Focusing on the Root Cause

The Governor of the Bank of England, Mervyn King, has expressed “surprise” that the public is not more angry with the bankers who caused the recession.

England’s top banking official had other warnings as well

“The evidence of the past is that the impact of a [financial] crisis like that persists for many years,” … You may not get it back for very many years if ever. It’s a very real hit on living standards. That’s why it is important to take the issue of financial stability very seriously.”

“I joined the Bank of England 20 years ago today… I don’t want to leave until we have a framework in place to ensure we don’t have to go through this again.”

It encouraging to see King  join Alan Greenspan in admitting where the fault lies.  Too bad everyone else is blaming teachers, firefighters, police, middle class Americans, immigrants, unions and just about anyone except our corrupt shadow banking system.

Guess Who Has Ka Daffy’ Money?

In yesterday’s blog Investors411 speculated that it was the US shadow banks. As one of you remarked in the comments section “true, true, true.” Backers of the psychopath dictator and mass murderer in Libya are Goldman Sachs, Citigroup, and JP Morgan. It turns out they have a huge hunk of this money.

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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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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. See Investors411 STRATEGY section for more

• The same old Fed manipulated stock bubble building trading pattern took a body blow yesterday
• The impact of higher oil prices around the world has become a threat to globalized growth.
• Stocks broke a 7 month long string of being up on the first day of the month.
• Oil prices exploded to new highs along with gold yesterday.
• This is not the building Fed manipulated bubble bursting, but  two other bubbles that may be bursting – No coherent alternative energy policy in the USA since President Jimmy Carter put solar panels in the White House & the US support for oil dictators. Both are bursting in our faces.
• Today is a confirmation day for the breakout in oil. Oil prices are not at all time highs, but the breakout yesterday is significant.

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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 yesterday +0.21%. This moderate rise enabled the dollar to close above its support level. Therefore, No confirmation of breakdown of support level. Oil prices now are by far the #1 forecasting index For stocks = Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Fell to to -15.44 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. Getting close to +30 resistance level. Stocks outlook = Neutral

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Reading The Tea Leaves

A Danger Will Robinson Danger Danger moment is here.  The potential for a quantum shift in the outlook of the US and more importantly the world economic picture is upon us because of higher energy prices.

Its impossible to judge just how sever the impact will be, but one should certainly be cognizant of the fact that higher oil prices will negatively impact most stock positions.

There is a danger of more investors pilling on the panic that a new high in oil prices brings.

• It sure looks like Libya’s oil is not going to reach markets for a long time.
• The potential for revolution in other oil dictatorships is apparent.

Few saw Mubarak’s downfall coming and I wonder if investors are  again under estimating  the impact revolutions could have on the disruption of energy supply and the world’s economy.

So its time to bring out the old Lost in Space robot, because of the potential for at least a short term quantum shift in outlook for world economics.

The robot from the old TV show always warned young Will Robinson of impending danger by waving his arms and shouting – “Danger Will Robinson Danger Danger.”

Bottom Line - The longer KA DAFFY holds onto power the worse it is for the oil supply. The potential for other oil disruptions exists.

I’m reasonably sure of the major short term negative economic impact these revolutions will have. I’m not sure how much this can overwhelm the Fed’s liquidity dump in the USA.

Technically, today is an important confirmation day of the move higher in oil and lower in stocks. If we have confirmation then the robot will keep flashing its warning.

What to watch today

• USO - ETF for oil - Oil up = stocks down
• 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

While the two above positions should outperform stocks, a spike in oil prices will hurt both. Will place a 3% trailing stop today on both.

I hope I’m wrong, but, it may be time to dust off those ETF’s that short and double short major indexes.  See positions section of blog.

Will post when I buy/sell in comments section of blog.

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

REMX (Rare Earth ETF) – Really believe this a good long term holding.  Hopefully longer term holding.

DGP – (ETF is 2X gold) . Set to follow silver and approaching breakout. Many web sites that focus on precious metals are calling this a manipulated commodity. A buy the dip ETF

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.)

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!

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!

Liming Nuclear Arms

This is significant good news for the world. US and Russia agree to cut nuclear arsenals by @1/3. Today Obama was giving a commencement address at University in Moscow. Detente which was a critical part of winning the cold war is back.  Australian  press on the story here

Violent Protests in China

No, this is NOT Iran . Violent riots in the western Xinjiang Uyger Autonomous  region of China continue. China press puts death toll at 156. Video link here (caution more violent video)

Contrast the coverage in American media (even this blog) with China vs Ira n .

Al Jazeera has a well reasoned round table about internet reporting & bias coverage in Iran here (warning its 24 minutes)

We look at news through huge filters or blinders and unless you understand how the rest of the world see it you have almost no hope of making progress.

The Great American Bubble Machine

Mike Taibbi in The Rolling Stone has another provocative and illuminating editorial on how Goldman Sachs has been up to its eyeballs in profiting from building American economic bubbles – here

Unfortunately,  this crowd is the one that has Obama’s ear on economic policy. Bob Sandisky has, as usual, a passionate response to the Taibbi article in the comments section of blog. – One quote

The Bush administration set in motion a new paradigm that basically changes the essence of America, from "We the people being endowed with inalienable right to pursuit happiness" to substituting People with Corporation. – We the Corporation.

HELP in Health Care

Nobel prize winner Paul Krugman has an excellent article on health care here

The first numbers on the cost and # of people covered in the heath care proposal came out poorly, but last week the budget office offered a much better and under reported  assessment.

The reason that this news is not getting out is the other side is spending $1.4 million dollars a day in PR against public healthcare. All of that money spent fighting this will be added to your health care bills.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results click  6/25 & scroll down)

Technicals and Fundamentals

Markets were basically flat yesterday. Volume up but below average

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor .

The major upcoming fundamental factor is earnings season which goes into full swing next week.

The S&P resistance level of 875 is the line in the sand. If the index closes below this level, we most likely will be in for another leg(s) down. SPX at 899 .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell sharply again on Monday.  What’s worse, is that the index broke down through its major support level at 3452 and closed at 3375 .  WARNING – This chart is more a long term indicator, but the breakdown in trade is very significant to any worldwide recovery. BEARS RULE

$USD - The Dollar rose +0,23 % yesterday This is a relatively minor amount . The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. . Dollar closed at $80.45 and has been trading for  a month between @$81+yesterday= and $79+. So its almost in the middle of its consolidation range. Long term Bearish pattern for Dollar (bullish for stocks ) that is consolidating pattern now (neutral )

WTIC – There was a huge 4.02% drop in oil prices yesterday. 9% over last week. (see chart) Things may stabilize temporarily, because it is sitting on a major support level.  However the 5 day fall has been significant and has NOT been accompanied by a significant rise in the dollar.  What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. = Bearish for stocks

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Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500 .

NB – Volume has confirmed nothing. So confidence in above predictions is a bit shaky . However, the BDI has broken support and oil prices are plummeting.

Our Positions (For more see Positions section of Investors 411-scroll down)

The Hedge – Buying equal $ amounts of the SDS (a short) & the QLD (long). So far this trade has netted less than +0.50%. – largely because of a real bad day yesterday. The principle behind this is that the top 100 NASDQ stocks are going to outperform the S&P 500.

It does not matter which way the market moves, only that one index outperforms the other. Plan to hold this position until we have a 5 to 10% gain or loss and then sell it.

If you would like to enter this trade  "buy the dip." Wait for a day (or better two) when the S&P 500 outperforms the NASDQ (like yesterday) and then invest.

Again for more information see Postions section of blog.

Yesterday’s Recommendation – Traders  – take some $ (1/3) off the table in China (FXI ).

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? GM Bankruptcy – Email addresses that can make a difference – speak up, fight back, be a watchdog. Stocks on verge of breakout from consolidation pattern. Investor’s 411 positions have already reached new highs. A mea culpa

GM Bankruptcy

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Photo from Huffington Post

GM files for bankruptcy this AM - Lots of the issues have been agreed on before hand. This is a positive. Overview from NYT or 7 Reasons Why GM is Headed for Bankruptcy  from USA today

For investors – This bankruptcy is going much better than expected 6 months ago. This would have been a Lehman Brothers type failure 6 months ago. 

EMail addresses that matter*

YOU can make a difference speak up, fight back, be  a watchdog. Keep the following to the list of addresses.

Congress.org How a politician votedd and forms to email your opinion

sunlightfoundation.com texts of major bills, special interest contributions, and earmarks

Recovery.gov Government on Stimulus bill

Cagw.org tracks gov’t spending by Citizens Against Gov’t Waist.

Pogo.org – monitors government waste

Cop.senate.gov – Monitors bank bailout

Consumerfed.org – Connects you to local groups working on local issues.

* The above list came from a Michael Crowley’s significant article “We’re Done with Greed.” in  Reader’s Digest (page 47, June)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals 

This market wants to rally. It sure looks like we will break out of month long trading pattern this week. The NAsDQ has taken over the leadership roll – the only major index with above average volume on Friday.

GM files for bankruptcy this AM – Lots of the issues have been agreed on before hand. Overview from NYT or 7 Reasons Why GM is Headed for Bankruptcy  from USA today

Interest rates and the (falling) dollar are probably the big news of the week, The dollar’s decline juices the price of oil.

XLF - The ETF that tracks financials (mostly shadow banks ) rose +1.83%. Financials has been the leading sector and as financials go so go the markets. Financials are lagging Techs (see QQQ) that broke out of consolidating pattern in light, below average volume.

WTIC - Oil prices again closed over their $60 support level +1.89% at $66.31. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

BDI - The Baltic Dry Index measures the flow of goods (world trade).  The momentum here is bullish (see chart). This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism)

Reading The Tea Leaves -  Looks like we are going to break out of the consolidation pattern to the upside this week. Some of our major positions already have done so. Volume, for the most part is NOT confirming the move higher. Techs is driver’s seat. However our secondary indicators are bullish – especially the BDI.

Positions - (See positions section of blog for more)

•  EWZ - From Thursday “sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday… looking for a dip (-5 to 10%) to get back in.” EWZ at new high (see chart)
•  GLD (gold) is one of the hedges against inflation. Up +2.08% from Friday GLD at 3 month high
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now. This ETF has gone elliptical and will wait for a pull back. We have had the predicted pullback.  This stock is for traders and not long term investors.
• FXI - our major position here only rose +3.35% yesterday. FXI has broken out to a new high
• GEX - alternative energy - +2.01 yesterday 
• FAS - 3x financials has been working. This position is for traders not investors

Mea Culpa – We have cashed in on some of our longer term positions recently (EWZ, XLF & QLD)(26%, 23% & 16% gains) and these stocks are still moving higher.  Looks like the pullback/entry point  is simply not happening. I thought stock would not move higher on $60 oil. I was wrong. Looks like oil will hit $70 and perhaps $80 before impacting stocks 

Tomorrow change in long term outlook to CAUTIOUSLY BULLISH if rally occurs.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

What’s Up? North Korea, data, editorials, and raising the alert levels. How we act here impacts Iran – New daily Positions section for recommended stocks – Reading the Tea Leaves, a broader longer term market outlook.

North Korea Info Page from BBC

Map and links from BBC

Factfile: Underground testing

The Korean war

N Korea’s missile programme

 

The British Broadcasting Company is a more independent source for information than most American media.

North Korea’s nuclear test is obviously a very significant problem. US and South Korea have just raised their alert level.

Solutions here are going to have to involve China/world taking a more aggressive role against North Korea.  NYT editorial here. Iran is watching what happens here. Giving into North Korean demands obviously encourages every nation/dictator to become a nuclear power.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals 

The NASDQ held onto most of Tuesday’s gains, but the Dow and S&P lost most of those gains. Small cap stocks (Russell 2000) were somewhere in the middle. Volume was again below average. We are stuck in a trading range.

From yesterday – “One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains…. Very suspicious over lack of volume.”

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.99%. Financials has been the leading sector and as financials go so go the markets.

WTIC - Oil prices again closed over their $60 support level +1.60% at $63.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

Fundamentally – Almost every analyst out there says we have a glut of oil and prices should be falling. 

BDI – The Baltic Dry Index measures the flow of goods (world trade).  The momentum here is bullish (see chart). This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism)

Reading The Tea Leaves - Longer term pattern is clearly consolidation (last month prices have been stabile) and this is good. The bullish trend that started on March 9th is firmly in place.  

If we break out of this consolidation pattern to the upside the Long Term Outlook will change to Cautiously Bullish. Right now, this senerio looks more likely than a downside breakout.  

• The BDI rising 
• Technical consolidation in prices 
• consumer confidence rising  
• rising commodity prices 

All this shows an improving economic situation worldwide. One downside to all this stimulus is inflation, but for now the mojo is still with the bulls  Questions - 

• Could it be that we are unwinding the economic debt of shadow banks in the right way?
• Are we in the last innings of the housing meltdown?  
• What happens when we impose rules on the shadow banks?  

 As stated before we have dug a huge economic hole. We can go from  -6% GDP growth to zero and this will be positive for stocks. But what happens after that?

Positions - (See positions section of blog for more)

•  EWZ - From yesterday “sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday… looking for a dip (-5 to 10%) to get back in.”
• Inflation - GLD (gold) is one of the hedges against inflation. Down -0.33% yesterday
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now. This ETF has gone elliptical and will wait for a pull back.
• FXI - our major position here only rose +0.68% yesterday.
• GEX – alternative energy – +1.91 yesterday 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? – Two unsung Heroes -Health Care Rescourses – Bears with stock market football – Our stock positions (some recommendations) – Oil prices breakout – Shadow Banks – Profiles in courage.

Two Unsung Heros

This year two outstanding women won the Profile’s in Courage Award given out by the JFK Presidential Library. 

Shelia Bair – (google photo)

Bair is the head of the FDIC and a Republican.  She opposed many aspects of the Paulson/Geithner shadow bank bailout. She was “the lone voice in the wilderness for her early warnings about the sub prime lending crisis.” She like Elizabeth Warren stands out as a voice of economic dissent in the Obama administration. For more see Bob Kuttner’s editorial

HealthCare

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals 

The losses might seem small, but the major US indexes were up almost 2% in the early afternoon. That’s a big drop into the close. Much bigger than yesterdays last hour plunge.  What’s worse is that Volume increased and was above average. Therefore volume confirmed the move lower.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.66% . This index closed at 11.72. As stated in past updates for the last 3 weeks financials have been trading between @ 13+ and @11+ (more specifically support at 11.33 and resistance at 13.08) Any close above or below these support of resistance levels would turn confirm a longer term trend for bull or bears.

WTIC – Oil prices confirmed their breakout above $60 and ended the day +3.23% at $62.04. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.

Reading The Tea Leaves - For more than a week volume has not given us a signal as to the direction of the markets. It did yesterday. Two or three high volume meltdowns can turn the direction of stocks.  The football is now with the Bears. Watch the XFL. If it breaks down through its support level and closes significantly below 11.33 in big volume, then you will probably see more damage to markets. Also 891 in the S&P 500 is another critical support level.

Positions - (See positions section of blog for more)

Long Term Investors 

• Looking to increase positions in gold (GLD) 
• Waiting to get back into Brazil (EWZ) on dips.  Right now Brazil’s 2 main exports coffee and oil are at multi month highs. 
• GEX (alternative energy) is running higher with the move in oil.  It too broke out to a new 6 month high. Best read of tea leaves is the move in oil above $60 is unsustainable and both (GEX & WTIC) will fall. You can take some profits here especially if you bought the dip around $15 to 18. GEX closed at $25.67 and hopefully buy back in on a dip. 

Shorter term traders - 

• Personally, if I had the time, I would probably trade any drop of the FNX to its support level. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? - Prisoner Journalists Roxana Saberi & Sami al Hajj; Media’s huge bias; Understanding why people really act as they do may be completely different from what you have been conditioned to believe; A sucker’s Wall St. Rally? Oil Prices gushing, & Shadow Banks.

AP photo of  Roxana Saberi

The Enormous Bias in the Media

Roxana Sabreri is the American/Iranian jounalist who was recently convicted of spying  in a secret trial trial in Iran. She was released yesterday and American media is understandably happy. It’s a major story and demonstrates many of the many of the injustices within Iran. The months she spent in jail in Iran were clearly unjustified.  This is something almost all of us in “civilized” countries are happy about.

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But have you even heard of Prisoner # 345. – Sami al Hajj –

The rest of the world has

 We see ourselves painted by the light of American media bias. The Muslim world see a differently painted bias.

To create a solution and build a better future you have to at least understand why the other side takes the actions it does.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Long Term Outlook

Quotes from Positions section of blog-  Fundamentals - The problem in the financial sector is far far far far far bigger than fist imagined. Impact of this mess is going to take years to resolve. Quote from Strategy section of blog - This is NOT your fathers buy and hold market. 

It is very feasible to see stocks rally as GDP rises from @-6% in the USA to perhaps 0%. However, the long term viability, after that concept is built into stock prices, is the major concern. The Upcoming War with Shadow Banks will be the first big test for the future. 

Is this a sucker’s rally – From the WSJ 

Technicals & Fundamentals

Major down day for most major markets except NASDQ.  Volume decreased and was below average. Therefore, volume did NOT confirm the price move. The NASDQ had a major loss with increased volume 3 trading days ago.  So far volume has not confirmed the losses on any major index including financials (see below & charts onside of blog)

Right now this looks like natural profit taking after a big run higher. I could develop into a reversal if volume increases.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -5.84%% in decreased below average volume.  Since the current rally began two months ago only 4 times have we had two down days in a row for financials.  So if today is another down day in, especially in light volume, short term traders might (day and swing traders) might see it as an opportunity to buy.

If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks – The mantra of the markets for the past two months continues.

WTIC charts “Light Crude Oil”.(see chart) Notice after Oil hit a low @$37 a barrel in Feb. it rose to a range between $48 and $54 for over a month and over a month ago it broke out and two days ago reached a high of almost $60. 

This breakout move above $54 has two sides two opposite sides (Bullish & Bearish) to it. 

• Oil above $54 indicates that investors see a recovery in the future that can sustain higher oil prices
• Higher oil prices hurt American consumers whose purchasing power are critical to the recovery.

What happens to Shadow Banks is still the dominant factor controlling what other stocks do. Investors411 has given the good,the bad and the ugly of the privatizing the gains and socializing the risk in Shadow Banks – The clear positive is the gainsonWall Street.

The upcoming war  - We have rapidly created an incredibly massive subsidy system for America’s Shadow Institutions – How do we disconnect from these wealthy welfare recipients?

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !