Obama on Libya

Here’s the NYT  editorial – basically an favorable review on an overdue speech to nation. Also the far right’s Bill Kristol  kudos from the Weekly Standard – “You’ve Come A Long Way Baby”

Both Popeye and Mama have made a understandable point in the comments section of Investors411 – This is tomahawks instead of teachers we are fostering and there is no clear and present danger to the USA. Many state the obvious – this multilateral action will be judged by wether Ka Daffy goes or stays. Good points -but

But consider a more pragmatic approach. You get there by putting one step after another and moving toward your goal. In the case of Lybia there are concrete steps that should be recognized.

• Nicholas Kristoff in NYT said words to the effect that  you can’t prvent every genocide, but preventing one is a good thing
• This was a multilateral approach (UN & Arab League backing) not a unilateral one like Iraq
• No boots on the ground invasion force, but the use of diplomacy and force.
• Genuine thanks not a phony pulling down of Saddam’s statue directed by a US army psychological operations unit.
• The “Arab Spring” of revolutions across the Mideast would have been endangered if action were not taken.

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	-0.19%	down
NASDQ	-0.45%	down
S&P 500	-0.30%	down
Russell 2000	-0.25%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more

The QE1 & QE2 chart relative to stock prices that was in yesterday’s Investors411  is now in the Strategy Section

• Another weak volume day. Slightly higher
• Some entity sold big time into close. Otherwise we would have had weak volume & slightly higher
• $99 billion in Treasuries are being sold this week. That’s a lot more than the Fed POMO alone can soak up. Fed usually buys a bit under $6 billion most days.
• Take Advantage of This Bull Market While It Lasts is a worthy editorial from Equity Network Corporation.  Specifically they talk about reacting NOW on the news before it gets rehashed over and over again by media. Precious metals as an inflation hedge is the top call for a bullish year.  I’m not so sure about post QE @ (June 30), but hope they are right.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar fell a wee bit -0.11% Bearish longer term pattern still in place, but we have started a three/four day bull run stalled yesterday.  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell back to +9.78 . Over past three months The MO has had problems getting over +30. Yesterday was no exception – the +30 resistance level was too strong for bulls to break. = Neutral

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Reading The Tea Leaves

Stock markets are dynamic and fluid. Forecasting tools change depending on what kind of market we have. Right now both Fed liquidity injections and High Frequency trading are impacting markets and many traditional tools (like volume) are not working as well as they used to

Bottom Line - Different times demand different forecasting tools.

Both the dollar and the MO have worked well for many many moons. See (click on links) charts above.

Hold Em & Fold Em

If you’ve  followed Investors411 you know we have a proven winner in both The Dollar and the MO as market forecasting tools

• The dollar going down far more often than not translates into stocks going up.
• The MO’s longer term +/- 60 & shorter term +/- 30 are both reasonably accurate points momentum swings the other way (oversold or overbought) The + side of the MO is overbought and the – side oversold.

Investors411 has repeatedly show why markets like seemingly bad news – it means more Fed quantitative easing. There are also key ETF’s to watch (see below) like USO (oil an inverse correlation) and tech leader AAPL that impact markets.

There hundreds, perhaps over a thousand different ways tell YOU – Hold Em or Fold Em. These seem to be working quite well now.

Short Bottom Line – We had our bull run off a -60 on the MO and paused as stocks got overbought. But obviously not all technicals (the MO being oversold/overbought) that moves markets. The headlines like earnings, Japan, Libya/oil, QE 2 are the drives and the technicals are the road signs of when to hold em and fold em.

So right now were in a holding pattern. The MO could fall to buyable levels and rise to fast and we’d have to sell. The momentum seems to be with the bulls.

What to watch today – Market movers

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Trading below 50 day MA is bearish.
• Japan Rector Developments

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Positions

UWM - – Sell order  for original UWM position is a 5% trailing stop

ETF’s currently Under Consideration.

