Goldman CEO Lloyd Blankfein in front of congress

A Second Global Meltdown?

“Clearly the World Needs More Regulation” - Lloyd Blankfein CEO of Goldman Sachs

Well, its at least gratifying to see Blankfein join former Feed Chair Greenspan in the realization that Capitalism can’t regulate itself. Goldman’s CEO and executives testified in front of congress yesterday. Meanwhile across the pond Greek derivative debt crisis was expanding. (See more analysis under KISS Stocks – TF&A below)

Goldman’s is taking it on the PR chin from the clowns in congress who deregulated the financial industry. The Democrats have a weak financial reform bill and are getting pressured by everyone from Republicans to Warren Buffett (see yesterday’s Investors411) to water it down.

You add the Greek derivative meltdown, & the fact that this is likely to spread to most of the countries that bought into the over leveraged unregulated American capitalist system = a possibility of a second meltdown. Countries facing same kind of unresolved problems include PIIGS – Portugal, Ireland, Italy, Greece & Spain, plus most former Russian satellite countries.  That would be one massive default if it comes to fruition.

Look at what it took to bail out the USA and the world from the first meltdown.  Remember fear spreads about twice as fast as greed according to behavioral economics.

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 for changes made each weekend

Big time toasting in big time volume for stocks across the board. All major indexes moved @ 1/2 way back toward their 50 Day Moving Averages (see charts on right side of blog for 50DMA)

Financial Pandemic is spreading.  This is centered on Greek debt and seems to be spreading to the PIIGS (Portugal Ireland, Italy, Greece & Spain) The whole world will be impacted if it gets out of hand.  Last week Investors411 expected this crisis to explode. The call was just a bit premature. How this is going to impact markets and the world from CNBC & NYT & Seeking Alpha

The last of the above links also focus on Goldman Sachs which is starting to unravel some more in front of congress. Title of this editorial should give investors pause  - As Scary as it Seems, Greek Debt Crisis Won’t Spawn Second Global Meltdown His stock solution for investors is buy if Greece defaults – But what if all the PIIGS & all the former Russian satellite countries also default? = A Second Global meltdown!?

Fed announcement on interest rates today at 2:15 EST -Will they in some nuanced way change the language of their statement on interest rates? Best read of tea leaves NO = Bullish Will this make us forget the problems across the pond or our own mess – NO = Bearish

Best read of tea leaves - Yesterday’ stock drop was a bit of a short term over reaction to a much more serious long term problem. For US & markets markets outside Europe the key technical indicator is the dollar (% other currencies outside Europe) keeps going up our goods will cost more to exports and profits will shrink.

All of this is in directly and indirectly related to Goldman Sachs.

• Directly – GS is involved in trading derivatives on Greek debt
• The whole issue of transparency & corruption evolved from American shadow banks and is a huge factor in Greece and the USA’s fiscal viability.

Significant Indexes

• McClellan Oscillator fell dramatically to  -33.55 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is  NEUTRAL territory, but we are approaching oversold.
• US Dollar – had the largest gain of the year (maybe #2 -I’m eyeballing a chart) +0.93% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules. Is very important. Remember, dollar down almost always = stocks up and visa versa. Bottom Line – Dollar gain was HUGE and we are now just below breakout levels for a new yearly high. If this breakout level falls and the dollar soars stocks will take it on the chin.

Positions

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

Check the Positions section for changes in longer term trades. As mentioned yesterday TEVA had broken support so was sold.

Investors 411 is still long IMAX, EWZ, ESRX & CNK

Investors – Be Happy – If we get a meltdown and the McClellan reaches oversold – its time to buy again.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Lloyd Blankfein, Goldman Sachs

Perhaps the #1 Shadow Banker

Congressional Wimps

The Barons of Banking went in front of Congress yesterday and what happened the can best be described in the fact that the XLF (The ETF that measures financial institutions) went up +1.13 .  Congress didn’t lay a glove on the Barons of the Shadow Banks. The Foxes are still in charge of the hen house.

The first step in all this is the restoration of  of the Glass Steagall Act . In 1999 the GS act forever changed big banks from conservative institutions to ones that traded financial Weapons of Mass Destruction (Warren Buffett’s words for CDS’s)

As stated before , we’ve even allowed the "too big to fail financials " NOT to have standard mark to market accounting rules.

Its like robbers (an inside job) blew a hole in the side of a bank wall and took money. You – the taxpayer – insured the losses. But the hole is still there and the bank is not telling us what we lost .

Even The National Geographic Magazine

Weighs in on heath care with a chart Other countries have significantly more doctor’s visits, live much longer and cost far less.

"Why the high cost? The U.S. has a fee-for-service system—paying medical providers piecemeal for appointments, surgery, and the like. That can lead to unneeded treatment that doesn’t reliably improve a patient’s health. Says Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health who studies health insurance worldwide, “More care does not necessarily mean better care ."

On Tuesday Massachusetts votes for a Senator and basically the election is turning into a referedum on Health Care.

Remember to check out Comments Section.

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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!

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.

We made up for most of the previous days losses, but volume wes lower. The trend over the last few months has been weak volume on up days. Long term this in a bearish trend.

• McClellan Index at 17.92 = Neutral.    @+60 or overbought territory & @-60 or oversold. This Oscillator as formed a strong support @ zero (see chart). It held once again yesterday , if we break though you might see it fall all the way toward oversold territory of -60

Earnings season has begun and Intel reports tonight

The long term bul l is trend is firmly in place – Short term markets are just a wee bit overbought.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

Proposed schedule (sorry limited time this AM)

• Monday Fearless Weekly Forecast and focus on multiple charts
• Tuesday and Thursday – Stock Watch List
• Wed. & Friday – ETF’s Wacth List
• Any buy of sell will be immediately mentioned.

Bough another 1% of portfolio of IMAX at 12.9. (plan to add more on another dip)

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010.

Long Term Outlook = CAUTIOUSLY BULLISH