Iranian dictators?

Moslem’s/Neda did not attack us on 911. It was a group of vicious, fanatical, insane terrorists from al Quaeda. The answer to defeating these terrorist is NOT to devolve into the same kinds of beliefs and intolerance they and others like them have.  If we as American’s cave in to the bigots then Osama Been Forgotten has truly won.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Technicals, Fundamentals & Analysis

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

Mantra for the month – The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

O.M.G. Another day in the world of BB/HFT trading.

Even though Investors411 stated yesterday “the bulls seem to be loosing control” – Cowabunga - what happened? Collectively the dollar opened up an unheard of +1.80% and stayed their. (You can follow this by using often mentioned dollar ETF – UUP) Didn’t see that dollar move coming.

Your average investors have flocked to low yield bonds and are huddled their under the table. Some braver investors have chosen high dividend stocks – They got burned yesterday, but they should be more successful than your average stock holders in the long run.

The reason for the massive selling in moderate/average volume - ???? – There was no news out there that didn’t seem already built into most investors consciousness.

• The FED suggesting the US economy is shaky – We all know that.
• China slowdown. This is a planned slowdown as their stimulus funds have run their course and their worried about overheating GDP.
• Yes, there is a lot of vacant buildings in China and a housing bubble building, but there is also 10′s of millions of new members to China’s middle class each year.

Significant Indexes

• The Dollar (USD) had a OMG rally yesterday. [Anything over +/- 0.50 is significant] USD up a massive +1.84%. Don’t ever remember such a huge move. For stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] kept starting to go parabolic (+7.50% yesterday) Prices starting to go parabolic are a Danger sign but still = Bullish
• McClellan Index – (MO) [Basically longer term  - the rough guideline is over +60 = overbought market = sell or short stocks & -60 = oversold market = buy stocks.] MO fell to -32.95 Approaching oversold,but still = Neutral

Reading Tea Leaves

Welcome to the world of BB/HFT trading/investing - Jsovajani in his last comment states right now  ”the most important concept is capital preservation” and many of you bemoan the fact that Investors411 has not plunged into stocks this year like it has in the past. = capital preservation.

The good news – Our +/- 60 level on the MO has clearly become a fairly decent forecasting toll of when the BB/HFT will turn (see chart). Investors411 is going to stay and expand on this strategy. But we all need to have patience (including me) till the time is right to invest and to realize that its probably NOT going to be a long term investment, but one that lasts a couple months, weeks or days.

Positions

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

Current positions – NONE

• EWZ (Brazil – Now 0% of portfolio position) Bought at 69.80. Sold last 1/2 at 69.03 for -1% loss First 1/2 sold at +2% profit.

From yesterday – “The Bulls seem to be loosing control.” They lost it. “Perhaps the MO will drop low enough to consider buying again.” At -33 on the MO we are approaching the -60 oversold level

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Glenn Beck

Jon Stewart does Glenn Beck

This parody of Glenn Beck was the major topic at my gym this AM. Even if you have never seen Beck on Fox the video is worth seeing. Some of you will be rolling on the floor howling with laughter.

Change in Long Term Stock Outlook

See Positions section below for why stock outlook was upgraded and editorial

CNBC – Las Vegas/Glenn Beck

CNBC is easily the #1 financial channel. With shows from “Fast Money” to “Mad Money” CNBC hypes the quick buck on Wall Street by combining the glitter of Las Vegas and the antics of Glenn Beck.  The blatant emotionalism sells for CNBC and their advertisers – the stocks they want you to buy. Confession – I have CNBC on a lot as background when I work and its on right now waiting for the 8:30 jobs report.

CNBC so lauded Greed based Capitalism (“Free markets” as opposed to rules based capitalism) it can be said it was a significant contributing factor to 2008s economic meltdown.

Jon Stewart’s Daily Show took CNBC’s star Jim Cramer to the woodshed over this. CNBC has put together a formula of hype, emotionalism, screaming that sells to fear/greed short term investment crowd.  Indeed this is a style diametrically opposed to the one Nobel prize winning psychologist and founder of Behavioral Economics Daniel Kahneman uses.

(to be continued)

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)

Stocks rallied (minor rally) in weak volume AGAIN.  This is the Bull markets mantra. (See editorial and change in Long Term Outlet below) Fundamentally there was some good weekly jobs data, but the big news is the monthly jobs numbers coming out at 8:30 EST this AM

Jobs Report -  February employment numbers  – Unemployment held at -9.7% and jobs down -36,000, a bit better than expected -60,000. January revised down -6000 (minor)

This is about as good as it gets for stocks. The fact that employment is NOT declining means interest rats will stay low and the Fed will keep flooding the economy with money.  Expect a rally.

Good news is monetary policy has helped stabilize the employment decline and we are down from 3 months ago.  The bad news is we are still at 9.7%

Significant Indexes

• McClellan Oscillator slipped slightly to +52.43 yesterday We are now just below +60 or Overbought territory. Stockcharts has a better version of the McClellan chart ($nymo) LINK We are still close to oversold territory, but have fallen over 10 points in last few days. This gives us a bit of up side wiggle room. However, still holding onto the sell more into any major move higher.  The McClellan Oscillator would have to at least get 5 or 10 points above recent high of 62+ to sell.

Because of the change in 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

Even though markets are close to being oversold in the short trm – the Long Term Outlook has been upgraded to CAUTIOUSLY BULLISH. from NEUTRAL The reason for this is technically that the benchmark S&P 500 (see chart) has for 4 days traded above its 50 day moving average. It has also formed a series of higher price highs and one higher low. Yes, volume, the #1 confirmation factor, has been weak, except for the first two+ months of the Bull Market that started in March. In fact, the chart shows volume has basically declined since May.

Behaviorally – there are many investors out there who have been burned by the Capitalism of Greed that they are holding onto other investments like bonds. There are two main possible ways (perhaps more) that these traders would buy into stocks

• Greed based capitalism becomes Rules based capitalism – Some transparency is reintroduced into US financial markets – From standardized mark to market accounting to regulated Credit Default Swaps to eliminating to big to fail institutions.
• Seeing the markets move higher, greed overwhelms those on the sideline and they jump in building another bubble. Its hard to predict exactly what behaviorally would trigger those that are seeking safer havens than US equities.

For decades volume has been the #1 confirmation factor of a price move. This is simple supply and demand economics. The more people that want to buy something (demand) – the higher the price grows (assuming basically the supply of stocks is relatively constant).  In the end something has to give. However, technically, higher highs and crossing the 50 day moving average are both bullish indicators. The lack of volume is the caution.

NB – We are in a position of change and sometimes markets can reverse themselves quickly.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP – This week a myriad of revelations on TORTURE have exploded. The eruption was centered on the release of a 2002 Bush administration “Torture” Memo.  We are wrestling with questions of greed, torture, an “unjust” war, and what used to be our moral leadership of the “free world.” What will the new tend(s) be?

Abu Ghraib prison photo

We Don’t Torture

*John Stewart, as usual,  uses humor on a humorless subject to cut to the heart Video Link

* The 2002 Bush administration torture memo authored by Jay Bybee can be found here (its long)

*  Attorney General  Eric Holder in his confirmation hearing defined “water boarding” as torture. His opinion is the one that counts. Don’t remember what he said about other techniques described in memo.

* Does torture work? 3 points of view from – Editorial in Politico

• Cheney – Yes Period.
• Obama –  May work sometimes, but shouldn’t be used.
• Hillary – No Period

* Ali Soufan the FBI supervisory agent, after 7 years, finally broke his silence over “the false claims magnifying the effectiveness of the so-called enhanced interrogation techniques”  See editorial in NYT

* A Torture Timeline – From Foreign Policy (“a web exclusive”) 

Photo – Iran torturing Gay’s –  Link - or worse Iraq - Link

Accountability

* Whose going to be held accountable?  Just the lowly flunkies at Abu Ghraib? Already the NYT has called for the impeachment of Jay Bybee.  In the comments section of the blog Popeye seems to want the heads of Cheney, Bush and Rumsfeld on a pole. 

* So what do we do? Is Popeye right?  Obama is tip toeing on the top of a picket fence in avoiding a decision. If Obama falls onto the fence – ouch

• A hyper political trial in the middle of a world wide economic meltdown
• Just turn this page in history and forget about it?
• Nail the lawyers (Bybee and others) and let the rest go?
• Another solution?

Post YOUR comments at the bottom of the blog (preferable) or send them to me and I’ll post them under anonymous or under an alias.

STOCKS

Technicals & Fundamentals

Mantra -Forget all about the major indexes - What happens to the shadow banks (financials) absolutely dominates stock  trading.

Earning season continues - 

XLF - The ETF that tracks financials (mostly shadow banks) rose +4.70% in decreased volume.  Financials have lead this rally and if they  collapse so will almost all other sectors (see Positions section of blog on XLF) This leading index is the one to watch.

The XFL is consolidating between @ 9.4 & 11.3. XFL closed at 10.70.

The major fundamental is that the government is going to announce the results of a “Stress Test” on the 19 major shadow banks on May 4th. However, today the Banks start to get the preliminary info.

If all (or almost all) the banks pass the “stress test” it will be looked at as a phony.  If a bunch of banks fail then they will get toasted and others might rise.  This is all very vague and no one knows the criteria for the stress test.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! 

Elizabeth Warren?! -  Financial Chicken Soup for Jon Stewart and perhaps our best hope for the future. She oversees TALF – Tempest in a Tea Pot – Nobel prize winner Joe Stigletz with another warning – NASDQ takes the lead – Another Two Faced (see 4/12) Investors411

Elizabeth Warren – Photo from Harvard Law Bulletin

Elizabeth Warren

She’s the head of the oversight committee of the Toxic Asset Relief Program (TALF) Her interview with Jon Stewart is a must for the coming battle over what to do with shadow banks.  There is hope within the Obama administration and this lady is smack dab in the middle of that hope.  

Her money quote “Capitalism without bankruptcy is like Christianity without hell.”  

 Jon Stewart (the best interviewer out there who is unafraid to ask the tough question to power) calls her explanation – “the first time he’s felt better in six month to a year.”  Jon Stewart Video

Please pass this video on to your friends. Obama took 45 minutes on April 14th to explain the same thing in detail – she gives the same hope in 4.5 minutes

Tempest in a Teapot

The far right, on the 15th had an anti-tax tea bag demonstrations across the USA. These demonstrations were endlessly promoted 0n right wing radio & FOX  News.

 According to one well known far right organizer Grover Norquist they had only 268,000 demonstrators.  This pales in comparison to many single location demonstrations like the million man march on Washington.   Again a Jon Stewart Video

One point these  folks have is deficits are bad. But their only answer to everything is cut taxes. Obama was right to cut taxes in a recession on all but the wealthiest of Americans as part of a stimulus plan. The left wing Huffington Post cherry picked some of the worst of these demonstrations (scroll down for slide show)

Joe Stigletz

Nobel Prize winner Joe Stigletz again warns “The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system” See Bloomberg news article

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

STOCKS

Technicals & Fundamentals

Major US stock markets (and most foreign markets) rose yesterday in mixed volume. The NASDQ continues to lead the other markets (see Positions section of blog - QLD)

 The NASDQ (tech) Russell 2000 (small caps) for the 2nd or 3rd time lead other major indexes and even the XFL. This recent  rotation of leadership is bullish for stocks.

XLF - The ETF that tracks financials (mostly shadow banks) rose +2.13% in increased, below average volume.  Financials have lead this rally and if they  collapse so will almost all other sectors (see Positions section of blog XLF)

Short Term Outlook - Similar forecast to yesterday – First technical chink in the bulls armor appeared Tuesday.’s big volume sell off. A small gain yesterday in decreased volume is not bullish.  

Too early to make a call, but short term traders should pay attention. The Danger signs to watch for - another big price/volume decline  and/or stocks moving lower on no news or good news.

Still bullish in the short term. But think in the longer term, say Sept/Oct – a test of lows could happen. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! 

Whose getting the preferred treatment? Shadow banks/institutions like Citbank or American manufacturers like GM – A cartoon. Fixing the Financial News Channel- CNBC – Remember Jon Stewart’s drubbing of Jim Cramer? Now comedians are banding together. A fearless market forecast- wear your rally cap.

cartoon credit – Daryl Cagle

Fixing Financial News – CNBC

The major financial TV channel, by far, is CNBC. We all remember when Jon Stewart opened a can of whoop ass on its most politically moderate host Jim Cramer. The hosts of the rest of the shows like Cramer are  basically cheerleaders for their advertisers - Wall Street

Now a group of comedians is doing something to fix the biased network. “Jon Stewart made the case, now we’re demanding action.”  A funny 4 minute video, but more importantly 20,000 people and economists have asked CNBC to start holding Wall Street accountable. 

You too can sign up to make financial journalism accountable at – FixCNBC.com

Together we can make a difference – take a minute and sign the petition – In the long run it will protect your money, our economy and your job if we have less biased financial reporting.

(Sorry yesterday’s link allowed for no comments and it took a long time to appear- I have no idea what went wrong.)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

STOCKS

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Technicals & Fundamentals

 Markets moderately moved higher yesterday. Volume was well below average.  Therefore volume offered NO confirmation of the price move.  

Overall this week looks like a consolidation of the previous three weeks gains. Just what you want is you’re a bull.  The chart to watch is XLF (ETF for financials – See below) Usually after a big move & then consolidation, stocks continue to move in the same direction,  This should make bulls happy.

Baltic Dry (Sea) Index - (see chart link on side of blog)  Measures flow of goods/trade and is a leading economic indicator.

Since 3/10 the BDI has fallen each day and yesterday was again  no exception. Another @0.20%  Total loss from high more than 31%.   How many days in a row can an index fall?  Right mow it’s 21 trading days in a row.  The rate of change (fall) has slowed dramatically.  We could be seeing a  bottom here.  This would be positive for markets

Reading the Tea Leaves - Same mantra - As long as  Shadow Banks/Institutions are going to get bailed out by taxpayers instead of bond/stock holders then the rally is on. That seems to be the direction Geithner Summers & Bernanke are headed. Trillions in wealth is changing hands.  

Fearless Forecast – The consolidation will end & the rally will continue as shadow banks announce better than expected earnings.   With diamonds, rubies and gold being showered on shadow banks and a big treasure chest to hide accounting procedures in these banks are going to SHINE this earnings season. Its baseball season so put on your rally caps.

Shadow Banks/Institution Watch

XLF (financials/banks) is therefore the key sector to watch. Checkout the chart and technically you will see that the XLF has tried to move above @9.75 for almost 3 weeks and failed. It closed at 9.20 yesterday up +0.55%.

Add Insurance companies  to those receiving bailout funds. Beyond the infamous AIG others are lining up. The reason for the modest rally in stocks yesterday is insurance companies shot up significantly. Story from MSNBC here.

Bottom Line - The more the tax payers bailout shadow institutions and the less transparent they are allowed to be the better these stocks will perform in the short term. The worse it will be in the long term for taxpayers and the national debt.