The Holy Grail of Stock Predictions

Goldman Sachs Prediction’s for 2011

Investors411 has an inside look at what GS sent its preferred clients on Dec. 30th about 2011. Each year the Chief analyst David Kostin, the chief economist Jan Hatzius and their staffs put together an outlook for 2011.

Why is it the Holy Grail of Predictions?

• Bias -I hate these bastards. No one firm shares more of the responsibility for the 2008 meltdown that cost a huge drop in housing prices, soaring unemployment and a worldwide Great Recession.
• Former GS CEO Robert Rubin was Sec. of Treasury under Clinton when investment banks (GS) were deregulated. His protegee was Larry Summers became the new head of Treasury after him and is now the outgoing Chief Economic advisor to Obama. Another CEO of GS, Henry Paulson, was Bush’s Sec. of Treasury from 2006 to 2009. He oversaw the massive over leveraged shadow bank buildup and the 2008 bailouts when the financial/housing bubble burst. All these men have profited enormously while working Americans and homeowners have suffered.
• NO other entity even comes close to GS in being tied to government finance and therefore understands the role of government (has access to inside information) in the markets. If you’ve been paying attention, Investors411 has reported how our Fed and Treasury Department are now manipulating stocks and bonds to the tune of trillions of dollars.
• CNBC popular analyst, Jim Cramer, was a mere hedge fund manager for GS. When GS speaks he listens.
• No other firm has an inside connection to the Fed & Treasury than GS.
• David Kostin’s 2010 predictions were so good he made Partner at GS & Jan Hatzius (Wikipedia calls him usually “bearish”) is one of the most respected economist on Wall Street. Once he speaks his views are parroted by everyone from Cramer to a bevy of lesser economists.

Does GS take advantage of its position as puppet master to government finance? – An old line from the 1939 movie Casablanca used by Claude Rains sums it up -“I would be shocked shocked to find out theirs gambling going on in Casablanca.”

Goldman Sach’s inside knowledge and ties to government give them an advantage that no one else has. This is vastly more important now because both the Fed & Treasury are manipulating far more than they have than they have at least in my lifetime. Therefore its the Holy Grail

Basically Goldman Sachs is bullish on almost everything from except the dollar and natural gas.

Here’s the Chart  GS is giving its clients that outlines their outlook.

They see a flat first 3 months, but a very strong finish to 2011.

Note – The Fed’s quantitative easing ends in 6 months. This has got to be factored in. If we have a QE #3 over the course of those months my read of the tea leaves is that the figures go up.  I think its nothing short of a minor miracle that the government/Fed has been able to stimulate the economy without  interest rates going significantly higher.

Barr

Lord Vader/AKA Larry Summers

If their is one man to single out for the lack of coherent response to a massive destabilization of the worlds economy its Barak Obama’s now former economic chief Larry Summers.

Last Tuesday a mass of increasingly bitter, alienated and emotionally driven people voted for change. Few realize that Lord Vader and his oligarchy of Casino Capitalists won the election.

Summers stands at the apex of the triangle of “hugely damaging conflicts of interest of the senior academic economists who move among universities, government, and banking.”

Every Investors411 reader knows about the legion of lobbyists corrupting government and now the legions from academia who are bought by the shadows of casino financial capitalist.  Millionaire economists, Fed officials, and university professors who “refuse to disclose their conflict of interests”

See Charles Ferguson’s “Larry Summers and the Subversion of Economics” editorial (a must read) for a broader list or see Inside Job docudrama.

Perhaps the most damaging moment (and it is a hard call) is when the head of the International Monetary Fund, Raghuran Rajan in front of a field of world’s top economic experts (2005)  including Greenspan, Paulson,  Bernanke, & Geithner is shouted down by Summers for warning that the impending 2008 financial shadow bank meltdown is coming.

If you’re a true blue Democrat then Summers is Benedict Arnold. But I prefer to look at him in a battle between true transparent capitalism and the casino, opaque, oligarchy of monopolists  that is increasing their wealth and stranglehold over working Americans.Economist John K Galbraith opens his editorial on the election with the following paragraph –

The original sin of Obama’s presidency was to assign economic policy to a closed circle of bank-friendly economists and Bush carryovers. Larry Summers. Timothy Geithner. Ben Bernanke. These men had no personal commitment to the goal of an early recovery, no stake in the Democratic Party, no interest in the larger success of Barack Obama. Their primary goal, instead, was and remains to protect their own past decisions and their own professional futures.

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US stocks used to be controlled by normal investors and traders – If it still was I’d be ducking, covering & selling big time.

Employment numbers for last month on Friday +151,000 jobs rate (positive surprise) & a continued -9.6% unemployment rate More here

The more highly leveraged the ETF is the more it is a shorter term trade (days/weeks) instead of a longer term investment (weeks/months) DGP is the ETF most likely to turn into an investment.

One strategy has been to lock in 5 to 10+% profit on the trades by selling 1/2 the ETF when/if it reaches those levels.

Traders would need a dip in MO before nibbling some more.  Investors, preferably, would like an MO of near -60 or higher before investing. Traders anything close to zero (highest risk) to -30 on MO

However first concern for traders is to lock in profits or keep tight stops on stocks and highly leveraged ETF’s.

Personally – I’ll probably  be  selling today, hopefully into an AM rally, the rest of the leveraged ETF’s. and perhaps 1/2 gold. I know MO is not at +60, but, the Bollinger Band/over extended from 50 day moving average means a short term reversal/consolidation. .

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.”

Announcements of purchases/selling can first be seen in the comments section of the blog and/or if you are on the private mail list. If you’d like to get on mail list send me an email – see HELP/EDITOR section of blog

The Vampire Squid is even growing because hidden corporate cash is now shaping the very fabric of our democracy.

In short Taibbi points out that America has become “a paradise for high class theives“ and congress their “willing lapdogs“ who’ve hijacked the American workers into backing policies that favor the rich. He identifies the godmother of the “grifter class” as Ayn Rand and her chief disciple Alan Greenspan.

You can read a lot more about the Vampire Squid and others stuck on your face, the American media, lobbyists and most politicans in Griftopeia – Taibbi’s new book.

“The financial crisis that exploded in 2008 isn’t past but prologue. The stunning rise, fall, and rescue of Wall Street in the bubble-and-bailout era was the coming-out party for the network of looters who sit at the nexus of American political and economic power. The grifter class—made up of the largest players in the financial industry and the politicians who do their bidding—has been growing in power for a generation, transferring wealth upward through increasingly complex financial mechanisms and political maneuvers. The crisis was only one terrifying manifestation of how they’ve hijacked America’s political and economic life.”

Source

Again the Mantra for the last week - “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.”

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.”

Elizabeth Warren

Fireworks Again

23 Comments yesterday. WOW. You tied a record. Most on politics. It ended at midnight with Yankee Bob on Fascism. You can scroll down to the bottom HERE to read them all. Some strong opinions, and let’s try to be civil.

I told Jim J I would publish his list of candidates to donate to Monday or Tuesday. You can be sure Tea Party candidate that JS (not me) called a “Whack Job.” will not be on it.

Elizabeth Warren

Bravo Elizabeth Warren has been chosen by Obama to set up the Consumer Protection Agency and start running it. The Right Appointment at the Right Time editorial by Simon Johnson.

Poverty Rate Rises

Poverty is on rise. Republican response to their fellow Americans “Let Them Eat Cake” or repeal all of health care. There are many parts of the health care bill I oppose, but repealing the whole thing is just wrong. More on the poverty rate in the US declining for a decade – The Lost Decade from WSJ

Back in 2008 Investors411 warned that the economic meltdown was “far, far, far, far, far, worse” than what people expected. One forecast you hate to have come true.

Digging In Heals

You may think of him as Darth Vader (Democrats – Larry Summers and Chris Dodd constantly compete for this title) But when he speaks its usually policy. Larry Summers – “Maintaining tax cuts for top wage-earners should take a back seat to other more pressing measures, White House economic advisor Larry Summers said, in a signal the administration could be digging in its heels on the issue. ”  From CNBC – All right Larry – something positive. Darth Vader title goes to Senator Chris Dodd for now.

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!

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day – Baltic Dry Index – From Investopedia

“A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed)

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.”

US Markets – It’s a ghost town out there as volume remains pitifully weak.

This is the third Friday of the month when options expire. Almost always this day lacks technical significance unless a major fundamental surprise occurs.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.31% yesterday.  Falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -3.63% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. Fourth down day in a row with rate of fall increasing. After 8 week bull run trend changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell again to +22.38 yesterday. Note while zero is the center of this chart the 50 DMA is at 19.33 That’s a support level. = NEUTRAL

Reading Tea Leaves

If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise.

However, it’s hard to put significance on an options expiration Friday. Perhaps Monday will be the key.

Positions

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

(I do manage 6 accounts that have other positions)

Current positions –  EWS (Singapore).

Same basic outlook for traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble

Investors – Wait for a bigger drop in MO before going long.

Also if, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

A Financial Dr Strangelove

Larry Summers , Obama’s chief economic adviser, is the financial Dr Strangelove of this administration. Ever since his nomination was first suggested, Investors411 has strongly objected to his controlling influence in our economic policy. Summers was the protogee of Goldman Sachs CEO Robert Rubin. He took over as Sec. of Treasury under Clinton and approved laws that gutted consumer/taxpayer financial protection.

Summers, has time after time backed the unregulated capitalism, that even Alan Greenspan has admitted was a mistake.  The latest expose comes from the $1.8 billion that vanished from when he was President of Harvard University. Boston Globe LINK

Summers has over ruled the voices of reform within the Obama administration.

Trickle Down Economics

Summers and the Obama administration are running the same kind of trickle down economics that widened the gulf between the rich and poor under Ronald Reagan . They’ve continued Paulson’s (Bush’s Sec. of Treasury) socializing the risk for the wealthy and making the middle class taxpayers pay.

Wall Streets wealth (rise in stock prices & shadow bank bonuses) is being led by rebounding emerging markets and American companies investing their money and jobs abroad.  The reason the Russell 2000 (smaller companies) lag the other major US indexes is they do less business abroad. Big Shadow banks (up collectively well over 100%) are getting bailed out with trillions of dollars (both printed money and your tax $) Main Street gets chumb change.

Nobel Prize winner Paul Krugman editorial in NYT states on jobs”There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers. This is wrong and unacceptable. “ LINK

He offers the following jobs solution LINK

The Bigots Demonstrate at Our School

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

For the moment the Dubai economic meltdown has stabilized because oil rich Abu Dhabi has promised to bail out the over leverage Mid east playground for the ultra wealthy. Volume, was, of course up over the 1/2 day trading Friday, but still below average. 3 of the 4 major indexes (not small caps – Russell 2000 – This index makes most of its profits from within the USA) have all achieved higher highs - Bullish Hopefully they are now in proves of achieving higher lows.

Repeating mantra = The dollar rules – The trend here is a moderate or slow decline of the dollar.  What would reverse this is an event like an attack on Iran – stocks would fall & the dollar would rise.  Perhaps, technically, there could be a short term rise in the dollar.

Obama’s Afghan speech tonight – Escalation in war, to a rational person, would ususally mean an immediate drop in stocks.  But, these are NOT rational times.

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 -87 points yesterday and closed at 3887. 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, 8 down days in a row & down through the former resistance/now support level 0f 4291 .

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 an insignificant -0.17% yesterday . The dollar closed at $74.80 . 

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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 -17.07 This is a slightly Oversold Position . This chart is showing we seemed to haveave 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

Positions

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

I did get a chance to do some editing in the Positions Section of the blog. ( Note 2 added positions)

From Friday – Probably going to take some profits today (sell 1/3+ positions) in FXI, EWZ, GLD & all of DGP. Hopefully, will get a chance to buy back into these positions when the McClellan Index gets oversold. Personally I did sell/take profits on 1/3 of FXI & all of DGP . No one ever went broke taking profits – but right now this move looks like a mistake.

List of positions & percent of portfolio (see positions section for more)

16% FXI

16% EWZ

11% GLD

10% MOO (agriculture ETF – more later on this)

5% AMZN (stock)

5% NVS (stock)

5% BRSIX – not listed in Investors411. A small cap mutual fund that I’ve owned for almost a decade ( I liked the company because they gave a lot of profits back to charity)

10% -  3 Bonds – not listed in Investors411 that I’ve owned for years.

sometimes @15% in day & swing trading I do not discuss in Investors411 & the rest in cash.

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 their is an attack. Yesterday Iran’s navy picked up some Britsh racing ship.

Some other terrorist event may occur reguarding 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.

Long Term Outlook = CAUTIOUSLY BULLISH

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

Perhaps the World’s Best Known Economist

Joe Stiglitz – Photo John Thys/AFP/Getty Images

Joe Stiglitz “is cited by more economists than any one else in the world” Stiglitz is an “economic prophet” and Nobel laureate who predicted the current economic meltdown. Investors411 has for years been quoting Stiglitz starting with the true trillion dollar cost of the Iraq war.

So why is the Obama administration ignoring this Nobel Prize winner? This is one of the major stories in this week’s Newsweek and can be found here .

Paul Krugman , another  Economic Nobel Prize winner goes even further here

Instead of surrounding himself with some progressive economists who warned of upcoming economic meltdowns, Obama has surrounded himself with a Goldman Sach’s crew featuring Larry Summers who participated in building the economic mess.Remember,  Goldman Sach’s, who was a prime mover in creating the economic mess and  took both bailout & Fed money, had a huge positive earnings surprise this quarter.

Health Care

Photo – WaPo

Jim DeMint the Republican Senator from S. Carolina who considers the Obama government “national socialist” (a nazi – like Hitler’s Germany ) says the right wing will use the health care debate to “Break Obama.” Story here

He’s right about the break Obama part.  If health care reform does not get off the ground this summer (some form passes both House and Senate) it will die because unemployment will rise before it falls. This will put Obama in a far weaker position.

It’s time for Obama to stop worrying about consensus building in congress and to start playing hardball.  WaPo on Obama’s next move Hardball?

Your Comments

Popeye adds some more information about the secret  fundamentalist group behind US politicians (see Thursday’s post & comments to the left) – The Family . You can find out a whole lot more here As you might have already guessed this group has strong links to Sarah Palin .

But it not the obviously hypocritical ties to the three adulterous  Republican politicians that is most ominous. It is the past ties and philosophy of this secret group and their allies that is even more significant. (more later)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

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

Technicals and Fundamentals

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

We did have the best week in many moons for stocks . We did take out a resistance level on the benchmark S&P 500. We did have one day of strong volume confirming the price move.

However, after big gains like last week, technically, overbought markets need some rest. That plus the SPX is at 940 and this year’s high/major support level is 956.  We may appraoch this level, but the bulls need a rest. Hard to see other companies come in with the earnings results of Shadow Banks like Goldman Sachs and Morgan Stanley Bearish momentum.

The NASDQ did close at a new high for the year and this certainly creates a Bullish pattern. Biggest fundamental of the week is Microsoft’ s earnings report and Apple also could give overbought index some bullish momentum.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) The big gains at the beginning of the weakened Thursday and more on Friday. It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern. Remember, this index usually moths a lot smoother and turns more slowly than other indexes. It hasn’t turned yet but Bears seem to be gaining momentum

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern
  

$USD - The Dollar is on the verge of falling down through in its in its 5+ week long consolidation pattern between $79+ and 81+. It did briefly break its support level but rallied Friday. Dollar closed up 0.32 at $79.51.-

Fearless Forecast For the Week

Last Week’s Fearless Forecast – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week This happened, but Investors411 failed to predict the magnitude of the rally till after Intel’s earnings.

This Weeks Fearless Forecast – Technically overbought markets need a rest . 30 to 40% of Dow & S&P report this week and it would be surprising to see as many positive earnings reports as last week.  Therefore, most likely a down week. But because the NASDQ broke out and created a higher high, we could see another shot at moving higher later this summer. It looks like bearish pattern developing on BDI. If so, this is trouble.

Positions

The whole Positions sections has been revised (Click on “Positions” at top of blog). Check it out

QLD – which was bought independently of “the Hedge” at 38.2 last week will get sold today . QLD closed at 40.47 Friday – why be greedy. We added a lot of positions last week. (QLD, IFN, EWZ, EWS ) Time to take profits on one.  Will buy back in on another dip.

The Hedge – The SDS part is down -3.44% and the QLD part up +5.51% The net gain is +2.07% We are hoping that the QLD outpreforms the SDS.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!