Investors 411 Blog

What’s Up - Pakistan  - Are we making the same mistakes? ; Israel/Palastine - an ineviable war and a path not taken; Polls and Avaaza; Markets continue low volume & low volatility. Stocks held onto Monday’s gains; Volume and volatility continue to fall. Bulls with the football

Refugees (Photo LA Times)

Pakistan

Are we going to learn from the mistakes of the past? Right now the Pakistan government is fighting the Taliban in certain areas of Pakistan. This has created a refugee problem of  almost a million people. 

One report shows the same old counter productive results. Each day the Pakistan military announces the # of Taliban killed. Each day in the massive refugee camps full of people fleeing the violence, Taliban allies offer food and help to those whose lives have been shattered. Add to this often unmanned Ameirican planes blast the Taliban and there is significant civilian collateral damage.

There are some signs that things will be different. For now the Pakistani clerics are supporting the government denouncing the Taliban tactics. Also, Hillary Clinton has asked for $110 in humanitarian aid. Perhaps this time the focus will be more on winning over the hearts and minds of the people instead of focusing on body counts. Only time will tell.

Netanyahu  (Photo Google images)

Israel/Palestine

This is a minefield whenever its brought up.  So let’s take Obama’s Notre Dame advice and look for some common ground. A recently conducted poll of Palestinians and Israeli contained the following results.

• 70% of the Palestinians and 65% if the Israeli’s wanted Obama involved in the peace process.
• 59% of the Israeli’s think Obama is trustworthy  vs. 31% think Bibi Netanyahu (Israel’s PM) is trustworthy 

The Bottom Line here is the USA/Obama should get more involved in the peace process. If this situation is allowed to fester another war is inevitable, perhaps within a year.

 Avaaza (Voice) is a multi national group of 3 million members that is trying to get Obama more involved in the peace process. Check  out Avaaza.org. and their add.  Another way, if Avaaza is not your cup of tea, is obviously to directly contact Obama and let him know how you feel.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

Markets basically went nowhere and Volume remained light.

In one sense this is bullish – we held onto Monday’s big gains. However, volume has been weak and well below average for the last 4 trading sessions.  Since volume is the chief confirmation factor of a price move, we simply have no confirmation of the price move.

XLF - The ETF that tracks financials (mostly shadow banks ) moved lower yesterday -2.03 in light, but increased volume. The chart (see side of blog) shows light volume for the last 7 days. The XLF has entered a rangebound pattern between 11+ and 13+. Yesterday’s close was 12.04. The downside volume has been greater than the upside volume. This gives a little of the mojo to the bears.  A breakout from this range (@11+ to @13+) will determine the overall markets next move.

Market’s Major Mantra - Again – “If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks” 

WTIC - Oil prices closed at $60.10. Up +0.86%. Prices had established a range between $54 and $60. We are sitting directly at a major resistance level for oil.  

HIgher oil prices have two sides. Higher prices for oil usually means investors think the economic picture is getting better. Higher oil prices means everyone pays more for gasoline.

BDI - The Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. The BDI broke through a major resistance early last week and rose another +1.5% yesterday. Repeat - World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed. Very Bullish indicator for world economics and stocks

Reading this weeks tea leaves - Our primary forecasting tool – Volume – is not clear, so let’s use our secondary indicators -  

Markets moved higher on good news (India) and the BDI give us a short term bullish bias.  Resistance level of 13.08 on XFL is the breakout area to watch. Any move above this is very positive for bulls. Another important breakout level is 930 on the benchmark S&P 500. Right now the bulls have the football.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

Four Bad Bear Markets – Understanding long term bear markets is critical and the following two charts will give you a relative idea what a bear market looks like.  The G 20 – rhetoric and results.  Israel – right wing takes control and spurns Obama/Clinton peace process. Stimulus & Budget. Employment #’s. Why the current rally may continue – “Rotation” and volume.

Click on either chart to see bigger chart. Charts from dshort.com

Four Bad Bears

These charts graphically put in perspective where we are relative to 3 other major bear markets starting with the Dow from 1929 to 1932  The first chart is over 34 months and the second is over 10 years.  The second includes the often never mentioned 9 year long NASDQ bear market.

You can draw you own conclusions, but notice how far we’ve fallen and how close we are to the Dow 1929 to 1932 crash. Each bear market is different, and we are fundamentally moving a lot quicker than they did in 1929 to fix the problem.

G – 20

The rookie, Barak Obama, didn’t hit a home run but he certainly was a hit. He translated his world wide star power into results from refereeing a France/China verbal spat to getting a trillion for emerging markets. You can read the NYT editorial  the G 20 here More came out of G 20 than almost everyone expected. Obama message – “the world is in this together” – resounded.

This AM (EST) Obama is speaking to an packed audience in France and tying the failure of a mortgage in Florida to the failure of a bank in Iceland.

Israel

My closest Israeli friend absolutely hates the newly elected Netanyahu government. It’s like giving American neocons complete control of Israel. Netanyahu has already told the Obama  “Stop Iran or I Will.” 

Netanyahu picked an extremist as his foreign minister – a former Moldovan night club bouncer named Avigdor Lieberman, who like Iran’s Ahmadinejad has made some outrageous threat. He immediately  “spurned” the peace process started by Bush and supported by Obama/Clinton.

Stimulus & Budget

Although many Republican’s voted against Obama’s stimulus plan the last Republican (South Carolina) holdout governor caved in and will accept the stimulus for his state to keep teachers in the schools and cops on the street.

House and Senate have passed basically the Obama budget.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING