Investors 411 Blog

Bob Herbert- NYT

Jobs, Jobs Jobs

Agree with NYT’s Bob Herbert, “Obama’s Source of Trouble” is Jobs. The Obama administration from the start has underestimated the depth of this recession and its underlying causes. The end result – JOB LOSS in the USA.

Unfortunately, research on YOUR stock picks takes time, and I’ve run out.

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. (No changes this weekend)

Lightest trading day of the year.  Markets went no where.  Basically, this is a slight positive for bulls, because it means Friday’s rally held.

CSCO has some big announcement today – 11:00AM EST – Usually stocks run up before major announcements and investors sell the news.

NASDQ reached a new yearly high in weak volume. Think the benchmark S &P 500 has at least one more push to a new high this week or next. Then it should pull back. Longer term Outlook Cautiously Bullish.

Significant Indexes

• McClellan Oscillator dropped a bit to +68.29 yesterday. We are still well above +60 or Overbought territory. StockCharts has a better version of the McClellan chart ($NYMO) LINK.

• BDI – The Baltic Dry Index, which measures the cost of world trade (also a good indicator of how China is doing since they are huge exporters/importers) has exploded higher in the last few weeks = Bulls rule Yesterday the BDI, like stocks leveled off in front of a strong resistance level.
• USD – The US Dollar has been range bound for about a month after moving significantly higher. Early Dec the dollar bottomed at $74+ and is now at $80+. There are some pluses and minuses to the strengthening dollar. For US stocks the fact that they and the dollar are near highs together is Bullish

Positions

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

Since the McClellan Oscillator over +60, or overbought – buying right now is far more dangerous than when markets are oversold. I’m waiting till we get around +20 just to  nibble some more on some of  these stocks. Most stocks move with the overall markets. YOUR decision on when to trade is also based on how long you are going to hold the stock and YOUR level of risk.

If you are considering individual stocks I strongly urge you look at the charts and learn something about technical analysis.

NB -Last Week’s comments in black. This week’s violet. Charts underlined in Blue

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

• CAAS – volume confirming rally – A buy the dip stock. Ever since this stock was put on list it has gone up big time. A buy the dip stock
  
• PCLN – Breakout 5.22% move yesterday in good volume – A buy the dip stock Dipped last week and now in rally mode A buy the dip stock
• F – Breakout 5.71% yesterday in good volume – A buy the dip stock. Too over extended or above 50 day Moving Average.
  
• IMAX Investors411 owns this stock – Broke out to new high. Up +8.16 yesterday. A buy the dip stock
• CSCO, Slower steadier more for longer term investor. Like AAPL at new high this year. For longer term investor. A buy the dip stock
• SHOO, A 4.02% breakout in good volume yesterday – A buy the dip stock – traded flat after breakout – in consolidation A buy the dip stock
• ICON, Has formed a series of higher lows & higher highs – A buy the dip stock Broke out and is on run higher. Too over extended now.
  
• VPRT Up +2.49% yesterday in what could be a breakout – A buy the dip stock – Did break out. A little overextended. A buy the dip stock
• DGIT Thinly traded A buy the dip Consolidating A buy the dip stock
  
• CTCT Building on higher highs and higher lows – Buy the dip Thinly traded but Good volume and another breakout A buy the dip stock
  
• VCI Dipped and has made up most of that loss, but in weak volume Tempting, but risky Another breakout, over extended Tempting, but risky
• CREE -  Too overextended to buy now - A buy the Dip stock Starting to Dip A buy the dip stock
  
• SNDK – . Overextended now but Buy the Dip stock Dipped then moved higher. Too over extended
  
• VSH – . On another breakout,but in weak volume and overextended -  Too risky. Consolidating and now looking better, a little over extended Tempting
  
• HMIN – Up 4.02% yesterday in breakout, but weak volume. Too Risky Falling Too much downside volume

I like PCLN, VPRT, & SHOO because I understand what they do (buy their products), not because they are technically superior to the other stocks on this list. F (Ford) has just gone up too much. Personally, even though many of these are tempting, I’m waiting till conditions are more favorable to buy.

I would buy dips in IMAX. Thanks to two of you for reminding me they have their earnings report on the 11th. Alice in Wonderland has confirmed people will pay a premium for 3D movies.  With 3D TV’s already being sold and a 3D channel coming I think it clearly going to grow.

Bottom Line - Right now thinking more about selling (taking profits) than opening new positions because of short term over bought conditions.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Greece, Debt and YOU

You may or may not know Greece is having a problem with its financial debt. (NYT article) This small country, thousands of miles away is the tip of the iceberg of unsolved problems that directly relate to YOUR financial well being. Let’s put this in Bullet points

• A major reason Greece is in such trouble is because, like AIG and so many homeowner mortgages, Credit Default Swaps were placed on their debt. They still are being place on them today by shadow banks and hedge funds (Aside – hedge funds – are the equivalent of “economic hit men” and are perhaps even worse than  shadow banks – more later)  So there are a whole crew of hit men or CDS traders who will make money or are investing to see Greece fail and default on their debt.
• If Greece goes down, a lot of other European countries, who are in an almost similar situation, could follow. The list includes Ireland, Portugal, Spain, England and former Russian satellite countries. “Economic hit men” (Harvard/Oxford prof Niall Fergeson’s term for hedge funds) are the vultures circling here waiting to make money off the kill.
  
• California, Michigan Rhode Island and many US states are likewise in the same boat. Without the Stimulus package they could have gone under already.
  
• So is the USA – Except we have printed, & borrowed over S10 trillion to temporarily fix our problems.

This recovery, so far, is based on smoke and mirrors – Not transparency and rules that keep economic hit men like the traders at from AIG, or hedge funds from bringing the financial world to its knees.

Investing bottom Line - For years it was easy to recognize that globalization economically favored both emerging market growth and the privileged/wealthy class in the USA. Investors411 was very successful and careful in choosing investments outside the USA.  That potential still exists. However, an unregulated shadow financial system full of roving economic hit men exits. So, we have to move more cautiously, because the chances of economic bubbles growing and bursting is still INCREASING.

Therefore, using technical shorter term oscillators like the McClellan makes more sense right now.  It, no longer your parents buy and hold forever market.

Coming next – Economic Hit Men – Hedge Funds

Bloom Box (con’t)

About the most discouraging news, when you separate the hype is that the Bloom Box has not yet been built as an “in home power plant.” The technology may not be revolutionary, but who cares as long as it works and can be put into production sooner rather than later.

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.

The day started out as a disaster for US equities and recovered a lot of those losses. Even though we closed down in higher volume bulls had something to be happy about because of the recovery.  It seems like this market is looking for an excuse to rally.  It’s fundamentally hard to understand why, but some pretty bad news recently including weekly jobless data, Greece (see above) increased housing problems, & double dip inflation fears  yesterday, doesn’t seem to be able to sink stocks. Markets holding their own or have slight losses on bad news is a bullish sign.

Therefore, best read of the tea leaves is that we will hit +60 on the McClellan before we hit 0.

Significant Indexes

• McClellan Index fell to +28.62 We are somewhat oversold, but have a ways to go to +60 Oversold territory.

In answer to an email question – how did I come to determine +/- 60 as overbought or oversold? The McClellan Oscillator on the NYSE is one of dozens of indicators that show the market oversold or overbought. I like it because it is relatively simple.  Most stocks follow the trend of the entire markets. (say @ 80+%). This is especially true for, the ETF’s which are market baskets of stocks.

Click on the chart of he index above and adjust it to 2 or 3 years.  Note every time chart went over +/- 60. What I did then was also put up a chart of S&P 500 adjusted to the same time and compared the two. It’s not a perfect correlation, but if you go long (buy) when the McClellan dips to -60 or below you or sell (or go short) when it reaches +60 you would have done better. There are some weaknesses in just using the +/- 60 system that I’ll go over at a later date.

Positions

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

Will be lightening up when/if positions reach oversold 0n McClellan Oscillator.

As stated on Tuesday –

I’ve also set what’s called a stop/sell orders  on at @ 2% above what it was bought for

• recently bought (added to) EWZ
• 1/2 of MOO, a longer term position.
  
• The remainder of THY

Came very close yesterday to reaching stop/sell or selling TYH. This AM I raised stop/sell order to about 3% above what they were bought at. Will also, preferably, sell these positions if/when stocks are overbought.

IMAX – doing fine – really hope this will be a long term hold – and there will be other dips to buy into on the way up.

Other stocks on YOUR watch list – the earliest I would nibble is when the McClellan Index falls below 0 (zero)

Not adding to any major positions until markets become oversold again.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING