Obama at West Point

Most Eloquent Speech vs Horribly Flawed Strategy.

• The  center of terrorism is NOT Afghanistan, but anywhere there is an apartment, cave, pick up truck with a committed individual – A fanatic with a gun/explosive, cell phone,computer and money. Examples – Fort Hood, Oklahoma City, & Pakistan
  
• The generals who dictated this strategy are extremely happy. McChrystal “The Afghanistan-Pakistan review led by the President has provided me with a clear military mission and the resources to accomplish our task.” LINK
  
• Vintage Bush fear mongering of WMD’s at end of Obama speech on the nuclear weapons in Pakistan. Yes, difference is these are real WMD’s in Pakistan, but is the Obama/McChrystal strategy the answer. Dawn is the largest English speaking daily in Pakistan (relatively pro USA) Here’s what their readers say LINK
• Top 10 reasons Obama plan could fail by mid east expert Professor Juan Cole – LINK
• Rationale for the 3rd surge in Afghanistan is based on unrealistic concept of success of surge and success in Iraq. (see past updates – more later) What’s needed here is a standard business cost/benefit analysis
• We took out the Taliban in 7 weeks with a few thousand (guesstimate) American boots on the ground in 2001. Why is the situation so much more dire now? (see above on Iraq for partial answer)
  

Larry Wilkerson , former chief of staff to Sec. of State General Powell has the best summation in his Damed if you do Damed if you don’t editorial LINK

“If you are a praying person, he {Obama} needs your prayers and support. If you are not, he needs your support. Because all of us Americans put him where he is–and I do not mean by votes.

We–all of us–let George W. Bush and Richard B. Cheney set us up. Moreover, we all contributed to creating the perilous fiscal state that is now a more dangerous threat to our country than any terrorist could ever hope to be”

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.23%	up
NASDQ	+01.46%	up
S&P500	+1.12%	up
Russell2000	+1.63%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

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

Technicals, Fundamentals & Analysis

Volume was up a wee bit and the NASDQ actually hit average volume (50 day Moving Average).  So volume really did NOT confirm the price move. But volume is NO longer the #1 confirmation or forecasting factor of a price move - The Dollar is. – It fell over -0.50% and, therefore, stocks had a significant price rally Significant = basically +/-  1.00% for major indexes)

Now going to get a bit more technical

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

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI fell -61 points yesterday and closed at 3836. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1700 points since late September. After 16 up days in a row, now, 9 down days in a row & down through the former resistance/now support level 0f 4291 . Rate of decline seems to be slowing .

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. Recent price drop-Nothing to panic about yet

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar. Mantra – Dollar up = US stocks down & Dollar down = US stocks up US dollar fell a significant -0.53% yesterday . Anything close to or over +/- 0.50 is significant  The dollar closed at $74.41 . 

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

The index closed at +13.70 This is a slightly Overbought Position . This chart is showing we seemed to have reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  There has been no clear buy or sell signal for over a month,. Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Positions

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

Best recommendation – It’s time to buy some protection. Iran , lost a 25 to 3 vote in the UN regarding their desire to achieve nuclear weapons or nuclear power (if you trust Ahmadinejad believe the later) The chances Israel or the USA will attack is growing. Obama committing more troops to Afghanistan further surrounds Iran. The price of oil will skyrocket if therethere is an attack.

Some other terrorist event may occur over oil.

So, on dips, buy the commodity oil. I have to check this out further, but the appropriate commodity (not company based) ETF’s seem to be USO & OLO (OLO does 2x what oil does) The later is very thinly traded. Going to work up to 10% of portfolio.

Your comments (Monitor) – Be happy with 22% position in GLD . Activision – Good story behind this game producers – each time they produce a better sequel to a hit game their revenues grow. Might wait till ACTI breaks out of consolidation trend and/or market gets oversold. MOO – need more time, but will get to more analysis.

Bought back DGP at 31.70

Long Term Outlook = CAUTIOUSLY BULLISH

Iran

What was supposed to be demonstrations marking the 29th anniversary of the Iranian revolution turned into a night and day that members of the Green Revolution let their voices ring out. Professor Juan Cole’s website has details and video. Its heatening to see so many protest (“huge crowds”) despite those that have disappeared into Ahmadinejad’s Iranian prison system. LINK

Vietnam & Iraq/Afghanistan – Optimism

Even though many including this blog have focused on the negatives surrounding the “unjustified” invasion of Iraq and long term consequences,there are some major reason for long term optimism.

In Vietnam we used chemical weapons (agent orange) carpet bombing and even resistance was slow to organize. These weapons were not used in Iraq. Democracy was insisted on by Sistani (the #1 Shia religious leaders) and after a year of demonstrations the US relented. In Afghanistan the poll numbers have already turned negative LINK This poll was before the election debacle.

In no way does this excuse our growing nation building disaster in the Mideast under Bush and Obama. But, it is a long term ray of sunlight in an otherwise dark cloud.

US Elections

Republicans won two governorships in NJ and VA formerly held by Dems. The Dems won a congressional seat in NY – formerly heavy Republican district.  Overall a better night for Republicans and bottom line is about the economy.  Three out of mainstream observations

• NJ Democrat Gov. candidate was a mucky muck at Goldman Sachs.  GS & Wall Street are loved about as much on Main Street as the New York Yankees outside NY metro area.
• The “conservative” running in NY congressional race considered radical right wing FOX commentator Glenn Beck “his hero.”  He had huge support from the “tea bagger” or dominant wing of the Republican party.
• Long time incumbents spent huge money and had difficulty getting elected – example mayors Bloomberg in NYC and Menino in Boston.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.18%	down
NASDQ	+0.40%	down
S&P500	+0.24%	down
Russell2000	+1.46%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

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

Technicals, Fundamentals & Analysis

This is the last post for the week

Friday’s jobs report is the news for the week .  What we have is an oversold market going nowhere. Wall Street term for this is “churning.” Because we are so oversold a good jobs number (loss less than 200,000) would probably move market higher.  Oversold also limits downside risk.

Best Read of Tea Leaves – We will not get a sub 200,000 number.

For traders – A high unemployment figure means the stimulus will keep flowing  and I’d buy the dip. Even though everyone is watching Friday’s employment figure – keep an eye on the dollar. If we have a significant break through of the resistance level expect a meltdown in stocks as the dollar rises.

In Asia and Europe oversold markets rallied last night, so this could carry a positive bias to the USA today.

FOMC meets to day – expect no change.  Any changes in wording would be negative and a shock.

The Dollar War - (Part 2) The big news of the day was India buying $6.7 billion dollars worth of gold from the International Monetary Fund. This is an investment in gold not dollars. Still, obviously central banks did buy enough dollars to halt any dollar decline yesterday.

FYI - Best 25 preforming stocks since Obama’s election LINK

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 24% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +62 points yesterday and closed at 3247. The rate of change is diminishing slightly. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1100 points since late September. =  Bullish for stocks & world trade right now

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

US dollar rose a modest -0.12% yesterday. The dollar closed at $76.33 . The dollar did briefly rise above its 50 day moving average.  The dollar is technically doing what prices do in front of major resistance/support levels – hesitating. The longer it hesitates the better the chances for reversal.

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.67 this AM . So dollar is only 0.34% away from major resistance. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions  as we get close to this resistance level.

Positions

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

Our major core positions into weekend. (See Monitor’s post in comments section)

NB  – These core positions have been long term positions for years and are STILL OUTPERFORMING the benchmark S&P 500 – For more see overview section

GLD – Gold rose a significant 2.41% and broke out to a new all time high in huge volume. This was based on the news of India buying a huge hunk of the shinny yellow stuff. (buy the dip)

EWZ – Brazil – has gone up too far too fast and was overdue for a correction. (see past updates)It had about a 10% correction (see chart) and its 50 day moving average is acting as strong support.  Think those of you who bought the dip will be rewarded in the long run.

FXI – China -  too recetly had almost had a 10% correction, another buy the dip opportunity.

Both China and Brazil could go lower if the jobs number is bad or the dollar rises too high. They go down faster than US markets, but rise much faster than US markets. The BDI recent move higher is favorable for both.

Considering diversifying into Indonesia & Vietnam ETF’s Also, for traders as an individual stock AMZN – great technicals& fundamentals, but also a swine flu play. If the flu ends up keeping folks housebound AMZN should profit. (more on Monday) It is currently dipping.

Concerns – 10 even 20% corrections are healthy for FXI and EWZ in the long term. Yes, these and other emmerging markets are recovering fundamentally far faster than the USA. But anything that goes up to too fast forms a bubble and they burst.

SPX – Selling entire position as soonas I get back from art show – taking profits and freeing $ for other investments.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Iran Week Three

Two points of view

More Optimistic – Andrew Sullivan here (above photo from his blog)

More Pessimistic – Jaun Cole here

Unfortunately, think Cole has better insight.

Photo to left – Your editor in the fabulous Summer of 1951

Why the USA Is in Such Trouble

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One of my left wing friends lamented that the Mark Sanford debacle didn’t get enough media attention this week. Sanford is a Republican family values governor who hypocritically had a torrid long term affair with an Argentina "firecracker," then likened himself to the biblical King David.

Farrah Fawcett (an actress who fought a courageous battle against cancer) and Michael Jackson (music icon with some strange behaviors) died and they sucked up all the news coverage. He wanted the Republican toasting to be the story of the week. All these events were secondary.

There was one big headline last week and these three events will have far less impact on your life and especially those of your children. - The US House of Representatives for the first time passed a major climate and environmental bill. As a society we just don’t get what’s important. That’s why this country is in such trouble.

There are 4 reasons why climate/environment legislation is so important, but today let’s deal with reason #1

Global Warming and The World Is Flat Society

In every society there are the flat worlders who for some reason (mostly self interest or emotionalism) want the opposite to be true. Example: Smoking doesn’t cause cancer or the CIA orchestrated the 911 attacks. Usually you will find a mix of these two groups in Flat Worlders – one that makes a profit and the other, close minded followers.

If you search through any relatively unbiased media source like Wikipedia you’ll find that "the Scientific community has reached consenus that global warming is man made" and "Since 2007 no scientific body of national or international standing has maintained a dissenting opinion." Link

Unfortunately, American culture is locked in the here and now of the Stanford of Jackson stories. Just like  smoking causing  cancer,  global warming will not kill me now and Stanford and Jackson sell.

Nobel prize winner Paul Krugman puts it bluntly -  those who think global warming is a hoax are committing "Treason against the planet" Unfortunately there are Republican members of the Flat World Society who voted against this legislation because hey believe global warming is a "hoax."

Research, the latest from MIT , (an evil scientific institution that the World is Flat Society hates and ignores) are seeing an even more rapid deterioration than expected. There are imperfections in the climate change legislation, but to vote against it because you think science is a "hoax" puts you in The World is Flat Society.

Reasons 2,3 & 4 tomorrow & apologies to Tom Friedman who has a totally different meaning in his book The World is Flat.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.40%	up
NASDQ	+0.47 %	up
S&P500	-0.15%	up
Russell2000	+0.79 %	-

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Technicals & Fundamentals

Big spike higher in NASDQ volume. Other major indexes up, but below average. NASDQ spiked probably due to rebalancing of the Russell 2000. So, no real help from volume in making a prediction.

Big events of the week

• Madoff Monday – The financier gets sentenced
• Consumer Confidence Numbers on Tuesday.
• Gov’t employment numbers come out Friday (Market closed on Friday)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool.

BDI - The Baltic Dry Index measures the flow of goods (world trade). You have to get out of the box and stop thinking just of the USA. This is a worldwide integrated economic planet and this Index is perhaps the best forecasting tool. If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Look at the chart. (Click on the blue BDI above) You can adjust it from 5 years to one day.  You’ll see what looks like a recovery. Friday the BDI was flat and its started to trade in a range. This is better than the bearish fall over the previous four days. Right now the long term momentum is bullish and short term neutral

$USD - The Dollar fell-0.72% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX – Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling.  This is clearly a long term bullish indicator .

Reading the Tea Leaves

Last weeks  fearless forecast – Another down to flat week. All indexes except the NASDQ were slightly down. NASDQ rose 0.6% .

This weeks fearless forecast – A rally, but one that does not get to new highs. Volume, the #1 forecasting tool, is not cooperating.   Its hard to have confidence in the prediction because volume is not confirming the price move. Secondary indicators are more positive than negative.

Our Positions

Let’s take the 5% loss on SDS and sell it. SDS was bought as protection against a big downside move. For Mid Year Results see last Thursday’s Post.

Our Hedge (SDS & QLD ) is starting to work.

Our other new position IFN (India) is also off to a good start.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Neda, The Iranian Freedom Fighter

Photo of Neda by unknown Iranian

• You can see the tragic end of Neda’ s life-on the Andrew Sullivan Blog here or the whole video  (you’ll have to scroll down to 2:27 PM yesterday of Nico Pitney’s live blog )at the Huffington Post here

• NYT’s Roger Cohen has an excellent editorial from inside Iran here His first hand account on "Islam stands for Freedom" and what’s happening on the streets is riveting. Violence has escalate during the day and each night cries of God is Great (Allah Acbar) and death to the dictator ring out over  the rooftops of Iran.

• The BBC is the world’s largest news organization and it strives to be neutral unlike American Corporate media (or me – I clearly have chosena side in this). They question the honesty of the Iran elections here The BBC lists many doubts. They also quote Professor Juan Cole who makes the same argument that Investors411 has made – How does a country 4 times the size of France collect 39 million folded paper ballots and count them in less than 4 hours?

• Read Obama’s latest statement invoking Martin Luther King here
  

The question of the week is what do you think of Obama so far – Good, Bad, Ugly? Besides Iran, there are some huge issues facing the USA – Today Frank Rich editorializes its Obama’s Make or Break Summer here

Back with stocks on Monday

Barr

Holocaust denier Ahmadinejan and the militants have launched a Coup and stolen the elections in Iran. Widespread protests and violence

Democracy Hopes

 Dictators Reply

The elections in Iran were a fraud and the militants are using the elections as cover for a coup.

The following sources are much more complete than anything I could say.

1. Professor Cole (Informed Comment Blog) is an expert in this field and outlined top 6 reasons elections were stolen on Saturday post. In his Sunday post he concludes/believes we’ve ” been had by a hard line constituency of at most 20% of the country, who claim to be the only true heirs of the Iranian revolution, and who control which ballots see the light of day. “
2. Laura Secor’s (experienced inside Iran reporter from within country) editorial “Iran’s Stolen Elections” in the New Yorker
3. Gary Sick – Mid East expert and served under 3 presidents on US National Security Council – In Talking Points Memo blog – editorial - “Iran’s Political Coup.”
4. Nate Silver – Perhaps the best poll analyst out there runs the ultra respected FiveThirtyEight polling blog. His editorial headline “Rigged Iranian Election is Flawed.”

Beyond the violence, foreign reporters have been asked to leave, internet cut, cell phone cut, opposition figures arrested and more.

As Jaun Cole points out the standard procedure in an Iran election was supposed to be a three day wait to investigate claims of fraud before the Supreme (religious) leader proclaimed victory. Instead results were immediately authorized.

Barr

WHAT’S UP? – Iran’s Elections – The “Obama Effect” – The “Green Revolution” – The Big Hate – Paul Krugman – Home grown Terrorist and feeding their hate.

Iran

“Green Revolution” supporter – Photo by AFP

Major elections today in Iran.

Already the USA is taking advantage of the Lebanon victory (see last few Investor’s411) and US diplomats are flooding into Syria and Lebanon. Winning means nothing unless you capitalize on it.

The Wild card in Iran Election: Obama by Christian Science Monitor’s Howard La Franchi lists some of the changes. It is one thing for the “Obama Effect” (Link to polling results on Obama effect ) to influence an election in a more liberal Lebanon and quite another to influence an election in hard line Iran. A sitting president has never lost a bid for a second term and Ahmadinejad is heavily favored.

You can read a lot more on Iran elections at Professor Cole’s site , including The Iranian American’s voting in these elections. Iran is a quasi democracy and the real leader is the head Ayatollah.

Our hope here is that there is a strong vocal alternative to Ahmadinejad in the “Green Revolution.” They probably will not win, but it consists mostly of younger Iranians and that’s the future.

The Big Hate

Nobel Prize winner, Paul Krugman editorial in today’s NYT is titled The Big Hate To his credit he differentiates between right wing haters in the media and those who refuse to go along with “The Big Hate.” He concludes

“Yes, the worst terrorist attack in our history was perpetrated by a foreign conspiracy. But the second worst, the Oklahoma City bombing, was perpetrated by an all-American lunatic. Politicians and media organizations wind up such people at their, and our, peril.”

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.37%	up
NASDQ	+0.50 %	up
S&P500	+0.61%	up
Russell2000	+0.45 %	-

-

Technicals & Fundamentals

A 1 to 2% rally melted into the close. Not a good short term technical sign. Volume still below average except for the NASDQ. This indicates that the NASDQ (mostly tech stock) still has the power of leadership position.  We are at yearly highs for most major indexes.

End of the quarter buying will begin to take place.  Many of the major players are waiting (a bit like Investors411) to buy the dip. Mutual funds and others would like to show off positions in some good performing stocks. Therefore, the end of the quarter (2nd 1/4 ends last day of June) is often bullish.  But even more so because we have rallied.

$USD – Repeat – The dollar is the index to watch You could write a book on the dollars influence on everything but for us the bottom line right now is – When the dollar goes down -stocks and oil prices go up and visa versa. Stocks went up so guess which way the dollar went.  Actually the dollar going down is leading stocks higher. It’s the horse and stocks are the cart.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. Financials had been leading the 2+ month long rally. Techs seem to have taken over leadership role, but hard to see any sustained move higher without financials. Yesterday financials down +0.81 %

WTIC - Oil prices exploded higher +3.01 to $73.90 Chart starting to look like it is going elliptical. Fundamentally the talking heads/ experts see no reason for oil prices to be so high.

BDI - The Baltic Dry Index measures the flow of goods (world trade). Stated before -  This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism) 24 up days in a row, 6 down day in a row, & yesterday a rally.  Bullish sign.

Reading The Tea Leaves

From yesterday – Right now, markets seem to have over extended themselves and a 10% correction would be good in the long run for stocks . Trading is very light except for the NASDQ which is near average. (Summer trading is usually light)

Many US market is showing signs of stalling out. The breakouts do not seem to be getting any real traction. Watch the Dollar and the BDI.

Position s – (See positions section of blog for more)

• FXI – our major position rose +2.43% yesterday. BREAKOUT to new high, but volume did not confirm the move. For the second day in a row the FXI was actually up 2% more and then pulled back.  This is a weak breakout.
• GEX – alternative energy - +0.38 yesterday. Dollar/Oil trade influences this. If oil goes up so doe GEX.
• PBW – We are going to change from GEX to the other major ETF that does alternative energy PBW- chart This alternative energy ETF is more liquid and its also outperforming GEX. We have been in PBW in past years and went with GEX because it outperformed then. This will be a slow transition over the next month. Already sold 1/2 position in GEX and will add that $ to PBW on a small (5%) dip.  Then sell other 1/2 and wait for a dip.
• The HEDGE – Little change again.  You can get a rough idea how this position does by looking at the difference between the NSDQ and S&P 500 – (-0.11% and multiplying it by 2) instead of looking up SDS and QLD

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Is Obama’s charisma and message starting to make a difference? – Major Economic caution – The Hedge – Reading the Tea Leaves

The Obama Effect?

 

Just maybe Obama’s charisma and message is making a difference. The elections in Lebanon may be the first example of this in foreign policy.

The more radical, pro Syria & Iran Hezbollah led coalition was, according to many, supposed to win. But the US backed side won about 68 to 57 with 3 independents (sources differ sightly on this result) Lots of outside money/influence by Syria & Iran vs Saudi Arabia & USA. 

Mideast expert/commentator Jaun Cole and Washington Post on this.  Now if only heavily favored Ahmadinejad would loose the elections in Iran next week.

The AP is is also carrying a story directly on Obama’s Cairo speech having a positive impact.

Major Caution on Economics

So far stock have risen on a charismatic president, hope, a few “green shoots” of economic news, truck loads of money shoveled at shadow banks/insurance companies, a tax cut, stimulus packages here and abroad. None of the problems that created this problem have been addressed is a substantive way. Too big to fail, transparency, and how to stop creating Shadow Banks have failed to be addressed. 

A point by point NYT article “We’re Still on the Brink.”

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.15%	down
NASDQ	-0.03%	up
S&P500	-0.25%	down
Russell2000	-0.25%	-

-

Technicals & Fundamentals 

Major indexes closed mixed on Friday and we had a bullish week.

Good Unemployment figures should have moved stocks higher. They didn’t. How markets react to news is a good forecasting tool. – In this case little positive reaction to an improving jobs number is NOT good for stocks.

Credit Markets are tightening  over the last week or two.  Major debate between two economic camps over why this is happening.

• Side one – The economy is recovering
• Side two – Inflation is blooming.

Don’t know whose right. Perhaps both.

The Bottom Line - Interest rates are rising. That’s NOT good for housing prices and or stocks.

$USD - The Dollars fall significantly impacts the rise in oil prices (oil , for the most part is traded in dollars) Dollar rose strongly yesterday +1.63% The falling dollar has been inversely proportional to a rising stock market over the last few months. If this keeps up it may impact stocks negatively

XLF - The ETF that tracks financials (mostly shadow banks ) fell -0.88%. Unlike major stock indexes the XLF has not broken out of its consolidation trading pattern.

WTIC - Oil prices fell - 0.45% to $68.54 –  As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

BDI - The Baltic Dry Index measures the flow of goods (world trade).  After what seems like almost a month of consecutive up days in a row the BDI has fallen sharply two days in a row. It is typical for this index to go many days in one direction. The reversal is not good for bulls. After @24 up days in a row, you may see this start to negatively impact stocks after about 5 down days. 

Reading The Tea Leaves  

From Friday – The longer we stay above breakout levels, the better it is for the bulls. Lack of volume is a concern and we have to watch the BDI to see if the reversal grows. Until we fall back into the consolidation pattern the new CAUTIOUSLY BULLISH outlook holds.

For about a month Monday has been the big bullish day of he week for stocks. A break in this trend would be technically bearish.

If the short term bearish reversals in the BDI and the Dollar continue to build we could see stock markets slip back into their consolidation pattern. Credit markets have tightened.  Add rising interest rates to this and at least for the short term it looks like the bears are back.

Expecting a down week.

The Hedge - New major position. See Positions section of blog. Also looking for entries/dips to EWZ (Brazil) & IFN (India)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

“A National Disgrace “- The American Justice System. South Park – Bailout video. Update on Iraq. A Berlin wall separating 39 million Hispanics from 135 million Mexicans. Pat Buchanan solution to the drug problem. The rising Red River. Over bought stocks market’s short term outlook 

Lady Justice by Rodringo Duran

“A National Disgrace” US Justice System

Senator Jim Webb (D VA) words at the introduction of the 2009 National Criminal Justice Act. Webb - With 5% of the world’s population, our country now houses 25% of the world’s reported prisoners. That’s just his opening in a laundry list of problems

Of course you’re wondering if any of the criminals who run the Shadow Banking System and robbed Americans of trillions will ever see the inside of a prison.  We, by far, run the largest police state of any civilized democracy, but if you’re wealthy shadow banker?

South Park – Bailout

 A 30 second You Tube video

Iraq’s Civil war

American corporate media has ignored the fact that the Shia have almost wiped out the Sunni’s in a bloody civil war that is still simmering. Baghdad once a majority Sunni city has now less than 15% Sunni according to Juan Cole’s Informed Comment blog. The latest on the Iranian backed Shia’s that control a fearful and divided Iraq/Baghdad – AP story

Mexico

Far more relevant than Shia dominating Sunni’s in Iraq to the US will be the 39 million Hispanics in the USA we are trying to separate from the 135 million Mexican’s by a wall. We will have to turn into what communist East Germany was when they erected the Berlin Wall to make this work or find a different solution.

Hillary Clinton is leading a diplomatic effort to Mexico that will culminate with an Obama visit. ” Clinton – “The U.S. shares responsibility for its neighbor’s drug violence. Now we must be just as smart about our ‘help.’” More from LA Times on Clinton and the Mexico Message

Hillary, is winning kudos as Secretary of State,

Solution to the Drug problem

Conservative/Libiterian Pat Buchanan often offers a choice in solving the “weed” problem.

•  Do what chairman Mao did and kill all the dealers and users
• Legalize it like cigarettes & alcohol, then tax it.

Legalizing pot would take a whole lot of business away from the violent Mexican cartels that operate in 230 American communities and account the 1200% increase in drug offenders in the USA since 1980. (stat source Jim Webb, point of view – mine)

The Red River

Just turn on the weather channel. The Red River in Fargo/Moorhead is cresting above 40 ft. (new record) in 6 below zero temperatures this AM. Best wishes to several bloggers and a grandson & granddaughter who live a few hundred yards from this river.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING