Investors 411 Blog

by Barr Jozwicki
June 4, 2012

Money Flows & Grows

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

.

Money Grows

When You know

How it Flows

.

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The European Union

.

Andrea Merkel/Germany

.

.

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Andrea Merle – NEIN

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Andrea Merkel has said NEIN to any

compromises

that would allow the ECB

(European Central Bank)

to stimulate and rescue the EU, like our Fed.

See - Bernanke Hero/Villain

.

George Soros

[Left Wing]

on Euro crisis

&

3 Months to save the EURO

.

.

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“You can NOT

reduce the debt burden

by shrinking the economy,

only by growing your way out of it”

.

Nobel Prize Winner

Milton Friedman

[Right Wing]

LINK

.

.

“buy long-term

government securities [today's QE]

and they can keep buying them

and providing high-powered money

until the high powered money starts

getting the economy

in an expansion.”

.

Even this President

Ronald Reagan

.

.

when confronted with a

minor Recession chose stimulus

He added more government jobs

.

.

Why doesn’t Austerity work when

a country/World is in recession

.

If you are having a tough time, you tighten your belt and spend less.

But what happens to a country where everyone tightens their belt?

Everyone spends less and the GDP goes down because no one is buying. Money stops flowing. Unemployment explodes higher and fewer are able to pay taxes.

.

No matter how angry you are at

those in debt or the banksters,

that anger just clouds your mind

.

The AUSTERITY Solution

to recover from a Recession

Does NOT work.

.

This is happening

throughout Europe

as the bankers/banksters/Merkel

who own the debt & derivatives

on the debt demand

only austerity.

.

********************

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Paul’s Corner

.

.

You Were Warned!

.

This Saturday in the comments section, I suggested y’all review Ron Brown’s Weekend Report. It’s an excellent review of the current market and Ron gave examples of simple chart actions that you should review and understand a head and shoulder top and the bear flag.

Ron’s Weekend Market Report:

Ron explained the head and shoulder chart formation and he shows the breakdown of the neck line on May 4, which was a nasty day in the market.

So, what does one bad day have to do with the value of my portfolio? Barr always suggests we buy the dip!

As we look back now, that break down through the neck line was a good warning and I’ll wager my 1 share of FB, the big boys were unloading stock from that point on. If you observe and understand a simple chart formation such as the head and shoulders top, next time you see one you might start protecting your portfolio!

After watching Ron’s movie, I took a look back at that May 4 date using my EdgeRater program to see what sort of warning shot we received.

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http://people.delphiforums.com/SNOTZALOT/may4kahunaresized.gif

.

The top circled line in the chart shows how the various indexes, S&P 500, NYSE, Dow 30, etc. moved down roughly 30% down through their Bollinger Bands in one day, we had a Kahuna!.  My good friend Ian Woodward warns that when you have a Kahuna with a 3 bucket down day (down 30%) sit up and take notice! A -30% move down in the Bollinger Band is serious!

From Ian’s last blog:

Kahuna (Little and Big) The Kahuna indicator measures volatility and momentum by looking at the one-day change in %B. The Big Kahuna is a 1-day change in %B of plus/minus 0.40. A Little Kahuna is a 1-day change in %B of plus/minus 0.24. Big Kahunas are signs of strong momentum (either up or down) and work well with the Eureka signal to identify tops and bottoms.

In the comments section from May 7, I suggested a review of Ian’s blog from the evening before where he discussed in detail the previous Friday’s 30% decline in the indexes position in their Bollinger Bands. Please review this blog!


Ian’s May 7 Blog Link:

So, we had a major shot across the bow May 4 and what do we see this past Friday? Another red Kahuna! This one was not quite as strong as the May 4 Kahuna, but it’s still a major move not to be ignored.  As Ron suggests in his Weekend Report, this past Friday’s down volume wasn’t large enough to be considered a “bottom” in the market. (Good grief!)

So my friends we were warned a month ago, just by looking at the charts, gloom and doom were knocking at the door. The charts probably indicate we haven’t hit bottom, are you protecting your grandkids inheritance or have you purchased another bottle of Tums?

Breaking news, added Sunday evening, as one would expect, Ian spent Sunday writing a great blog discussing the state of the market and what to watch for. It’s a must read!

The rest is up to you depending on your stomach:  Foxhole, Short, Dabble, but wait for the QUALITY of the Bounce if you are already out, using these concepts to stay on the right side of the Market.  Don’t forget we need Eurekas and Kahunas to the upside. No excuse now after my last blog note of a Glossary of Terms used.

Ian’s Blog Sunday June  3:

Disclaimer, these comments were written Sunday morning and are intended for education only. As we all know, by the open Monday morning all bets and suggestions are off!

Tums?

.

.

*********************

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Stock markets and Economies

are more

globalized  and interconnected

than ever

.

.

The World’s Largest Economic Block

- The European Union –

is leading worldwide stocks lower.

.

  • 411 uses the yield of the 10 year Spanish bond as a leading indicator of market direction – Our canary in a Coal mine. – Bond yield up = stocks down
  • On 3/2 Spanish bond hits a low of 4.87%, in mid April it tries to hold its 6.0% resistance level and in Early May breaks up through the 6.0% resistance. (see chart Below)
  • All major markets, that are interconnected through trading and especially banking, are fixated on Europe’s slow meltdown

No changes in LTO

till Spanish bonds close

below at 6.25%.

.

Longer Term Outlook

3 months+

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CAUTIOUSLY BEARISH

.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.



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September 27, 2010

The stampede

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , ,

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Why The Bull Are Stampeding?

Massive Manipulation & Economic Mega Tends.

History

  • Globalization mega trend provides cheap and now educated labor force. Energy rich (mega trend) countries benefit from rise in prices due to dwindling supplies and growing globalized demand.
  • To keep up with emerging markets US financials (shadow banks) cheat and over leverage the system. US consumers also encouraged to acquire massive debt. Instead of calling this keeping up with the Jones’s call it keeping up with the Wong’s.
  • System wide  meltdown for countries believing in casino capitalism - commonly called free market capitalism.
  • Attempts to bring transparency to markets failed. Attemps to make too big to fail over leveraged shadow financials go out of existance – failed.. At best weak guidelines set in place. Another opaque financial system begins to build.
  • Some Americans realize that jobs are going overseas and and a wealthy oligarchy and major US companies are making a ton of $ off this system, that also brings lower cost goods to USA.  No jobs, Gordon Gecko’s in control,privatized gains & socialized risk, Main Street screwed, 1 ib 7 Americans now in poverty – everyone angry.

Now

  • China as well as some other emerging markets manipulate their currency. Paulson/Bush & Geithner/Obama throw hissy fits, but do little/nothing. Why - because major US industries and industrialist are making a killing (From WalMart to Apple to Caterpillar) off of slave/cheap labor in emerging markets that are manipulated to stay low relative to USA. They make $ off of China’s manipulation.
  • US Fed dumps trillions of dollars to financial institutions in USA that further finance casino capitalism. This too is obvious currency manipulation. Dollar falls (less valuable because more $ are printed) and stocks move higher.
  • Most recently added – Fed dumping or printing money scheme is the PMOC (see below) Fed promises to do whatever it takes to keep US economy primed.
  • Potential Gridlock in congress means shadow system that benefits Chinese dictators, Oil rich countries/dictatorships, a wealthy oligarchy continues. Manipulated by fear, vanishing American middle class is for the most part clueless as to what’s happening,

Stocks

  • The return to casino capitalism and flood of money into US markets means manipulators (hedge funds, BB?HFT’s, Sovereign wealth funds etc.) are overjoyed.
  • Retail investors sense another bubble building, but don’t understand what’s happening. Why are jobs not coming back? – Obviously they are going abroad.
  • Stocks of the big companies/industries that profit from abroad and emerging markets soar because the manipulators are pouring money into them.

Bottom Line - We retail investors are just insignificant players in a massive attempt to manipulate the forces of globalization and dwindling energy supplies. Of course another bubble is building. Manipulation now has long term consequences. As long as you understand how the money flows you can invest accordingly.

Thanks, for the complements on the market calls this weekend. All I’m doing is watching money flows described above.

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

Index Percentage Volume
Dow +1.86% up
NASDQ +2.33% down
S&P +2.12% up
Russell 2000 +3.42% -

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Technicals, Fundamentals & Analysis

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

Mantra for September“The Black Box/High Frequency Traders BB/HFT control the majority of trades. CNBC’s Jim Cramer -”BB/HFT make up 80% of trades.”

US Markets

Another massive rally in weak below average volume, which is also well below last years volume.  The rally is real but it is being run by BB/HFT’s, Sovereign Wealth Funds, Hedge Funds and other manipulators. It’s also being juiced by our Fed that is and promises to PRINT or “do whatever  it takes to keep the economy going.”

The single most important new factor to look at is our Fed’s PMOC pouring more and more $$$$$$$ into the economy. Another 3.8 billion last Friday.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell  -0.77%,  The inverse correlation between the dollar & stocks seemed to have broke down earlier this week, but Friday made up for all that.  Trend for stocks = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell  - Friday. Two week BDI fall. After 8 week bull run trend seems to be changing to = Bearish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to +11.14 yesterday. Location= NEUTRAL

Reading Tea Leaves

The MO – is our #1 forecasting & when to buy/sell tool. Even after a the huge rally Friday the MO is still just above zero and just below its 50 DMA at 15+. Clearly Neutral which gives the bulls room to run even higher.

Thursday the MO reached -20 and , as predicted, this was a major support level.

The Dollarbroke down though major support last week. Even though the daily inverse relationship between a falling dollar and a rising US stock market did not match up the weekly did. It was a/the primary cause behind the bulls taking charge..

Tea Leaves – It the past year whenever the dollar has taken such a large move up or down it usually takes a few days to consolidate or move in opposite direction.  This time I’m not so sure.

Here’s the Bull’s formula – Fed prints/pumps money into economy. Huge financial institutions get that $ for almost nothing. Lots of the $ goes to stocks and eventually ends up abroad.  The more $  that get printed the more it forces dollar down and this too makes stocks go up. (US goods cost less abroad) Bulls run till we get overbought.

Positions

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

(I do manage 6 accounts that have other positions)

Longer Term positions -

  • EWS (Singapore) 2% trailing stop loss on 50% of position/ 4% trailing stop/loss on the rest.
  • USO (price of oil/commodity).
  • SSO (2x what S&P does- this ETF is more a trade that may turn into an investment) I now have a 3% trailing stop on this trade.
  • TYH (3X technology) Bought at market open for 33.48. For today have stop/loss at 33.49.

I would be buying some of the individual stocks on YOUR Stock List, but just do not have the time. See Paul R’s comments.

Also as someone just wrote in this AM buying most of or the whole list of ETF’s or YOUR Stock List (also consider high dividend stocks) is a way to go instead of picking a few from the lists. (more on this later – see comments section of blog)

I know everyone just wants to buy and hold for years. Just can’t recommend holding for longer than a cycle of the MO (McClellan Oscillator).  Mostly a cycle from oversold to overbought (@-60 to +60) lasts from one to three months. Sometimes shorter.

Remember, we are now in a bullish cycle and therefore, elevated the buy/sell criteria a bit on the MO. (see past investors411) Watch the dolar and its invese relationship to stocks.

Traders

From Friday – “This is again one of those no guts no glory moments.” Bulls still in charge and have lots of room according to MO to move higher. Buying dips of stocks/ETF’s that are not too overbought on dips.

Investors

From Friday – Those of you with little exposure to stocks “may want to nibble.” You can still nibble on the dip if willing to accept risk.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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July 20, 2010

Jobs, Jobs, Jobs

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , ,

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

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Jobs, Jobs, Jobs

Ever since the 2008 meltdown Investors411 has stated financial and economic conditions are “far far far far far bigger than first imagined.” This statement that has been made many times and is still bolded in the position section of the blog.

Poll after poll (except among Tea Party supporters) have said “To Hell with the Deficit, Its Job, Jobs, Jobs.“ See yesterday’s Investors411 for  a list of historians and economists who make the same case less colorful language.

Immediate Help

  • Extend unemployment benefits its “the human thing to do.” Republican Billionaire Mort Zukerman
  • Extend unemployment because (the average American unemployment check was under $300 a week in 2009) it will stimulate the economy. These people will SPEND the money and we all benefit because money flows.
  • Republican’s know that the longer they can delay a vote on this the less money will flow and consequently the more people unemployment will grow before the November elections. Every day they delay = the more votes they get in November, because they can blame Obama for unemployment.
  • It’s certainly hypocritical to endorse the Bush tax cuts on the wealthy. Next vote for unnessesary war funding outside the budget for over 10 years. Then play politics because our own American families of former workers are going hungry.

Longer Term Help

  • Infrastructure projects get you the most bang for the buck according to Mort Zukerman (who I usually don’t agree with) and most economists.
  • We need an Independent Infrastructure Bank Not one where a powerful Senator like Democrat Harry Reid can take $350 million for a high speed train from LA to his home state of (Los Vegas)Nevada.

Bottom LineAndy Grove, Intel’s CEO had it right – Globalization has created a major “scaling” problem in the USA. Unless we somehow change that direction the ultimate result is going to be very negative economically for the USA.


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 +0.56% down
NASDQ +0.88% down
S&P 500 +0.60% down
Russell 2000 +0.44% -

Technicals, Fundamentals & Analysis

The High Frequency/Black Box traders (that are focused on the here and now) pushed the markets higher in weak trading. This has been the typical headline for many moons in what’s been a falling market since April. – Lower price highs and lower lows.

IBM was the earnings report of most interest and its down @-4% in pre market trading = Bearish

APPL – Both Monitor and Paul R have warned about today’s earnings report at close.

YOU have pretty much reached consensus that holding a stock, especially in a declining economic environment, is highly risky before its earning report. If you are an insane lover of risk (short term trader) and AAPL continues to drop before earnings – it does take some of the downside risk away.

Ruptured oil well leaking again and possible leaks on oil on ocean floor related to BP oil spill. Best site for this is The Oil Drum = Bearish

Significant Indexes-

  • McClellan Oscillator (MO) rose to +21.91 [+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 Friday was basically flat +0.04% [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. Earning have trumped this indicator for now & we have consolidated for last two days. = NEUTRAL
  • BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China.) BDI is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks the BDI rose Friday & +0.70% yesterday. At long last the BDI finding a bottom - a bullish sign, but too early to tell.Fundamentally the -60% drop is very BEARISH

Reading Tea Leaves-

Don’t think the negative fundamentals of the BDI (Trade and China) & Europe have been fully integrated into stock prices yet. Sure fells like we are going to have a negative day. But, with Black boxes in control (almost everyone else has fled to safer investments of bonds and treasuries) – you never know.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

From YesterdaySH – The ETF that shorts the S&P 500 was bought at 51.45. It’s up over 3% now. 1/2 will be sold at 3% profit and a stop/loss has been put in place at what it was bought for. 1/2 of SH was sold for 53.02 for +3% profit.  Letting the rest ride and will sell when conditions on MO near oversold.

No other positions long or short are contemplated in immediate future because MO is neutral. Sorry, there is little to do but sit tight,  be happy you’re almost all in cash, and wait till we get oversold or overbought.

One exception is GLD or DGL (@200% GLD). Its dipping and if it falls to its 200 DMA – would consider buying on fundamentals.

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September 9, 2009

Market Updates – The End of Democracy?

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , , ,

The End of Democracy?

E.J. Dionne who writes primarily for the Washington Post had an editorial entitled It Could Be the End of Democracy as We Know It . LINK

What Dionne is referring to is an upcoming Supreme court decision that threatens to overrule a 1990 decision that upheld the long-standing ban on corporate money in campaigns.

Yes, McCain/Feingold legislation made it much harder for corporate giving and it still got through. However this legislation would open the floodgates.

HAVE WE so quickly forgotten the #1 lesson of the 2008 economic meltdown-that Greenspan as he admitted was wrong and “free markets” could not regulate themselves ? This week US corporations may be given unfettered access to buy politicians. Indeed as Dionne explains “President Barack Obama’s health care speech on Wednesday will be only the second most consequential political moment of the week.”

Quantum Shift in Savings

Another unheralded event is not making headlines. That the quantum shift of Americans from net borrowers to savers . Since Reagan took office and reversed the trend of diminishing national deficits (see last Thursday’s blog for data on deficits as part of GDP) The shop till you drop,go into debt up to your eyeballs era is coming to a close for the American consumer.  MSNBC reports that in July “Americans cut debt by $21.6 billion in July; $4 billion was expected” LINK

Some conclusions from this data:

  • How is there a quick economic recovery if American’s save more?
  • Saving more is obviously a good thing and increasing debt bad.
  • Real Organic growth is going to come from outside the USA (countries like China who were huge net savers and are saving a little less now)

Financial flows like this reinforce the concept that in the USA any recovery in GDP is going to be slow to materialize and real organic growth is going to be led by emerging markets whose middle classes are growing and don’t have huge deficits.  Even countries like Germany who have been net savers and whose businesses do not worry about paying health care costs are at a distinct advantage over the USA.

This is why Investors411 focuses on foreign ETFs that have organic growth and growing economies/middle classes – Invest in where the money is and will be flowing

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow +0.59% up
NASDQ +0.94% up
S&P500 +0.88% up
Russell2000 +1.03% -

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 and Fundamentals

Major US indexes rose again.  This time volume rose,but was still below average.  Stocks are rising because the dollar is falling. It took a massive hit yesterday.

This week , FEARLESS FORECAST - is for an up week .

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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) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off and started to rise over the last two weeks, +33 yesterday.

Each day this looks more like a base has been formed above a key support level – Bullish short term outlook for BDI and we have certainly recovered from the devastating lows of Dec./Jan.

The BDI is 41% off its high (early June) Before that it gained almost +170% from early April to Jun e

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

The dollar dropped of the table and through its major support level. It fell a whopping-1.16% % yesterday. Dollar closed at $77.26. Its  major support level is @$77.5 . Short term Bullish for stocks

Mantra Dollar up = US stocks down & Dollar down = US stocks up

Bottom Line – Both the BDI & the Dollar are forecasting at least a short term rally. Key to look for is can the dollar get back over its $77.5 support level.


Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Sold 1/3 (or 6% total stock) position in FXI (China) last week A Mistake . With both the dollar falling and the BDI finding technical support and rising China again looks like the place to be invested in. Investors411 has only 12% of its portfolio invested in China. Looking to now add to this position.

Individual stocks-Another reason I hate individual stocks is because an event like a big conference can impact the stock. Apple has one of those today.  Will Steve Jobs show up? How will he look, what new product will they feature? – I have no idea on how to answer these questions that will move the stock. All I know is technically it outperformed the major US markets and like NVS is at a new high.

Taking advantage of falling dollar. There is a downside to a falling dollar, especially a currency that falls like a stone. However for most American companies that rely on exports for real organic (not cost cutting) growth benefit from this.  It also inflates the prices of commodities. Its no accident that as the dollar reaches a yearly low commodities like gold, oil, and copper reach highs. So any country or commodity play looks good right now.

Right now Investors411 is caught with its pants down because we are not more fully invested in countries & sectors where the money is flowwing.

Have to update positions section (away all weekend) Investors411 problem is that we are under invested in equities. The predicted 5 to 10% correction this month almost happened last week (-4+%), but close doesn’t count.


Long Term Outlook = CAUTIOUSLY BULLISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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March 31, 2009

Market Updates – Super Tankers

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , ,

The more you know about investing, the more you realize that everyone else (especially the more $ they have or control) knows more, has a bigger support team , more computers, better access to data and knows how to bend/manipulate whatever they are investing in.  These wealthy investors/entities/countries are like huge slow moving/turning super tankers. Therefore, your advantage is to recognize which way the fleet of tankers is moving and get their first.

Baltic Dry Sea Index

Nothing could be less exciting than something called the BDI.  But it is one way to measure the FLOW of money or direction our globalized world is moving in. The top 20 economic countries are meeting in London (see comments by “Critic” from London on right side of blog) The G 20 meets later this week and perhaps the drop in the BDI shows how fractured or nationalized the worldwide response to the recession is.  (Lots more below on BDI under fundamentals)

Money Flows

  • To start realize that the standard of living just in the USA has or will drop from 20 to 50%. My guesstimate is combining the loss in home value, investments, jobs and the increase in debt. 
  • Other countries, especially those like England, Iceland, and Eastern European countries whose banks adopted the same “free market” unregulated, over leveraged financial system are in worse shape. 
  • Protectionism, just like in the Great Depression stops money flows, and we are a global economy. The world wide recession’s greatest danger is nationalism stopping money flows.
  • Money flows best when goods are bought and sold. The more people that spend  money the faster it flows. When money is hoarded by an oligarchy or debt is forced on working folks money flows dry up.
  • The major question emerging from our “Great Recession” is how to get the money flowing again and whose going to pay for the past mistakes.

Investment Choices

 Our huge debt, over leveraging and reliance on credit before the meltdown hit has put this country in much worse long term position to fix the problems created. This is why Investors411 recommends using hedges (ETF’s that short the markets – see Position sections) when markets rally to far too fast in the USA.

This is also why Investors411 recommends in Brazil and especially China (see Positions section of blog). They don’t have debt, but do have other resources.

Gold, GLD, is also recommended because in the long term all the money thrown by super takers (governments and other entities) to fix the problem is going to create inflation and devalue currency. This usually makes gold and other commodities more valuable. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

 

Stocks

 

Index Percentage % Volume
Dow -3.27% up
NASDQ -2.81% down
S&P500 -3.48% up
Russell2000 -3.04% -

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Technicals & Fundamentals

Monday was a significant meltdown day. When you put it together with Friday losses total over 5% for the major US indexes.  The same for most of the rest of the world.  Volume, the chief confirmation factor of a price move was below average (Dow was at its 50 day moving average). Technically, volume is still not confirming the significant price move lower.

The S&P 500 did close just below its 50 day moving average – support level (50 day MA 791 & closing 788-see link to chart on side of blog). Technicals, still look good, but…

Fundamentally, all the companies related to financials from GE to AIG saw what happened to GM. Obama administration got a whole lot tougher than they expected and financial giants worried the same could happen to them. GM was supposed have some sort of special protection because of the close relationship between Democrats and unions.

Remember the bottom line issue is who pays to fix the problem created by the over leveraged crooks in the US financial companies – You (taxpayer), stock/bond holders, employees, some foreign entity, etc. and  how much will each group pay? – Stock markets in the short term go up the more taxpayers pay and the less transparent companies have to be.

Baltic Dry (Sea) Index - (see chart link on side of blog)  This rather obscure chart measures the flow of goods across the world. 

Why its so important is that we are in a world wide recession and if the flow of goods increases, its a sign of things improving. PROTECTIONISM or the lack of trade hinders the flow of money and the creation of wealth.  So when this index starts to deteriorate we have a problem.  

The BDI is also important because it is more of a leading indicator rather than a lagging indicator.  Check it out and compare it to the major US indexes. It’s not perfect, but the BDI usually moves in one direction before worldwide stock indexes. Why not if the flow of trade dries up a nation’s economy will suffer.

Here’s the problemthe BDI since 3/10/09 has done nothing but decline – from 2298 to 1646. Very bad news for world trade and stock market bulls. Before we had our three week rally this month the BDI was slowly building off a bottom around 660 and rose significantly in February an then continued up in March.  

Reading the Tea Leaves – In the shorter term – Thursday the gov’t committee (Its called something like FASBY) meets to supposedly change Mark to Market accounting.  This should give financials a boost.  But longer term watch the BDI, if it keeps falling so will worldwide stocks.

Long Term Outlook CAUTIOUSLY BEARISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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