Economic Bottom Line

Imagine if every top narcotics official had a $2,000,000 a year job waiting for them with the drug cartels after they retired. What would happen?

(paraphrasing Matt Taibbi on shadow finance and politics in USA)

That’s essentially what we have in the USA. Not in narcotics, but in finance/business. Not only is the money that oligarchs provide financing political campaigns dominated by business, it also dominates the retirement and appointments of top  ranking elected and appointed officials who are supposed to regulate Wall Street.

Over the weekend NYT’s Joe Nocera published yet another list of Wall Street crooks who are too in bed with our political leaders and the regulatory agencies to even be made to say they are sorry for what happened. (thanks to Popeye for referencing this in comments section of blog)

Charles Ferguson, whose film Inside Job last night won the Oscar for best documentary again stated the obvious – the economic crisis is a multi trillion dollar colossal crime perpetrated on the working-class masses by a greedy few – yet no one goes to jail.

It may infect more Republicans than Democrats, but the far more important point is that self serving corruption dominates BOTH political parties.

In 2008 a great financial and economic problem became apparent. Trillion of dollars has been lost and additional trillions thrown at this problem, yet  unlike other financial meltdowns, no one has been held accountable. Virtually nothing has been done to structurally change or investigate the root cause.

Our politicians can not get at the root cause because they would have to admit corruption and put the powerful status quo at risk of loosing their power. The very power that insures the politician’s election and future wealth.

Jeffry Sachs, of Columbia University, realizes that long term sustainable development is no longer possible in the USA. Both parties are financed by the  big money of the wealthy elite whose lies are shouted at us so thick and fast that we can only hear the drumbeat of propaganda and slogans.

So the malaise of a temporary recovery in the selected sectors of the casino capitalism that befit the wealthy elite continues as different economic bubbles continue to build.

If your one of the financial masters of the universe whose income tops $2 million a year, the rest of us in a globalized world are little more than cows that eat grain, providing milk and eventually get slaughtered. Chinese cows, Indian cows, American cows – what’s the difference? Sometimes the young cows wake up – like in Egypt . They may not win, but at least they had the guts to try.

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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

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Index	Percentage	Volume
Dow	+0.51%	down
NASDQ	+1.58%	down
S&P 500	+1.06%	down
Russell 2000	+2.21%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble.

• Once again stocks rallied in below average volume. – Same old Fed manipulated stock bubble building reasserting itself as the dominant trading pattern.
• Libya did manage to disrupt last week. Until the oil fields start burning its impact on stocks should diminish.

Below is a repeat from past Investors411. It will be placed in the strategy section of blog until it is not longer relevant.

• Mantra #1 - till it no longer works - still endorsing the concept that the Fed POMO [schedule] is and will be the key factor in keeping a long term rally going. Another term for this is quantitative easing or QE #2.
• Mantra #2 - 50% to 70% of the volume on US stock exchange is soaked up by High Frequency Trades chasing imbalances in trades. This means 30% to 50% of volume is made up or real or valuation investors.
• You can NOT compare, use many technical tools, or historic data to evaluate this market because it is being manipulated higher by our Fed or central bank and the majority of volume is soaked up by HFT’s chancing imbalances.
• Two significant reasons allow the Fed to keep the liquidity tsunami flowing - Housing prices are hurting & Unemployment figures are high.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose  Friday +0.29%.  Dollar has bounced off a short term support level around $77.  Let’s see if it holds today.  If it falls bulls get the momentum back, but until then= Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Rose to to +3.17. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. Note: the +30 barrier has become a very strong resistance point. Stocks outlook = Neutral

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Buy the Dip – Same plate that was served over a week ago is still there.

Reading The Tea Leaves

The same Old Song - But we obviously have a new fundamental factor – revolutions in oil rich dictatorships - This could alter everything. Some truly bizarre statistics that have me very concerned.

• In times of crisis everyone usually piles into the dollar – They haven’t
• The Saudi’s promised to make up for the lack of Libya’s supply problem. But you can’t replace “sweet” crude with gunky oil. Strange this is not impacting markets more.

Paul did a great job over last week and called the dip perfectly. As stated many times +/-30 has become the new short term support/resistance level for the MO (see above.)

What to watch today

USO - oil prices

UUP - (Tracking ETF for dollar)

Remember - The dollar is a contrarian indicator. Bad dollar = good stocks

AAPL – Bounced off its 50 DMA support level. As long as it hangs in above that everything OK

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Positions

Not settled in enough after vacation to make a call on anything except buying oil ETF on dips. Too much global volatility.

UCO -(2x oil prices)  Buy the dip. Why not its a hedge against higher gas prices.

REMX (Rare Earth ETF) – Really believe this a good long term holding.  Hopefully longer term holding. Stop set about 2% below rising 50 day moving average.

DGP – (ETF is 2X gold) .

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy. Perhaps preferable or a good alternative would be *DJP that is more agriculture and metals or RJA (all agriculture)

RJA (Agriculture commodities Index)An  ETN, not an ETF. Hopefully longer term holding. Stop set at @ 2 % below rising 50 DMA.

UWM (2x small cap stocks) TNA (3X small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#4 is under construction.)

Democratic congressman Jim Clyburn

“Baby Killer”

YOU, in the comment section of the blog, have had a rational debate over the tax implication of the health care bill starting started by John Sovjani and now ending with a NYT article from Ewanapat that shows, in part, who benefits and who pays. The rest of the nation has not.

One Texas Republican congressman screamed “Baby Killer” while a Democrat spoke on the heath care bill. Later he apologized, but this calculated move will bring huge amounts of cash into his campaign for congress. Across the country Death Threats, vandalism, break ins, gas lines cut, and even photos of hang man nooses have been sent to at least 10 Democrat congressmen and women who voted for the health care bill.

Here’s a report from yesterday. From today, where families of Democratic congressmen who supported health care are moving out of their districts because of the death threats. Sarah Palin’s website is painting bulls eye’s on targeted democratic congressmen CBS reports

When Black Democrats like congressmen Jim Clyburn (D – Majority Whip) gets a noose & death threats faxed to him it is exactly what happened to those who dared stand up for civil rights in the 60′s.

No matter what side of the health care debate you are on – if you do nothing you condone the behavior. At least tell a co worker or friend that this kind of tactic is unacceptable.

Chimerica

(part 2)

The USA has lost 2.4 million jobs because of the trade gap with China -Study reported in WSJ. Yesterday, our House Ways and Means Committee, announced it was holding hearings China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

Bottom Line – We need many of those 2.4 million jobs back in the USA, but a trade or economic war with China would be devastating to the world’s economy.

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	-0.48%	up
NASDQ	-0.68%	flat
S&P 500	-0.55%	up
Russell 2000	-0.96%	-

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 US dollar exploded higher breaking out of its trading pattern. The strong inverse correlation between US stocks and the dollar once again took hold pushing US equities lower. Stocks fell in basically higher volume.

What’s happening is that Greece and some other European countries involved in the Common Market have weak currencies and the relative to them the dollar is stronger. These problems have two root causes -

• The same financial meltdown that hit us is hitting them. Remember, the reckless lending of super banks/shadow banks was a global phenomena. In this case the Greek government aided by Goldman Sachs covered up their debt.
• Greece and some other European countries have swung too far into socialism – example may can retire at 50 in Greece with almost full benefits. This is the exact opposite of the USA which has swung too far into greed based capitalism.

Expect a rebound as momentum is still clearly with the bulls and the McClellan oscillator turned red (below zero)

Significant Indexes

• McClellan Oscillator fell to -1.66 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. – Investors411 manta is its much better/safer to buy when stocks are over sold and sell when they are over bought. When the $NYMO is around zero those who can accept more risk can nibble on stocks & ETF’s.
• US Dollar - Exploded higher +1.34%. Anything over 1.00% is considered a huge move and this move was also a breakout to a new high.

Positions

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

Our remaining China position FXI (Also EWZ & MOO)

Over the course of the last few months Investors has decreased FXI holdings from a high of almost 25% to the current 5%. China has been an investment mainstay of Investors411 for many years. Unfortunately many imbalances (see yesterday’s Chimerica piece) especially with the US and a over supply of public and retail housing is clouding the future.

This is also true for emerging markets that have been under performing US stock markets.  Technically after years of out performance this was bound to happen regardless of the fundamental problems in China. Our other major foreign investment. Brazil, EWZ is also under performing. Again over many months we have reduced holdings from a high of almost 25% to 5%. Brazil has a presidential election and the economically successful “socialist” president of the last 8 years is not running. Markets hate change.

The overall problem is does China have a soft landing or a hard one?  Yesterday, our House Ways and Means Committee, announced it was holding hearings on  China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

MOO is an agriculture ETF whose growth relies on emerging markets buying US agricultural products and equipment.  Investors has cut this from 10% to 5% position.

Strategy – Bottom Line – Will drop remaining 5% in FXI into a rally.  Investors is building it own market basket of 3D stocks and health care stocks. (see past blog posts) Investing in ETF’s  (example TYH) that do 2 & 3 times what US indexes do when they are oversold.  Also considering YOUR stock list for investments.

Apologies for everyone who just wants to buy and hold forever.  It’s just NOT your parents market. Blame technology.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING