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Tax Options Impact

The WA PO has created a terrific interactive chart (bigger/clearer picture here) from (non partisan) Tax Policy Center, Joint Committee on Taxation, Office of Management and Budget.  They offer 3 options on Bush tax cuts.

Hopefully, in he Obama plan the $3,000,000,000,000 saved will go to deficit reduction over the next 10 years. I favor this right now, but another worldwide economic meltdown, 9/11 event, or other unforeseen disaster could change this.

Get Educated then Educate your friends - This is a great informational chart to post on your facebook page, send to friends , etc. Everyone can draw their own conclusions.

Hopefully, in he Obama plan the $3,000,000,000,000 saved will go to deficit reduction.

Note – The default is set to plan #1 – “Let the Bush Tax cuts expire” creates $3.7 trillion for government. Click on options to compare.

Blogo del Narco

People in Mexico are so terrorized by the drug cartels that few news sources dare print what’s happening for fear of reprisals. Blogo del Narco is the exception. (At top left there is a marker that will translate to English)

Reality is right (because of our huge # of drug addicts) now anyone in continental USA is far more likely to die from something related to Mexican drug terrorism than something related to a Moslem Jihadist terrorist.

A Mexican computer student is risking his life documenting drug terrorism in Mexico. I hope you check out and support his site.

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	+0.09%	down
NASDQ	+0.28%	down
S&P 500	+0.15%	down
Russell 2000	+0.28%	-

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.

Very weak volume & markets go nowhere. Today the FED injects more cash (see yesterday for explanation) and weak volume give BB/HFT’s more control.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar was flat 0.00% yesterday. For stocks. A little more often than not flat trading indicates a reversal. = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.71%yesterday. Has broken up through 50 day moving average. 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 rose to +7.89 = Neutral

Reading Tea Leaves

Another day that the FED is injecting liquidity in their Permanent Open Market Operation.  From yesterday – 8/19,24,26 & 9/1 So the major players are going to have some cash in hand to play with today.

Positions

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

Current positions - EWZ & EWS

Investors411 has just revised the entire POSITIONS section – You can click on the word POSITIONS at top of blog or LINK here Most revised is the ETF section.

Many foreign ETF’s are again technically outperforming major US indexes. I’ve listed a dozen.

Two New Listings in Position Section

USO (oil commodity ETF) & UCO (2x crude oil ETF)  The later is obviously more volatile. Both these have dipped and Investors411 is opening a position is USO & perhaps USC (the bigger the dip in oil prices the better UCO seems)

Reasoning – Investors, long term emerging markets are going to need more energy. The second reason is if the USA or Israel bombs Iran. Intrade puts possibility at bid 22.9% & ask at 25.6% this AM before 1/1/12 – also see last Monday’s update. In effect, this is a hedge, against something blocking oil supplies.

Downside – going into winter usually oil prices move lower and possible world wide recession.

Technicals USO - Higher highs over last 3 months and hopefully right now we are at a higher low.

Like EWS & EWZ starting with 4% of portfolio position.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

The Patriot Tax

Congressman David Obey (D. WS.) has called for a graduated war tax on all but military families. It’s long past time we went back to making war a shared sacrifice.  Now, we have those who put their lives on the line while phony patriots go to Disney World. Let’s have some real “support” for the troops. Story LINK

Others with more power in Congress are also interested in “a share the sacrifice” tax legislation Story LINK

Unfortunately, It sure looks like Obama plans to send 30,000 to 35,000 more troops to Afghanistan according to many sources. Financial Times LINK

What if at the same time Obama announces nation building in the narco country of Afghanistan he announced a Patriot tax.

Mexico vs. Afghanistan

• Afghanistan’s GDP is $10.2 Billion according the world Bank
  
• Mexico’s GDP is $1,009 Billion
• Afghanistan’s #1 product is illegal drugs and Mexico’s #2 product is illegal drugs.
• Mexico directly employs 450,000 , and indirectly millions in its $25 billion illegal drug industry.
• 14,000 Mexicans have died in last 3 years over drugs and who know how many  American have died directly and indirectly from their drugs or drug war.
• The giant Oil (Mexico’s #1 product) field offshore in Mexico is running out of oil and the Mexican drug problem is growing.
• Corruption abounds in both countries and many accuse the Mexican army of taking sides (one drug cartel over the other) in the drug war
• 17 of Mexico’s 31 states are deemed “narco” states.
• Mexico is on our boarder and Afghanistan is the other side of the world.
  

Americans are dying today from Mexican drugs and drug wars. The Taliban that we are fighting did harbor alQaeda (perhaps 100 left in  Afghanistan) but they are in no way a clear and present danger to the USA. They are not killing Americans outside Afghanistan/Pakistan.  As the drug problem grows in Mexico millions of Mexicans are going to continue to flee the violence & poverty and come to America. You think illegal immigration is a problem now? – Wait.  Which is the greater threat Afghanistan or Mexico?

See story (facts on Mexico from his article) – The Boarder Of Madness , by Philip Caputo in this month’s Atlantic. The Fall of Mexico LINK

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!

Index	Percentage %	Volume
Dow	-0.16%	flat
NASDQ	-0.31%	down
S&P500	-0.05%	down
Russell2000	-0.37%	-

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

Dollar flat = stocks flat

Volume was again anemic. Checkout the chart of the benchmark S&P 500 over this month (on right side of blog) and since early this summer. You’ll see as stocks rally the volume drops.  Volume has NOT worked as a forecasting tool over this period.  But over time/long term it is a clear indicator that fewer people are willing to invest more money in stocks.

Remember the story of the Frog slowly being boiled in water . He doesn’t know what’s happening. The decrease in volume as stocks rise makes me feel like that frog.

However, our Mantra remains - the dollar is dictating stock direction. Its also a dominant factor holding up economic recovery.

FEARLESS FORECAST – Up Week

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 has broken out to new yearly high

The BDI fell -77 points yesterday and closed at 4340. The up 16 days in a row streak has been broken. Technically  the BDI broke out through its major resistance level 4291 (this year’s high)  The BDI has rallied about 2100 points since late September. 3 down days in a row.

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.

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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 rose an insignificant +0.01 yesterday. The dollar closed at $75.12 .  As the chart shows in late Oct the dollar fell $7500 and in mid Nov. went a bit below that.  Again,this is directly above the $75.00 support level.

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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 -5.67 This is a NEUTRAL Position – stocks are neither oversold or overbought in the short term.

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)

Some stocks to consider (almost all for short term traders ) I’ve chosen shorter term charts (3 to 4 months), because these  would be shorter term trades.

AAPL – Apple Computer LINK to chart – Its got complete line of hot products that sells word wide & relatively great earnings report. Missed a buy the dip opportunity near Nov.1.  Would buy the dip or when McClellan Index gets to around -60.

GOOG Google – LINK to chart – Along with AMZN & AAPL it makes up a trinity of leading big cap tech stocks. Hit new high yesterday. Too high to buy now.

MS & GS – Morgan Stanley & Goldman Sachs – MS chart & GS chart These giant shadow banks are had their risk socialized by taxpayers – their competitors didn’t and many have failed.  More business for them. Great profits because they can borrow $ for almost nothing. They have dipped, but overall McClellan Index is neutral. If McC were oversold I’d buy.

BIDU – Bidu - BIDU chart – China’s Google.  If you want to play china and are willing to take bigger risks this company is for you. Buy the dip. Too close to new high right now.

FEED & SEED – AgFeed Industries & Origin Argitech  FEED chart & SEED chart. Have not had time to know what caused the explosion in price & volume of these two stocks over last two days.  However, if you gamble and love risk – buy the first two day dip. Pure technical play.

Long Term Outlook - We are on the cusp of change between CAUTIOUSLY BULLISH and NEUTRAL for stocks.

Long Term Outlook = CAUTIOUSLY BULLISH

WHAT’S UP – Swine flu –  Possible pandemic or over hyped media crisis?  How to protect your portfolio and Investor411 positions:

By Alfredo Estrella/AFP/Getty Images.

Fears of Flu

Fears of a flu pandemic are sweeping the globe., The head of the World Health Organization said the flu outbreak is a “serious situation” that has a “pandemic potential”.  Already over a half dozen countries have reported cases of Swine Flu.  All corners of the globe are being impacted by this possible pandemic. Its going to get worse before it gets better.

Most major media outlets have given issued alerts on what to do. World Heath Center has raised danger level over this disease today.  

Over Hyped? – 1/2 million people die from the flu each year.  It’s too early to tell how many people in Mexico have had the flu ,but 152 have died in Mexico. If a million people had the flu then this death rate is far less consequential. No deaths are reported in other countries.

It is also the end of flu season not the beginning (Dec.) So all this may be an overhyped media crisis.

Below under Technicals and Fundamental section of stocks is how to protect your portfolio.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.64%	down
NASDQ	-0.88%	down
S&P500	-1.01%	down
Russell2000	-1.92%	-

 

Technicals & Fundamentals

From Yesterday

“Possible FLU PANDEMIC negatively impacting markets throughout world.”

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Major Negative Impact of FLU on Stocks

Investors411 Positions - FXI (China) and EWZ (Brazil) are going to take  a hit.

Emerging markets are far more vulnerable to a real or possible flu pandemic. Brazil already has a few people with this strain of flu. Therefore you either exit some positions of buy protection. This may be an over hyped crisis, but right now its better to be safe than sorry. Personally I’m adding some more protection.

As always – don’t make huge massive moves (all in all out) – But  both FXI and EWZ have had a great run over the last six weeks and some protection seems prudent. 

• EEV is the Ultra Short ETF for the Emerging Markets. (2x short Emerging Markets)
• FXP is the Ultra Short ETF for China (2x Short China)

Strongly recommend that you take profits or protect assets especially in these areas.  Longer term once these stocks hit a bottom FXI and EWZ should present a great opportunity to buy. 

Obviously related transportation, travel, and commodities (especially hogs – even though you can’t get swine flu from eating hogs) industries will take a hit and here’s an article on  companies that may benefit. From Smart Money – 10 Stocks to Watch in the  Swine Flu Crisis

Sorry  I should have been more aggressive yesterday with this warning

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XLF - The ETF that tracks financials (mostly shadow banks) rose -1.62% Friday in decreased volume.  Financials have lead this rally and if they  collapse so will almost all other sectors (see Positions section of blog on XLF) 

The XFL is consolidating between @ 9.4 & 11.3. XFL closed at 10.76. We are still close to strong resistance level at @ 11.3.  This is the resistance level all Wall Street is watching.

Fed meets today.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! 

“A National Disgrace “- The American Justice System. South Park – Bailout video. Update on Iraq. A Berlin wall separating 39 million Hispanics from 135 million Mexicans. Pat Buchanan solution to the drug problem. The rising Red River. Over bought stocks market’s short term outlook 

Lady Justice by Rodringo Duran

“A National Disgrace” US Justice System

Senator Jim Webb (D VA) words at the introduction of the 2009 National Criminal Justice Act. Webb - With 5% of the world’s population, our country now houses 25% of the world’s reported prisoners. That’s just his opening in a laundry list of problems

Of course you’re wondering if any of the criminals who run the Shadow Banking System and robbed Americans of trillions will ever see the inside of a prison.  We, by far, run the largest police state of any civilized democracy, but if you’re wealthy shadow banker?

South Park – Bailout

 A 30 second You Tube video

Iraq’s Civil war

American corporate media has ignored the fact that the Shia have almost wiped out the Sunni’s in a bloody civil war that is still simmering. Baghdad once a majority Sunni city has now less than 15% Sunni according to Juan Cole’s Informed Comment blog. The latest on the Iranian backed Shia’s that control a fearful and divided Iraq/Baghdad – AP story

Mexico

Far more relevant than Shia dominating Sunni’s in Iraq to the US will be the 39 million Hispanics in the USA we are trying to separate from the 135 million Mexican’s by a wall. We will have to turn into what communist East Germany was when they erected the Berlin Wall to make this work or find a different solution.

Hillary Clinton is leading a diplomatic effort to Mexico that will culminate with an Obama visit. ” Clinton – “The U.S. shares responsibility for its neighbor’s drug violence. Now we must be just as smart about our ‘help.’” More from LA Times on Clinton and the Mexico Message

Hillary, is winning kudos as Secretary of State,

Solution to the Drug problem

Conservative/Libiterian Pat Buchanan often offers a choice in solving the “weed” problem.

•  Do what chairman Mao did and kill all the dealers and users
• Legalize it like cigarettes & alcohol, then tax it.

Legalizing pot would take a whole lot of business away from the violent Mexican cartels that operate in 230 American communities and account the 1200% increase in drug offenders in the USA since 1980. (stat source Jim Webb, point of view – mine)

The Red River

Just turn on the weather channel. The Red River in Fargo/Moorhead is cresting above 40 ft. (new record) in 6 below zero temperatures this AM. Best wishes to several bloggers and a grandson & granddaughter who live a few hundred yards from this river.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING