The Dynamic Duo – Petraeus & Bush or is that Obama?

The Afghanistan Quicksand

Please tell Tea Party Patriots the three single largest reasons the deficit has grown over the last decade are

• The 2008 meltdown and consequential bailout/stimulus.
• The Bush tax cuts
• The Iraq/Afghanistan war spending and consequences.

General McChrystal yesterday became the fall guy for the failed surge stratagey in Afghanistan. In effect his insubordination was like taking a hit for the military industrial complex. The new chief in Afghanistan is General Petraeus. Petraeus/Bush planned the first troop surge in Afghanistan. Petraeus/Obama surges two and three.  All have failed But American media is dares not state this reality.

Remember when American media was falling all over itself because American caualties were down due to a surge in Iraq? Now that casualties are up with the 3rd Afghan surge you hear almost nothing. Interesting!?

OK Obama looks tougher because McChrystal got canned. Big deal. Has this changed anything? Pehaps - Petraeus and Obama get to dump blame for their failed Afghan policy on McChrystal. The military Industrial complex grows stronger as does the call for more violence (deficit spending) as the solution.

Informed Comment blog by Professor Cole paint a picture of today’s Iraq (where less American’s are dying) as a failed state with @ 4 million refugee’s, a hung government,(elections were last winter) and an ongoing Shia/Sunni civil war killing at least 300 people per month.

Your deficit dollars continued to be poured into both sink holes.

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!

Index	Percentage	Volume
Dow	+0.05%	up
NASDQ	-0.33%	flat
S&P 500	-0.36%	up
Russell 2000	-1.66%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

Repeat – ” Any analysis of stocks has become an analysis of what the “Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.”

The new homes data for last month was much worse than expected. Worst fall in 4 decades - 33% Everyone expected bad numbers because stimulus was withdrawn, but the news drove the Dow over 100 points near the open. The fact that stocks recovered to slight losses in , of course light volume, is Bullish

Technically the fact that stocks held onto Tuesday’s more significant losses is Bearish

The Fed announcement was nothing new – Interest rates are going to stay between o & o.25% for a long time & Europe has hurt things here.

The dollar started out the day higher and fell. This is what the Black Boxes saw and the reason stocks moved higher throughout the day. Right now, the Black Boxes have focued with lazar like intensity on currency fluctuations.

Significant Indexes

• McClellan Oscillator (MO) fell a smidge to -2.25 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works.NEUTRAL
• US Dollar –  The dollar fell yesterday -0.30% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The one day the trend = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped. BDI is in free fall from @4200 to  2515 yesterday. This is a huge -39% drop in 5+ weeks.  Often a leading indicator for stocks. Now at/just above a major support level. Rate of fall declined again yesterday. This index often makes slow changes, so diminished decline (@40% less) could be the start of a reversal. However, clearly long term  = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend

Have not yet had a chance to Update over last weekend but there are NO positions held at this time

From Yesterday – “DGP is ETF that is double long gold. Investors411 plans to buy the dip in this ETF.”

Big Black Storm Clouds - Every major stock indexes 50 day moving average is heading lower. Right now it would take a pretty massive rally to change that direction. Every “Old School” technical interpretation of this is  Bearish.

However, Currency markets are the dog that’s wagging the stock market tail. If the dollar falls stocks will rise. Black Box traders control what’s happening not “old school” analysis, so for now the long term outlook for US stocks is still NEUTRAL

CAUTION – At some point the Black Boxes are going to stop looking at the economic relativity between Europe and the USA. Unfortunately, when this happens the realization they come to may be the USA is growing weaker too, just not as fast as Europe.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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