WHAT’S UP? – Iran Day 7 – Kissinger, Kerry, Kahameni, Moussavi, Ahmadinejad, Obama Effect – Some conclusions – The “Supreme Leader” Reading the Stock Tea Leaves – low volume – The dollar & the Baltic Dry Index – plus more

IRAN Day 7

Friday demonstration -Photo Getty

• Perhaps biggest rally yet as “Day of Mourning” brings million+ to street yesterday. Story Link
  
• “Supreme Leader” Ayatollah Kahameni today called the elections fair Story Link
• The “Supreme Leader,” this is the name they use for their dictator, accused US, Britian, and Zionists of compicity incasting doub on the elections.
• Henry Kissinger endorses Obama’s hands off strategy “Anything he [Obama] says would handicap Mousavi “(opposition leader) This echo’s Senator Kerry “Think Before You Speak” editorial

Some Conclusions the Far Left and Far Right are NOT going to like to Hear.

• The focus has shifted. It’s no longer The American’s against he Muslim world (you’re either with us or against us) but between the conservatives and modernist in Islam.
  
• Ahmadinejad was created under the hard line Cheney/Bush approach to the Muslim world. The “Green Revolution” under the “Obama Effect”
• Lesson learned – All Muslim’s are not the same – Just like American there are there many different sides
• If the Ahmadinejad/Kahameni militant temporarilly win – remember they are the main supporters who encourage and support other violent terrorist groups like Hamas and Hezbolah.
  
• Look at what the Ahmadinejad/Kahameni militants do to their own people and think what they would do to you, Sunni Muslims, Israel, or any who do not follow their orthodoxy.
  
• These militants in Iran are more dangerous than “Supreme Leader” Kim in North Korea because they are religious miitants.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

Mea Culpa – Like many others I’ve been caught up in the events in Iran and not been doing due diligence on stocks and other issues. But still believe in basic conclusions listed this week. However,  the conclusions/forecasts have been pretty accurate starting Monday. See reading the tea leaves below.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD – The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went up +0.45%.   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows.  Too early to tell difinitively. However if you get another 1 to 2% rise inthe dollar the mantra of the last few months will probably reapear. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. +2.41% in low volume. Financials are in danger of breaking down through a major support level. (see chart) They got a reprieve yesterday. Any breakdown would be bearish.

WTIC – Oil prices closed up +0.29% yesterday.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 6 day rally. But again yesterday the move higher was minimal and we have NOT reached the highs of 6 days ago.

We could be putting in a double top or a slightly lower high. This would be a longer term bearish sign if it occured.

Reading the Tea Leaves

The conclusions/forecasts have been pretty accurate starting Monday.

• Monday’s lead statement - Expect a tired low volume market to retreat this week .
• Low volume means indicates no bias toward bulls or bears.
• The low volume breakout has failed and we are back in the old consolidation area and, therefore back to NEUTRAL outlook.
• Strong support at @ 900 on the S&P 500. This has held for a couple days.
• The low volume indicates a technical correction of a market that went too high too fast.
• The possibility of this 4% correction turning into a 10% correction exists – still with low volume

The key two words are low volume . This shows little commitment my major players one way or the other.

The BDI and especially the Dollar are the indexes to watch. This is a technical correction, but volume is the key. Some unexpected bad economic news could turn volume around and put the bears and fundamentals in control.

In the Long term its hard to see the dollar move higher because fundamentally we are printing so much money and injecting a lot of stimulus intothe markets.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Iran Day 6 – Health Care, Despite 76% of American’s wanting a public component, its in trouble, why – The regulatory rewrite – Reading the Stock Tea Leaves – India – Stock predictions and more

Iran Day 6

Best sources for what happening remain The Huffington Post , Andrew Sullivan’s blog, and the BBC . (See yesterday’s post)

• Day of mourning for fallen proclaimed by opposition leader Moussavi
• Demonstrations continue and Ahmadinejad government continues to censor press (foreign and Local) and beat/arrest demonstrators

Scott (see posts on the right) reminds us Ahmadinejad is not a dictator and more like a "Secretary of State." He’s right. The "Supreme Leader" Ayatollah Khamenei is the religious dictator . He is backed up by a group of other religious leaders whose head is a Moussavi supporter.  The question is will this oligarchy of conservative religious leaders win or will "Supreme Leader."

Remember there were over 300 candidates for President and only 4 approved candidates allowed to run.

Health Care

76% of Americans want a public heath care plan to go along with a private plan NBC/WSJ Poll Link Unfortunately this legislation is in trouble. Here’s why.

• Opposition by HMO’s who fear competition
• Opposition by Drug companies who fear decline in prices
• Opposition from AMA. Doctors who fear loss in revenue.
• Decline in Obama popularity because of the depth of the economic problems.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

So far Volume has simply not confirmed any price move. Yesterday volume, although higher was not yet even close to average.

The exceptions is the NASDQ – Yesterday’s modest rally was accompanied by above average volume.  This is not yet significant because the rally was so modest +0.66%

Jobless rate for week =

Long Awaited Government’s Regulatory Fix

The administration released its prescription for regulatory fixes for what went wrong in the financial meltdown (102 pages) The reaction from Wall Street – Stocks went nowhere .

You’d think at least financial companies (shadow banks and related institutions) who got us into this whole mess would be in panic over regulatory changes. The XLF (financials/shadow banks) did loose -2.93% yesterday and is down this week in anticipation of this report. But this drop is not nearly as big as many over the past few months.

Conclusion – Too early to draw a conclusion about how effective some of these changes may be. They have to get through congress. Simply judging from the reaction of the Shadow Banks prices.  Their concerned – prices have fallen – but not panicked.

Just judging from how investors are reacting to proposed regulations – The suggested regulations are not tough enough. If they were we would have seen a bigger meltdown.

This is, hopefully, going to be the biggest regulatory rewrite since the Great Depression .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD – The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. After two significant days where the dollar was up a total of over 2% it fell -0.58% Tuesday & -0.59% Wednesday. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. -2.93% in noticeably higher volume .

WTIC – Oil prices closed up -0.67% yesterday. 

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 5 day rally. But yesterday the move higher was minimal and we have not reached the highs of 6 days ago.

Reading the Tea Leaves

Monday’s lead statement - " Expect a tired low volume market to retreat this week ".

The rising dollar is technically the most important influence on stocks. The correlation between the dollar rising and stocks doing the opposite is perhaps greater than 80% over the last few months.

NB – Volume is confirming Nothing. So it looks like the support levels will hold. This prediction yesterday looks premature . The XFL (could fall off a cliff if they think financial regulations are too stringent) and this would bring stocks down. Of course we need good regulatory laws and enforcement to prevent the same thing from happening again.

Positions

IFN (India) - Bought a small amount of IFN yesterday (India) yesterday at 27.6) This will probably fall more in sympathy when US markets fall.  So I may be premature in buying. Will buy more on larger dip.

The dollar is still key to market & oil prices.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING