Obama on Libya

Here’s the NYT  editorial – basically an favorable review on an overdue speech to nation. Also the far right’s Bill Kristol  kudos from the Weekly Standard – “You’ve Come A Long Way Baby”

Both Popeye and Mama have made a understandable point in the comments section of Investors411 – This is tomahawks instead of teachers we are fostering and there is no clear and present danger to the USA. Many state the obvious – this multilateral action will be judged by wether Ka Daffy goes or stays. Good points -but

But consider a more pragmatic approach. You get there by putting one step after another and moving toward your goal. In the case of Lybia there are concrete steps that should be recognized.

• Nicholas Kristoff in NYT said words to the effect that  you can’t prvent every genocide, but preventing one is a good thing
• This was a multilateral approach (UN & Arab League backing) not a unilateral one like Iraq
• No boots on the ground invasion force, but the use of diplomacy and force.
• Genuine thanks not a phony pulling down of Saddam’s statue directed by a US army psychological operations unit.
• The “Arab Spring” of revolutions across the Mideast would have been endangered if action were not taken.

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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	-0.19%	down
NASDQ	-0.45%	down
S&P 500	-0.30%	down
Russell 2000	-0.25%	-

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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 liquidity stock bubble. See Investors411 STRATEGY section for more

The QE1 & QE2 chart relative to stock prices that was in yesterday’s Investors411  is now in the Strategy Section

• Another weak volume day. Slightly higher
• Some entity sold big time into close. Otherwise we would have had weak volume & slightly higher
• $99 billion in Treasuries are being sold this week. That’s a lot more than the Fed POMO alone can soak up. Fed usually buys a bit under $6 billion most days.
• Take Advantage of This Bull Market While It Lasts is a worthy editorial from Equity Network Corporation.  Specifically they talk about reacting NOW on the news before it gets rehashed over and over again by media. Precious metals as an inflation hedge is the top call for a bullish year.  I’m not so sure about post QE @ (June 30), but hope they are right.

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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]   The dollar fell a wee bit -0.11% Bearish longer term pattern still in place, but we have started a three/four day bull run stalled yesterday.  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell back to +9.78 . Over past three months The MO has had problems getting over +30. Yesterday was no exception – the +30 resistance level was too strong for bulls to break. = Neutral

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Reading The Tea Leaves

Stock markets are dynamic and fluid. Forecasting tools change depending on what kind of market we have. Right now both Fed liquidity injections and High Frequency trading are impacting markets and many traditional tools (like volume) are not working as well as they used to

Bottom Line - Different times demand different forecasting tools.

Both the dollar and the MO have worked well for many many moons. See (click on links) charts above.

Hold Em & Fold Em

If you’ve  followed Investors411 you know we have a proven winner in both The Dollar and the MO as market forecasting tools

• The dollar going down far more often than not translates into stocks going up.
• The MO’s longer term +/- 60 & shorter term +/- 30 are both reasonably accurate points momentum swings the other way (oversold or overbought) The + side of the MO is overbought and the – side oversold.

Investors411 has repeatedly show why markets like seemingly bad news – it means more Fed quantitative easing. There are also key ETF’s to watch (see below) like USO (oil an inverse correlation) and tech leader AAPL that impact markets.

There hundreds, perhaps over a thousand different ways tell YOU – Hold Em or Fold Em. These seem to be working quite well now.

Short Bottom Line – We had our bull run off a -60 on the MO and paused as stocks got overbought. But obviously not all technicals (the MO being oversold/overbought) that moves markets. The headlines like earnings, Japan, Libya/oil, QE 2 are the drives and the technicals are the road signs of when to hold em and fold em.

So right now were in a holding pattern. The MO could fall to buyable levels and rise to fast and we’d have to sell. The momentum seems to be with the bulls.

What to watch today – Market movers

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Trading below 50 day MA is bearish.
• Japan Rector Developments

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Positions

UWM - – Sell order  for original UWM position is a 5% trailing stop

ETF’s currently Under Consideration.

EWV for those who love risk is the ETF that is ultra short (2x) Japan. Problems there are under estimated and/0r covered up.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. -

REMX (Rare Earth ETF) - Really believe this a good long term holding. Dipped in front of a strong resistance level.

DGP – (ETF is 2X gold) also SLV (silver). Breakout on worries of future inflation – Gold is moving inversely to the dollar - Dipping has my interest today

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals -

RJA (Agriculture commodities Index)An ETN, not an ETF.

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.”

We are on the cusp of change from NEUTRAL. We could swing back if stocks dip

More Troops – Bad Bet

Nicholas Kristoff’ s editorial in today’s NYT on why more troops in Afghanistan is a bad bet. Investors411 praised the fact that we tripled aid to Pakistan.  Here’s Kristoff’s money quote.  “American policy makers were completely blindsided in recent weeks by outrage in Pakistan at the terms of our latest aid package — and if we can’t even hand out billions of dollars without triggering nationalistic resentment, don’t expect a benign reaction to tens of thousands of additional American troops. ”

Jobs Jobs Jobs

Investors411 has painted a bleak picture of long term job prospects for Americans over the last few month. When you add to this shadow banks are still in the shadows and foreclosure problem is at best stabilized you have a bleak picture for Main Street USA.  Perhaps those that have seen gains in their stock portfolio’s since the spring will spend and juice the economy. However, especially for older workers, as Abby Gold in the comments section points out, on Main Street its not a rosy picture.

Solutions – One specific help would be to extend something like the $8,000 homeowner credit for first time home buyers. 350,000 buyers took advantage of this program – it worked especially for lower priced homes. The ripple effect is those new home buyers have to furnish those homes. Two respected individuals have offered their solutions

• Mort Zuckerman (right of center – editor of US News & World mag.) in an editorial titled “The free market is not up to the job of creating work” suggests a “massive program(s)to restore stable jobs growth.” He suggests a National Jobs bank and allocating $65 billion toward it. LINK
• Tom Friedman (left of ccenter/pro business – NYT columnist) looks at the failures of America’s education system to keep up with the increasingly  globalized world.  Here’s the money quote – “While the subprime mortgage mess involved a huge ethical breakdown on Wall Street, it coincided with an education breakdown on Main Street — precisely when technology and open borders were enabling so many more people to compete with Americans for middle-class jobs. ” LINK

Pay Cuts on Bailed Out Companies

Obama administration is forcing pay cuts on top executives of 7 bailout firms. Good first step, but what about all those other shadow financial institutions who used the Fed or collected big time from AIG’s  bailout? Goldman Sachs & many others gets away without any claw backs in this. Huffington Post LINK or NYT LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.90%	up
NASDQ	-0,59%	up
S&P500	-0.89%	up
Russell2000	-1.35%	-

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

This is a US stock market dominated by professionals and traders.  Some sort of programed trade kicked in the last hours and the pro’s left the building.  The volume way well above average and the fall from what was a rally was over 1%. Volume increased significantly in the last hour’s price collapse = Bears asserting dominance

The dollar fell significantly which almost always means US equities rally. This again = Bears asserting dominance

The dollar fell so overbought oil prices rose significantly LINK to chart +2.25 to $81.37 . Obviously oil prices above $80 is going to hurt ma and pa consumer in any recovery.  Sure looks like some entity or group is manipulating oil prices. Up 9 of last  10 days and going parabolic (up too far too fast)= Bears asserting dominance

The BDI rose (probably did not have time to react to swift fall in equities)

Reading the Tea Leaves – There is no specific fundamental(s) that you can point to that says yea that’s the reason stocks tanked in big time volume at in the last hour of trading.  Obviously “the Pro’s” know something us common investors do not. Earnings season has been much better than expected with companies beating on both TOP and bottom line. The dollar fell. The BDI is rising.  Stocks should be rising.

Stocks falling on good earnings news, a rising BDI and a falling dollar is a disconnect from what has been a historically a positive trend .  Think of this as a sign in the road saying WARNING SPEED BUMP AHEAD.

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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 is @ 30% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +85 points Friday and closed at 2917. A higher high price on its chart pattern has been confirmed and it sure looks like a bullish run could be starting. =  Bullish for stocks & world trade right now

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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 fell a significant -0.55 % The dollar closed at $75.12 . We have developed a support now resistance (it’s called support on the way down and resistance on the way up) level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB -

• Earnings will probably trump the dollar as the #1 influencing factor for the nest two weeks. But the falling dollar is the main driver of stocks right now and we have a long way to go till we hit last year’s $71 low.
• A slow decline in the dollar = good a rapid decline = bad .
  

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached .

The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Trades made this week are updated at the end of the week. -  Sold 50% of position in EWZ and all of EWY. Have no position in XLE. Also for TRADERS (not investors) strongly considering buying some companies listed yesterday that had outstanding earnings, but have fallen over last few days.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!