EWV for those who love risk is the ETF that is ultra short (2x) Japan. Problems there are under estimated and/0r covered up.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. -

REMX (Rare Earth ETF) - Really believe this a good long term holding. Dipped in front of a strong resistance level.

DGP – (ETF is 2X gold) also SLV (silver). Breakout on worries of future inflation – Gold is moving inversely to the dollar - Dipping has my interest today

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals -

RJA (Agriculture commodities Index)An ETN, not an ETF.

UWM (2x small cap stocks) TNA (3X small cap stocks)

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

We are on the cusp of change from NEUTRAL. We could swing back if stocks dip

Elizabeth Warren

News/Trends /Politics

• No Fly Zone – UN poised to vote  on a no fly zone in Libya.
• “Business friendly” Bahrain vanishes. Our dictator (home of the 5th fleet in Mideast) may be starting a Sunni/Shia religious civil war. Example (Violent 30 second video)
• Relative quiet from Japan reactor situation. Huffington Post live updates
• China suspends nuclear building program
• Congratulations to The Critic (see comments section of blog) and anyone else who bought the dip yesterday. At 8:30 AM EST future prices were up about 1%.
• Elizabeth Warren (our best hope at consumer protection) under attack from Republicans

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	-2.04%	up
NASDQ	-1.89%	up
S&P 500	-1,95%	up
Russell 2000	-1.19%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

Japan’s nuclear situation is still the trump card – Situation improves  so do stocks. Market movement is dictated more by behavioral psychology than technicals at this point. However, there are some relevant technical and fundamental points

• Yesterday’s heavy volume sure liked a climax sell off or the start of one. Volume dramatically higher has wiped out the weak holder of stocks, and there is room for an upside move.
• Single largest piece of financial news is the dramatic move higher for Japanese currency . Another economic blow to Japan All good coming from Japan will cost more and what’s called the “carry trade” has ended.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar rose yesterday +0.46% Bearish longer term pattern. Chart shows dollar directly above a support level. = Neutral.
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell to--88,39. Clearly oversold, but news from Japan trumps everything =Bullish

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Reading The Tea Leaves

Japan reactor developments trump all technical aspects of the market. However, you have to start to think that at least some of the worst case senerio is built into stock prices.

This is a chart of the MO for the past 3 years The MO has fallen to -90 about 6 times in the last three years and each time it has improved dramatically within a couple days. It has not been this low in almost a year.

When you add the  flow of the Fed POMO money coming into the market to the fact that only strong holders of stocks are left you have a formula for a rally.

Yes, there could easily be another leg down on the Japanese reactor situation worsening. But for those with guts to buy when everyone else is selling now is the time. More reasonable investors will want to wait for another leg down or conclusion to the Japan reactor problem. Perhaps, A more sensible and cautious approach.

Stocks in pre market trading are moving higher. Moving up on no significant news from Japan is a positive sign. Moving up on bad news would be better.

Bottom Line – An oversold rebound is likely and shouldl turn into a rally if Japan situation stabilizes.

The one worry is Fed POMO runs out on June 30. If stocks are bad, there will probably be more quantitative easing. But the uncertainty over this hurts stocks.

What to watch today

• USO - ETF for oil - Oil up = stocks down - Now down below $100.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL -
• Japan Rector Developments

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Positions

Considering UWM or TNA near the open if it does not open dramatically higher. Could be a very short term trade.  See comments section of blog for timing.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices.

REMX (Rare Earth ETF) - Really believe this a good long term holding.

DGP – (ETF is 2X gold)also SLV (silver).

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals - Both DBC & DJP are on breakout runs.

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

UWM (2x small cap stocks) TNA (3X small cap stocks)

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

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Real News

Be still my beating heart, Hillary Clinton, gets it and she’s not afraid to tell the world.

Our Secretary of State, Hilary Clinton launched a verbal broadside against American media and its headlined in the Huffington Post One of the sheep/cows has woken up to the fact of just how phony American media is.

Clinton -

• Al Jazeera offers “real news”
• US is loosing “information war” in the world

“You may not agree with it [Al Jazeera], but you feel like you’re getting real news around the clock instead of a million commercials and, you know, arguments between talking heads and the kind of stuff that we do on our news which, you know, is not particularly informative to us, let alone foreigners.“

More Sophisticated Trading

One of Investors411 mottos is to try to keep it simple. So the following is a bit out of context, but it involves two long term position which I hold and you may be interested in. They involve leveraged ETF’s UCO and TMV, & the use of covered calls.

• TMV is 3x leveraged (bearish) to 20+ year treasury bonds. I think inflation is inevitable because of all the quantitative easing and yields will eventually rise.
• UCO is 2x leveraged oil prices. I think, because of growing demand and limited low cost oil higher prices are here to stay.

I have bought these stocks and sold/opened a call option on them. Example – I bought 100 shares of UCO last week at $51, and sold a call at $55 for March 18th. This means the other person has the right to buy my UCO for $55 on the 3rd Friday of the month. That person payed me $160 to do this or about 3% premium. So I made 3% already and on March 18th if everything works out I can sell another covered call on the same UCO and make another premium. Sweet, but there are dangers and lots of other factors involved.

• Sorry ran out of time and I’ve just started. - to be continued. – see comments section later today for more.

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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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	+1.59%	up
NASDQ	+1.84%	flat
S&P 500	+1.72%	up
Russell 2000	+2.22%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble. See Investors411 STRATEGY section for more

• The same old Fed manipulated stock bubble building trading pattern gains in small volume. This time is was BIG gains
• The impact of higher oil prices around the world has become a threat to globalized growth and US markets have not yet decided the impact higher oil prices
• Many forced to cover short positions, so we had a big swing up
• Oil prices above $100 (now for two days) will have a bigger impact on emerging markets than the USA. So the longer prices stay high the worse it is for the economy and eventually stocks.
• Alan Greenspan’s view on the economy
• Jobs report for February below – Remember a good jobs number means the more likely quantitative easing will end sooner rather than later and/or there will be no QE #3. Scheduled ending June 30th. So good news on jobs may be bad news for stocks.

Employment numbers for Feb. are - 8.9% unemployment Figure and +192,000 jobs created.

Good headlines for the public and about what was expected. AP on numbers

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar fell again. This time -0.24% yesterday . Oil prices now are by far the #1 forecasting index (see below) For stocks dollar short term trading pattern = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to  +24.63. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. MO Stocks outlook = Neutral/Bearish

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Reading The Tea Leaves

The McClellan Index has worked almost flawlessly over the past few months. Check out the chart above. Therefore, with the MO at +25, in the short term we are probably very near a top. Longer term trend is still with the bulls.

What to watch today

• USO - ETF for oil - Oil up = stocks down
• UUP - (Tracking ETF for dollar) Clear 2 month pattern of bears ruling Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Bounced off its 50 DMA support level. Back approaching new high

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Positions

Another 3% trailing stop today on both REMX & RJA today.

UCO -Will sell 1/2 of UCO if profits exceed 5%. 5% trailing stop

UWM – A +25 on the MO shows there is not a lot of upside left in the UWM. So will probably sell into small rally and have set 3% trailing stop. Buying with such a high MO was probably a mistake.

Will post when I buy/sell in comments section of blog.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices.

REMX (Rare Earth ETF) - Really believe this a good long term holding.

DGP – (ETF is 2X gold) . Set to follow silver and approaching breakout. Broke out to new all time high and has started to pull back. Buy the dip to 17 DMA

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals - Both DBC & DJP are on breakout runs. Buy the dip to 17 DMA

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

UWM (2x small cap stocks) TNA (3X small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#4 is under construction.)

See Stocks Below for Hindenburg Omen

Pakistan Disaster

“The magnitude of the problem; the world has never seen such a disaster. It’s much beyond anybody’s imagination,” – Pakistan flood where over 7 million are homeless UN President Ki-Moon.

When Bush/Americans sent Tsunami relief to Indonesia American popularity soared. Today America has far better relationship with the world’s largest Muslim democracy. Indonesia is not without problems, but it’s a whole hell of a lot harder to Islamic Jihadist to recruit where the population is pro American rather than one that hates Americans.

Someone is going to step into the vacuum created by Pakistan’s economic disaster in the world’s second largest Muslim country and  Democracy (@170 million people) Will it be the Islamic Jihadist’s or Americans? Obviously, right wing politicians are absorbed with trying to limit religious freedoms of all Muslims and fear monger political advantage. Its hard to be tollerant when so many on all sides are shouting hatred and fear. Also many of you want the $ to stay at home (unemployment and/or the deficit)

In this case not only will you be helping those in need, but you’ll also make it a whole hell of a lot harder for the lunatic Islamic jihadist to gain support. Here’s a list of places you can donate or simply donate by texting “SWAT” to 50555 to donate $10

Bombing Iran

Intrade puts the odds of the US or Israel bombing Iran at @22% by the end of 2011. Atlantic’s Jeffery Goldberg says odds are much higher (50+%) & In Asian Times Gareth Porter says Goldberg’s wrong.

Investment Bottom Line –  Stocks would obviously take a huge hit on this event.

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	-0.16%	down
NASDQ	-0.77%	down
S&P 500	-0.40%	down
Russell 2000	-1.21%	-

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.

Emerging Markets [EEM] turned positive on Friday while US Indexes took a hit in extremely low volume. Emerging markets are once agin outperforming major US indexes and the trades/country ETF’s that Investors411 has used seems to be working again. = Bullish

If you look at the DOW Transports (Friday -0.83) instead of Dow Industrials (-o.16) you’ll find even a gloomy senerio than in last week’s losses. = Bearish

The Hindenburg Omen

Named after the blimp that crashed in 1937, The Hindenburg Omen, is a somewhat accurate predictor technical analysts use to forecast a market crash using the McClellan Oscillator. The WSJ and many other financial outlets picked up on the fact that we had a Hindenburg Omen last week. Here’s the bottom line from the above Wikipedia source. Within the next 40 days the chances of the following happen (using back testing) are -

• a 5% loss = 77%
• panic sellout = 41% & stock crash = 24%
• every NYSE crash since 1985 has been preceded by a Hindenburg Omen

Since we just had Friday the 13th, September is historically the worst month for stocks, you know how susceptible American’s are to fear mongering, I thought I’d let you know what’s in the back of the minds of every technical analyst including those who run the BB/HFT’s.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose +0.38% Friday. This confirmed Dollar on a week long bull run. For US stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.27% Friday. Has broken up through 50 day moving average. But upside momentum slowing shows possible trend reversal. Overall trend still = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -40.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

No mater what help we get from emerging markets, the dollar is still key to stock prices and  has shown no signs of slowing down. Closest resistance level is about $1.00 away (50DMA). Monday’s recently have been the best day of the week and Chinese markets were up +2.11% overnight.

However, dollar bulls & stock bears rule,  the MO has yet to reach -60, and the BDI rally is slowing down. Bulls seem safely locked in the corral.

Positions

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

Current positions - NONE

NB – The whole Positions Section was updated over the weekend. (see top of blog of link here.) I’ve listed many emerging market and foreign ETF’s with links that are again outperforming US markets. Also, references to ETF’s that do +/- 2 & 3 time US indexes and links to YOUR stock list.

More aggressive traders could start to buy/nibble the dip. Longer term investors may want to wait for stocks to move lower. The MO is at -41 and ideally you’d like to see at least -60 before buying. It has reach @-120 in the past. None of these figures are written in stone.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

I am wondering what you think of investing in the Iraqi dinar? – From MH

Iraq

The USA is pulling combat troop out of Iraq by end of August & only 50,000 to remain. “No combat troops will remain.”

So without the bells, whistles, victory celebrations we’re kind of  leaving Iraq. Like Osama Been Forgotten, Iraq Been Forgotten. Here’s what remains.

• The Sunni’s got toasted in the civil war and there are still probably millions of refugees in Jordan, Syria, & Iraq
• There has been NO resolution of an elected government in Iraq for 5 months. Two leading sides each have @ 90 members of a @350 member parliament.
• American’s & Saudi’s back Allawi faction. Iran backs Maliki (current PM) faction.
• Kingmaker seems to be Sadr (actively courted by all) who fought Americans and hid out in Iran. Sadr likes Maliki’s side but hates him because he imprisoned his followers.
• All that oil, everyone own a gun, religious hatred/killings and huge amounts of corruption. Not a good mix.
• July was deadliest month in two years according to Iraq government. But this is still down from 2008 levels.

Reasonable to assume as US withdraws and no or a weak governing majority formed - violence will grow. If the Allawi faction gains power the Iraqi dinar could pop higher.  Obviously great risk here. But where there is great risk there is great gain.

Best place to go for more is Informed Comment blog.(scroll down)

For the US this obviously was an oil war (the peak oil mega trend). It is in the US interest, and that of all the corrupt officials no matter what side they are on, to keep the oil/money flowing. However the hatred is very very deep and religious between Sunni’s & Shia. The other major group – Kurds want the same oil that the Sunni’s claim. This is all very very confusing and I could go on & on.

Bottom Line – Dinar pops on Allawi taking over (most likely winner because Saudi’s & Americans will fix it for him) Then you have a power vacuum with US leaving and all those guns, hatred, and money/oil. Violence already growing and the kingmaker is the most radical Shia religious leader (Sadr) in Iraq. Not a pretty picture.

So if you love great risk buy now on the hope of Allawi forming a government. But I’d sell into Allawi taking power because American’s don’t want to go back.

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	-0.36%	up
NASDQ	-0.52%	flat
S&P 500	-0.48%	down
Russell 2000	-0.94%	-

Technicals, Fundamentals & Analysis

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the vast majority of trades.

Last big week for earnings reports.

Significant Indexes-

• McClellan Oscillator (MO) fell  to +42.72 over the last few days [+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. A minor price fall ( yesterday’s -38 Dow points) creates a major 24 point move on the MO vs. a major gain (Monday’s +200 Dow points) creating almost the same move higher. When the MO falls 24 points on such a small loss its usually bullish. Again “wiggle room” has opened up for the MO to go higher – High two weeks ago 90 minus 42,.72 = @ 47 points or wiggle room for bulls. NEUTRAL
• US Dollar –  The dollar  fell  -0.43% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar  is in a two month long fall and is divectly above a major support level.(its 200 Day Moving Average – see chart) The fall for stocks = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a two week rally and is up +17% rally and is at 1977 Monday. Yesterday the BDI fell slightly to 1964. We’d have to break support at 1700 to turn really bearish or go back up above 1977 to turn bullish = Neutral

Reading Tea Leaves-

Investors purposefully chooses the three indexes that have perhaps the most significant impact on the market. They all measure different areas. Here’s the BASICS

The McCellan Oscillator -MO BASICS (see above)

• The MO measures if the market is oversold or overbought.
• It does NOT use volume to caluculate this (see above)
• The BB/HFT traders are making day and swing tardes that almost ignor old technical rules like volume as a confirmation of a market move.

The BDI – BASICS (see above)

• Measure costs to ship goods worldwide.
• Transparent figure – Unlike many economic figures – think shadow banks.
• Without exports/inports our globalized economic structure collapses.
• Lower prices = less goods shipped. Higher prices = more goods shipped & good for stocks.

The Dollar – BASICS (see above)

• The BB/HFT pay close attention to what the dollar does.
• Currency markets dwarf stock markets.
• When the dollar falls it means all those companies that export US goods will make more profits and markets will move higher. (& visa versa)

Analysis –

The US Dollar is in a two month free fall. (see below) . Today’s a big day because the dollar’s price is right on its 200 Day Moving Average. It certainly looks like the 200DMA support level is going to fall and therefore stocks will move higher. If you want to track (or invest) in dollar daily see UUP (Dollar Bullish index) This is where the action is.

Bulls are still in charge of mid term trend and we have more “wiggle room.”

Positions

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

EWZ is the only long position at this time. Will sell 50% at 5% gain or if it returns to the price it was bought for.

Interested in buying more (ETF’s based on major US indexes) on any further dip. Especially a dip in stock prices as the dollar rises like yesterday.

YOUR Stock List

BIDU, AAPL, SNDK, PCLN , F, CREE (8/10), SAM , GMCR, HMIN (8/10), SWKS, RADS (8/5), SKX, VCI, UFS, IMAX, UPS.

Paul R has posted some information on some of these stocks – see comments section of blog. Will get to in depth analysis next week.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

The Scream

“The Scream” – by Edvard Munch

Understandably, many of you are frustrated with the direction our country is heading in . You’ve watched again as another economic bubble of unregulated capitalism burst. Last year – two bubbles – housing & finance. The collapse of Lehmann Brothers and the financial meltdown showed the world we needed some rules to govern unregulated markets.

It’s obvious that relative to the world and especially Asia (China) that the US star is falling and theirs is rising. You thought finally your fellow American’s would get it.

The health care/public option failure is especially frustrating because some good ideas came close to passing. (See Bob’s comments onside of blog – Why was there no mass organized demonstrations for a public health care plan? and earlier comments) You realize that a 5 to 10% increase in health care each year is going accelerate the already growing gap between the rich and poor in the USA.

Is Bob right? – Perhaps in America the class struggle between the rich and those that have less is over.  The rich (symbolically – shadow bankers) have won a round or two this year. It can get depressing and make you want to scream.

Certainly in China it is hopeful that you see one generation move from slave labor in rice paddies to becoming a computer programmer.  But, admittedly here the flow seems in the opposite direction.

Sometimes you win and sometimes you loose. The bottom line is three other old adages “what doesn’t kill you makes you stronger.” You learn your lesson, adapt and move ahead.  The second adage is “it could be worse “ Yea it could have been a lot worse -  think President Palin. Lastly “think globally and act locally” The key word here is to act on what you believe in. Sometimes that seed you plant takes time to grow

So  scream or don’t, but keep fighting for what you believe in &

Happy Hanukah

Post script – I’m sure Bob will keep on trucking.

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+0.28%	down
NASDQ	+0.29%	up
S&P500	+0.70%	up
Russell2000-	+1.57%	-

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

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

Technicals, Fundamentals & Analysis

Running out of Oxygen – US & most world markets have been moving higher in weak, below average volume .  We’ve move up again over the last 4 days and inched out new closing highs for major US markets (all but the Russell 2000 index).

We are in moderately overbought territory (see below). Translation – we are staring to run out of buyers.

The inverse relationship between the dollar and stocks has broken down somewhat over the last two weeks. But its still there.

FEARLESS WEEKLY FORECAST – Up to flat week . But be careful we are entering overbought territory (see below) and if rally continues I’ll be taking profits rather than adding to stocks.

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 a fell a  -49 points Friday and closed at 3530. Over the last week the BDI dropped rapidly and the decline eased on Friday.  Since Mid November highs the BDI (see chart) has established a clear downward trend =   bearish signal

What it means-Since the low of Oct 2008 technically the long term chart is = Bullish. However we are now in a month long correction. Mid term trend = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets.

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The Dollar is currently the #1 forecasting tool (now weakening)

$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 was fell yesterday -0.23% . Anything close to or over +/- 0.50 is significant  The dollar closed at $76.35 . Technically have broken up through the 50 day moving average resistance level and then failed to break out through the Oct/Nov high around $76,82 resistance level.  In technical terms we have created a “double top.”  The $76.82 level is now a very important line in the sand.

The whole dynamic  here seems to have changed – We now, at least for the short term, have a rising dollar

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

There’s been a dramatic change in the last 4 trading sessions. We broke out of the range (see below) and are close to  overbought/sell positions . The index closed at +40.17 This is an  Overbought Position and we are getting close to a +60 dramatically overbought  or sell signal.

From past updates – 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

Bottom Line – Time to start thinking about taking profits, especially into any continued rally.

Positions

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

(again a little behind on latest moves)

We’ve had, and volume has confirmed, a quantum shift in markets. This may be temporary and it may be long term, but it necessitates major changes in positions. – looking for dollar to hold or add to gains . – This happened or was confirmed yesterday . Will wait to buy some ETF’s and stocks when McClellan Index says we are approaching overbought (@+60)

Recommended ETF’s and Trades

SELLING & BUYING

Your Comments - (See “Monitor’s” comments on side of blog – About a week  ago Investors411 sold its positions in GLD. DGP, AMZN & NVS ) – Not interested in opening any new positions right now Waiting for a clear signal from MCellan Index to commit additional capital or sell existing positions.

Right now, it sure looks like we are reaching overbought positions.  If we rally into the end of this week I’d take some more profits

Start small & Build your position – Buy the dip.

Long Term Outlook = CAUTIOUSLY BULLISH

The Second Maine Militia

Second Maine Militia leaders from Time Magazine

There are three excellent comments that you should read to the right. Let’s focus on Popeye’s reference to the forming of the Second Maine Militia . – They open their yearly meeting by blasting fake TV with smiley faces and phony slogans painted on them with AK 47′s and old cannons. Article from Time magazine  LINK

They get it.  They share the view that the US government has lost its moral authority. The problem is not right vs. left, Democrats vs. Republican , but “up vs. down.” Money quote – both political parties have “ degenerated” …“into whores for wealth and arbiters of empire.”

Something the Maine 2nd militia would be up in arms about is how Tim Geithner as NY Fed chair (now Obama’s Sec. of Treasury) sold out the taxpayers by over compensating the shadow banks (or in Maine Second Militia terms “whores for wealth”) in the AIG bailout. Lead story in NYT business section LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.33%	up
NASDQ	+1.38%	up
S&P500	+1.45%	up
Russell2000	+2.83%	-

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

KISS = Keep It Simple Stupid – The dollar rules

Dollar broke down through its $75.00 support level and the benchmark S&P 500 broke out to new yearly highs.

Volume our usual #1 confirmation factor was up, but still below average . Volume, therefore, did NOT confirm the price move. In fact over the long term the rise in stocks and decline in volume almost always signals a major reversal. But, for the last few months the Dollar rules and little else matters.

Bernanke spoke yesterday and overall he was very negative on the US economy. This is bad for Main Street and Jobs. But good for Wall Street because interest rates will remain low for a long time (Lots more on this, but limited time this AM)

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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 @ 1+% 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 +109 points yesterday and closed at 4220. Up 13 days in a row . The BDI’s growth did slow down a little as it approaches its major resistance level at 4291 . (This years high)  The BDI has rallied about 2000 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

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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 was down a  significant  -0.47% yesterday. The dollar closed at $74.88 . The $75 support level has fallen . If the dollar closes below $75 today it will confirm the breakdown

Which ever side the Dollar breaks out through will set the momentum for it and the opposite will happen for US ( and most world) equities.

CAUTION – The first breakout (up or down) is often false. Right now the momentum (since the long term trend is down) is with the Dollar bears and consequently stock bulls

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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 +35.50 . This indicates stocks are overbought and The McC rose +28.62 yesterday  If we get another rally this big stocks will be clearly overbought and its definitely time for long term investors to take some profits.  No one should be adding to long positions now. Traders and shorter term investors should be considering taking profits sooner.

Even though the Dollar Rules consider overbought levels (60+) on this index a point to lighten up on stocks)

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching -60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

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

Sorry have not had a chance to update Positions section in well over a week – see past updates

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD )  Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

Traders (short term plays) These are not ETFs, but individual stocks

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. But subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH