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Want To Live

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Go To Denmark

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Denmark and almost every other Western Democracy has

more upward mobility than the USA.

Even the Latest Republican presidential star Rick Santorum  agrees

See Jason DeParle front page NYT article

WHY?

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Income Inequality

How Income Inequality Harms Societies

Click on Photo for Video

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Dr Richard Wilkinson presents what is perhaps the best TED presentation of 2011, You all know the Truth of what Wilkinson is saying…

“Income inequality is divisive and socially corrosive, its been around since the French Revolution…What’s changed is that we can now look at the data and see what that inequality does.”

Using UN and World Bank data Wilkinson starts out comparing gross national per capita income of 20+ market democracies – Gross income has no or little relationship to the well being  of countries (the USA is at the top in income)

But when Income Inequality between countries and within  countries is measured,  well being has a massive correlation on the following categories (the USA is at or near the bottom in every category)

• Life Expectancy
• Trust
• Math and Literacy
• Infant Mortality
• Homicides
• Imprisonments
• Teenage Births
• Obesity
• Mental Illness
• Drug Addiction
• Alcohol addiction
• High School Drop out Rate
• Child Well Being
• Education Scores
• and of course Social Mobility

You can view an entire list of the data and charts in a couple minutes HERE

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Rich Developing Societies have reached

A Turning Point in History

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“Politics should be about social relationships and how we develop and sustain societies”

Bottom Line – Wilkinson genius – The measurement with hard economic data of what gets worse in countries and societies when the rich and poor move too far apart.

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STOCKS

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Wall Street Bull and OWS Symbol

• The correlation between Europe and the USA is wakening, but still significant. The Bulls are gaining more control in the USA

• Our #1 technical forecasting tool, the McCellan Oscillator (MO) fell to +41.14 . 50DMA at +2.02 A wee bit of bearishness, but still room for rally to grow (for more see  STRATEGY link at top of blog) = NEUTRAL/bearish

• The major trade war between the USA and Iran has consequences. Investors/traders should be long Oil. USO, UCO or Oil related stocks (See YSL 2012)

• My single largest holding remains EUO (double short the Euro) This is because it sure looks like the Euro will continue to be devalued.

• Over weekend I will try to update Positions section of blog to reflect changes made this week and 2012 outlook.

For those who have an options expiration on the 21st.

Remember if you are out of the money the option will degrade even faster the closer you come to the 21st. (12 days)

MOS has traded between 44.7 and 55 over the last 12 days. If your Call/Put was placed at 52.5 you need about a 4% move either way to make a profit. One item in your favor is that we are entering earnings season next week and things almost always become more volatile.

As stated in the comments section lots of yesterdays rally was short covering and not fundamentally based.

Odds are you will see a 4%+ move above or below 52.5 in the next 12 days, but the trade is no longer based on the earnings report. MOS is currently at 53.50. Technically, because it gave up 1/2 its gains yesterday its outlook for today is a wee bit bearish. But that’s just for today.

All – Also remember you can sell the Put side too if its value is more than the commission.  Example MOS goes up and you sell your call next Wednesday when MOS is 54.5 You make (guess) 30%  By Friday  MOS has lost 5% of its value and each Put is then worth (guess) $30.

MOS could also shoot up to the moon. MOS is up a bit in pre market trading.

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Financial Amnesia

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Old FT Front Page

Since the Editorial boards of the vast majority of US financial journals have yielded to their advertisers or the corporate oligarchy, few papers/jorunals stand out.

One is the Financial Times.

This AM the FTimes is running a story accusing   Wall Street of  “collective amnesia” Investors411 readers know that this collective amnesia is purposeful and enacted so profit can be further privatized and the conseuences (risk) can be further socialized.

“Financial amnesia disarms individuals, the market and the regulator,” … “It causes risk to be mispriced, bubbles to develop and crises to break.”

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Politicizing Science

Michael Mann

We have had an all out attack on science that perhaps stated with trying to prove Cancer had no relationship to cigarette smoking.  They were, for the most part unsuccessful then, but that was decades ago.

Now, Cherry picking data and using a massive political and media machine a corporate oligarchy tries convince an American public that the opposite of science fact is true.

Michael Mann in a TED/PSU lecture/video clearly proves how its done over climate change.

The same kind of McCarthyism is happening in the USA with everything from climate change to evolution to financial meltdown

Quite simply

Ethics and morality are being assaulted by

GREED

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The Dark Side

Ron Paul

&

Mitt Romney

Last week Investors411 went over the bright side of Ron Paul. This short video shows the dark side.  The new Iowa front runner proclaims 15 things that are “unconstitutional”

Here’s a sample from Right Wing New’s John Hawkins on the national Republican front runner  “Why Mitt is unelectable.”

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STOCKS

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Wall Street Bull and OWS Symbol

Last Night’s

Republican Debate

When the moderators of the debate Point blank call you “dangerous,” “outrageous,” and “totally irresponsible” you know the deck is stacked against you.  This is the kind of debate run last night by Fox News.  Their target was Newt Gingrich.

Fox News, Washington lobbyists and the Carl Rove Republican establishment have already crowned Mitt Romney as their man. The deck is stacked.

Needless to say there was virtually nothing substantive in the debate about how to prevent Europe’s collapse, the job crisis or a host of other major issues.

As whacky as these debates are, $$$$ wins in politics. Between now and the first  vote in Iowa an avalanche of negative adds from PAC’s from the wealthy oligarchy will determine the outcome. Everyone says they HATE negative adds, but the simple fact is they work.  Romney’s PACs have the money to club any serious Republican opponent.

Romney nor any of his Son’s have ever served in the military

Has Romney Gone Rabid?

What should frighten you about Romney is far more than his promise to take China to the world court on day 1 in office – thereby starting the same kind of trade war that sunk us into Great Depression.

Romney wants to go beyond the Bush/Cheney just use brute force

“us vs. them” foreign policy.

Quote from Andrew Sullivan at 10:12 PM of the Republican Debate

“Again, Romney accuses the president of treason, saying he backs Chinese power over American. Romney wants a doubling of warships and 100,000 new troops. How to pay for that? No answer.

But what’s notable about Romney is his resolute intention to play the treason card.”

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By far my favorite in the Republican debates has been Jon Huntsman who has a plan to end to big to fail shadow banks.

Huntsman, last night admitted illegal immigration levels were the lowest they’ve been in 40 years. There is a  also huge gap between his and Romney’s extremest views on immigration.

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STOCKS

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• The other inter market technical analysis that is relevant now is Europe

• Oil prices plummeting is a very significant problem because this is probably related to global growth.  Two biggest emerging markets - India did rally off its low for the year yesterday & China while better off, is dropping and 3% away from a major support level.

Europe has flattened, but oil is flashing a major bearish signal.

So, you going to ignore him?

Tax and Spending

Since Obama and the Republicans answer to the shadow bank, military/industrial and other business cartels in Washington it is important to get get a more unbiased point of view on the budget. Here’s one from today’s NYT. Tax and Spending Myth and Realities A must read since  the cartels dominate the flow of information.

Military/Industrial Cartel

Just how powerful and dominate is this cartel? Their budget has gone up a staggering 81% in the last ten years.  Nothing comes close to creating debt like the military budget yet they are so powerful a cartel that neither Obama, the Republicans or the media address the problem in a substantive way.

The $700 billion yearly usually used as an approximation of the  defense department’s budget is as phoney as a three dollar bill.

• Foreign wars (Iraq, Afghanistan) are treated as supplemental budget items and not included
• Veterans affairs are not counting in this budget, yet this is closing in on 8.5% of total budget.
• Homeland Security (almost 3%) is not part of this budget and so are other smaller related military expenditures.
• Since programs like Social Security are paid for with their own tax or fees and are currently in the black they are not part of the growing federal deficit.  If you eliminate these programs as debt contributors, the military budget alone wind up contributing over 50% of the growing national debt. Some put this figure much higher

So if we take the $1,000,000,000,000+ military budget and increase it by 81% growth over the next 10 years you come up with a $4 to $6 trillion dollar increase over the next ten years that almost every politician in the USA ignores.

You’ve seen Republican’s ignore the King Kong of deficit creators in the Room (far bigger than the 800 lbs. gorilla) and today you will see Obama in a speech to the nation virtually ignore it.

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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 liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• This is different. What has been a 3/4 day market correction has happened in light volume. Used to be we rallied in light volume and sold off in heavy volume.
• The dollar , oil and MO have fallen significantly and the likelihood of at least a technical rebound is growing (see below)
• Republicans seem to want to play politics with the Debt Ceiling. This could have a significant negative impact on stocks. More on this in later Investors411. Surprised the Wall Street part of the Republican party seems to be caving into the Tea Party wing on this.
• The key to US equities remains how accommodative the Fed can be. If it is limited by the debt ceiling or something else – watch out below. Everything will suffer.
• Fed announces POMO schedule though May 14. $80 billion, plus a second program of $17 billion. Can’t help but wonder if this second program will continue beyond the supposed end June 30th. Analysts very divided on a QE #3(more quantitative easing after June 30th)

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   Dollar fell moderately yesterday -0.23%.  The trend since start of year is bearish with lower highs and lower lows on chart, We are at a lower low.  For stocks = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell to -51.72. Almost oversold. = Neutral/Bullish

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Reading The Tea Leaves

From yesterday – “Looks like we are in for a correction. The dip last month took the MO down to -85 (see link to chart above)” and in past has gone as low as -135.MO at -51.72 now

Bottom Line  Till it Breaks Down – No Black Swan events have been able to seriously impact the Fed liquidity driven equity market. So we are nearing a buy the dip territory.

The dollar at a low, oil prices plummeting last 2 days, and the MO nearing oversold levels shows we are ready for a rebound. If oil , the dollar & stocks continue to fall I will buy the dip. The further the better. This may only be a short term play (day, days, a week, or more).

Debt ceiling Republican soap opera politics in Washington could really hurt stocks. Question becomes will US default? Investors hate uncertainty and this is yet another bond holder to get out of treasuries.

This could kill the duration of the expected rally higher.

What to watch today – For shorter term traders Market movers.

• USO - ETF for oil - Oil up = stocks down – Big hit in last two days – for stocks – Bullish
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks. Now bullish
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows. AAPL rebounded yesterday. Perhaps the start of a rebound rally? Still, overall = Bearish
• Japan Rector Developments - This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting  way over extended and now correcting.

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Positions

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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.”

All About Oil

This editorial by John W Schoen does a good job explaining why oil prices are so high. Plus the difference between the limited supply of cheap oil and the far more expensive shale oil.

He ends his piece with an illuminating point.

Europe and Japan have a much higher tax on gasoline. This economically forces people  to use and find alternative fuels. When there are sharp price hikes these governments can lower the taxes to soften the blow. This is a major reason why so many other countries are so further along in seeking alternate energy solutions than the USA.

Four outstanding blogs go into depth on on energy related subjects

• The Oil Drum
• Peak Oil
• Tree Hugger
• Oil Traders Blog (For investors)

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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

• Same old manipulated by the Fed’s dump of liquidity, low volume stock rally that we have seen for the last few years.
• From Seeking Alpha an editorial on commodities
• Here’s a contrarian economist on what happens to stocks and the economy when the Fed’s QE2 stops on June 30th.

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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 for the third day in a row. Up +0.40% yesterday. Chart for last three weeks still clearly bearish for dollar.   Oil prices now are by far the #1 forecasting index and its trumping the dollar see below) For stocks dollar short term trading pattern = 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 rose to -1.86. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level.  This narrow range is something I have never seen before. MO Stocks outlook = Neutral

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Reading The Tea Leaves

From Yesterday – Today’s the big day - For three months the bulls have built a strong support level at -30 on the MO. Each time it has been approached it has held. We are just 2 points away. The bears have a big battering ram - oil prices over $100+ for an extended period of time.

The support level held – The bears, as they have been for the last three months, were defeated.

As Chris states in the comments section of the blog the “MO at -30 works like magic” For three months the -30 level has been a buy signal.

No fundamental factor can seem to overcome the -30 level. Stocks can only become so oversold then the buyers step in.

• Tunis & Egypt revolution – No problems
• 100+ dollar oil – No problems
• Libya – No problems
• Other possible and simmering outbreaks in oil rich dictatorships – No problems

What’s holding up the bulls is the Fed’s market manipulation – O% interest rates to the TBTF & other shadow banks and quantitative easing.   This is all one big economic bubble building.

The problem for the bulls is that they can not break the bears resistance level at +30. This gives stocks a very small range on the MO to trade in – 60 points over the last three months. The range for the last three years and beyond had been over 200 points.

Why? - Best read of the tea leaves is all but the strongest holders have been chased out of the US stock market over the last few years. Every time stocks are threatened the Fed’s liquidity tsunami takes over. Our managed stock market  is bought when it starts to fall by the manipulators or money printers.

Bottom Line – Stocks have moved into a smaller trading range.

Special Note - Considering changing the Long Term Outlook to NEUTRAL at long as oil prices keep rising above $100+

What to watch today

• USO - ETF for oil - Oil up = stocks down
• UUP - (Tracking ETF for dollar) Clear 2 month pattern of bears ruling Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Took a hit yesterday as it approached former high.

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Positions

A 5% trailing stop today on both REMX & RJA today.

5% trailing stop on UCO  today.

One strategy of Investors411 is to take 5+% profits on 1/2 the position and let the rest ride.

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

This market is excellent for short term stock players

Buy when MO approaches -30 and Sell when it approaches  +30

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.

DGP – (ETF is 2X gold) . Set to follow silver SLV and approaching breakout. Broke out to new all time high and has started to pull back. Buy the dip to 17 DMA of SLV or DGP

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 - Both DBC & DJP are on breakout runs. Buy the dip to 17 DMA

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

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

Mea Culpa - In hindsight – It was unfortunate that the UWM positions trailing 5% stop was hit.

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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 the new ”YOUR Stock List.“

Special Note - Considering changing the Long Term Outlook to NEUTRAL -if oil prices remain above $100+ a barrel for a significant amount of time and/or keep rising.

Our Manipulated “Free” Press

Every bankster in the USA has one “Get out of Jail Free” card courtesy of the politicians in the Federal government, their close symbiotic relationship with the agencies that are supposed to regulate them and a press that rolls over in adoration when they interview a them.

Yesterday Britain’s top banker echoed the cry that those that had benefited so greatly and cause so much economic devastation should be held accountable.

Today Al Jazeera (another outside the USA media outlet) runs the Feature Editorial entitled Will the Banksters Get Away With It? In it author Danny Schechter offers ten reasons why Wall Street ‘criminals’ get ‘bail-outs and not ‘jail-outs’ or never get punished.

Is Matt Taibbi or the issues that so many brought up about “banksters  and the privileged class  getting big coverage on network news or right wing outlets – NO

Remember Climategate?

Some stolen emails from just one university that did research into climate change supposedly proved global warming was a hoax. Now this got big coverage.

Since then, not one, not two not three, not for, but five independent studies have proved that their was “no credible evidence”

However, the climategate story befits the privileged classes who would NOT profit from cleaning up pollution.  The media and politicians promoted climategate with a avalanche of media reports. Yet almost nothing on climategate itself being a proven hoax.

This is the reality of what passes for news in the USA – A get out of jail free card if you are in the privileged elite and media a media drowning if you dare stand up against them.

Climategate, birtherism, unions blamed for everything, death panels, – you name it. It all passes for news

David Roberts concludes in What We Haven’t Leaned from Climategate

“U.S. politics now contains a large, well-funded, tightly networked, and highly amplified tribe that defines itself through rejection of “lamestream” truth claims and standards of evidence.”…hyped relentlessly by right-wing media, bullied into the mainstream press as he-said she-said, and later, long after the damage is done, revealed as utterly bereft of substance. It’s a familiar script“

So its little wonder that trillions stolen, lost, and looted by banksters gets no attention and phony controversies are hyped over and over again in the US media do.

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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 of small gains in small volume was back after taking a body blow the day before
• The impact of higher oil prices around the world has become a threat to globalized growth and US markets have not yet decided the impact higher oil prices
• Oil prices exploded  again to over $100 dollars a barrel. The highest price since Sept. 2008
• Yesterdays a confirmed the breakout in oil. Prices above $100 will have a bigger impact on emerging markets than the USA. So the longer prices stay high the worse it is for the economy.
• Stocks, can of course, can still be manipulated higher by the Fed’s quantitative easing.
• An independent ADP jobs report gave a surprisingly good number for last month +214,000. In a manipulated market good job news means less likelihood of Fed manipulation in the long term. So news is mixed for stocks.

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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 fell a significant 0.49%  yesterday . Oil prices now are by far the #1 forecasting index (see below) For stocks dollar short term trading pattern = Bullish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Rose to -5,52. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. MO Stocks outlook = Neutral

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Reading The Tea Leaves

Yesterday – “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.”

Sustained higher oil prices will shave GDP growth is emerging markets faster than more established markets like the USA. But both will feel the pain if prices remain high.

At some point even a manipulated US market, is going to start to feel the impact of higher oil. Today? Tomorrow? Next week? Next month? or down the road.

The dollar is falling and this does give bring up two important points.

• Dollar goes down and profits for US globalized companies go up.
• We are experience a MAJOR crisis and investors are NOT buying the dollar for protection.

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

Another 3% trailing stop today on both REMX & RJA today.

Will sell 1/2 of UCO if profits exceed 5%. 5% trailing stop on UCO.

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.

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. Broke out to new all time high. Buy now or on small dip.

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 – Both DBC & DJP are on breakout runs. Buy the dip.

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

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.)

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 !

WHAT’S UP? – Three influential  personalities are shaping future trends - Jesse “the body” Ventura; Jim “mad money” Cramer ; Arianna “she’s everywhere” Huffington.  Their views on the future of capitalism and American morality will impact your money and your lives; Investors411 just took +23%, +16% and +26% profits in 3 different areas – Was it a mistake?

Jesse Ventura

Jesse’s been a Navy Seal, a World Wrestling Federation Champ and the Governor of Minnisota. Last week he came up with the following quote on why we should prosecute Dick Cheney for torture-

“You give me a waterboard, Dick Cheney and one hour, and I’ll have him confess to the Sharon Tate murders.”

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

-

Technicals & Fundamentals

From yesterday – Let’s stick with the same prediction, for this week as last. More consolidation with a downside bias. After 9 up weeks in a row a consolidation is good for bulls. Going too far too fast creates bubbles. 

Major US and world markets couldn’t wait for a consolidation and instead on the India news (See yesterday’s Investors411) IFN India  ETF was up +21.5%) exploded higher. A relatively positive earnings forecast from Lowe’s (home building/remodeling supplies) helped. Competitor Home Depot had basically the same report this AM.

There is one ingredient missing - VOLUME - The #1 confirmation factor of any rally did not show up yesterday. Below average declining volume indicates that the huge amount of money on the sidelines stayed there. 

XLF - The ETF that tracks financials (mostly shadow banks ) exploded higher yesterday  +6.59% in below average declining volume. Volume is NOT confirming the price move. Of course, they again outperformed.

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

WTIC - Oil prices fell from the $60+ high last week and have established a range between $54 and $60. Up Monday +4.54% to $59.59. This is directly below the the major $60 resistance level.  Hard to tell if stocks are pulling oil prices or visa versa. Both seems to be signaling a rebound in the economy. 

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 +2.4% yesterday.  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 - From yesterday - Lets hope and predict a consolidation with a downside bias this week in weak volume. BDI and India are both long term  positives. If 877 support holds on (Mon, Tues. & Wed.) the S&P 500, we could see  the nine week stampede of bulls continue later this week. 877 is the number to watch.

Looks like I was wrong – or I let hope of a consolidation cloud my judgement. The stampeding bulls did NOT wait till the end of the week to get the stampede started.  When bulls stampede they just blindly move. Today they’ll look around and wonder why their fellow bulls did not show up.

We’ve had 3 days in a row of declining volume as markets went south. Then a major reversal in still less volume.

Certainly looks like only short term traders are putting their money down. Benchmark S&P 500 closed at @ 910 and last week its high was @930. We could reach or even surpass that 930 resistance level. But without volume after another short term push higher expect a fall.

Reasons to rally-

• Markets are moving higher on good news
• BDI has broken out and moving higher
• Rising Oil prices reflect an economic rebound
• Financial analysts keep mentioning “green shoots” sprouting up all over.
• Obama is one good salesman.
• Shadow banks have government support

Why are the giant institutions and massive amounts of cash staying on the sidelines? Not having VOLUME confirm the rally is maddening and therefore definitive longer term calls are suspect. However, the mojo is back with the bulls.

Was it a mistake to get out of certain positions too early? +23%, +16% & +26% (See Positions section of blog) Perhaps, and will buy back into EWZ (Brazil) on dip.  Would buy back into XLF (financials) as longer term investment on dip -A smaller position than before. Also looking for a dip to buy some more GLD

However still short term trading FAS and UYG (ultra financials)on dips.

NO major long term  moves now – Be patient - But a tradable market.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP? - A Standing O at Notre Dame; India/Democracy’s big win; Jim Cramer on who brought our nation to its knees. Soaring stock market – after9 weeks in a row takes a breather; Of course more on Shadow banks; Reading the Tea Leaves.

Photo – Charles Rex Arbogast/AP

Obama’s Sanding Ovation at Notre Dame

The contrast between Obama and the previous administration is like night and day.  Where Cheney Bush projected fear and confrontation, Obama, who inherited two wars and and the greatest economic meltdown since the great depression, worked on ways finding common ground. You can listen to his compelling 30 minute address at this link

Those who tuned in to see Barack the pro choice “baby killer” were soarley  disappointed.

photo BBC

Big Victory in the World’s Largest Democracy

The Congress Party in India surprised the pundents and came close to winning a majority in parliament. The party that saw the biggest drop was (Hindu Nationalist Party) who, as the name implies, fosters nationalism and fear of those who are different.  Also shrinking in size were the many independent parties including the Communist. (Congress will be less dependent on the Communists who were their allies in last government)

Its hard to say how big or small a role Obama’s election in the USA played in the victory of the more moderate Congress party. But the bottom line – a more moderate, less confrontational, and pro business victory in India benefits the world. Congress did reach out and gained more votes from the lower classes in India. Stocks in India have surge 17% – BBC

photo – Time mag.

Cramer’s Interview 

Money quote from CNBC’s most popular stock analyst Jim Cramer, in Time magazine  on the financial innovations of last several decades -

They almost brought our country down. The only guy who really called this right was Carl Marx. Marx understood what would happen if you let the markets run amok. Of course, it was done by right-wing Republicans. They brought our nation to its knees, and we’re not going to end up being a great power because of what happened.

Cramer did take it on the chin in a Jon Stewart interview. Stewart’s  attack was directed rightly at the financial channels concept of cheerleading unregulated markets. Cramer obviously took the attack personally.(See past Investors411 for more)

What’s Up? – Not the stock market; Financials fall –  financials flooding markets with  more shares to raise capital; First in,hopefully, a series of guest editorialist: This one by Scott Herwehe “ Is this a financial crisis or is this a crisis of an unsustainable economic model?” The American Worker.

American Worker, by Michael Florin Dente, 1990. Photo flickr.com

Is This a Financial Crisis or Is This a

Crisis of an Unsustainable Economic Model?

By Scott Herwehe

(highlighting mine)

 From approximately 1820 to 1970  worker productivity increased in America and wages increased for most American workers as well. These increased wages were won through a vibrant labor movement that battled and fought for higher wages and better work conditions.

From 1945 to 1970 the average American enjoyed greater wealth than any other time in American history meaning the distribution of wealth was more equitable than any other time period. In fact, the bottom half of American workers made more significant gains than the top half.

Realizing the gains of the labor movement of the 1930′s the owners of production began looking at ways to increase profit and productivity. Two major ways that this was accomplished was outsourcing ( this was accomplished through polices that were undemocratic such as trade polices and the breakdown of Bretton Woods and also see Operation Bootstrap) and increased reliance on the secondary labor force which is workers such as immigrants who have fewer rights than an American citizen.

A massive propaganda campaign was made against unions and we have seen a steady decline in union membership as well as policies beginning with Reagan that have decreased union power and workers rights.( Remember we are the only country in the industrial world where striking workers can be permanently replaced).  

So  around 1970 avg. American workers wages began to level off and productivity continued to increase. Americans were working more hours and more people from a family were joining the workforce. More mothers and children of the family were joining the workforce. So Americans were working harder but real wages were stagnating.  The continued rise of productivity and stagnant wages created huge profits for the owners of capital. With more wealth led to a financialization of our economy where we started producing and making less stuff and instead designed ways to make money off of money.

The only problem was that the gains of the financialization of the economy only went to a small minority of people. Accroding to the World Bank it went to the top 5 %.  A massive redistribution of wealth began to emerge where more and more wealth became concentrated toward the top few.  This created a problem for the owners of production though.  Obviously if wages stagnate or decrease than the workers consumption slows. There needed to be new ways to maintain low wages and continue our consumer based economy.

The answer was credit. We became a nation of borrowers and new and ingenious ways to make money were designed.  This obviously is an oversimplified explanation. There are other policies and factors at play but what is stated is important to know. Can we continue this economic model of working more and more for less and less? Can we continue to borrow more than we can afford?  Can we continue using up massive amounts of resources to keep consuming and buying things that we don’t want or need? We use almost 30% of the worlds resources and have 5 % of the worlds population.

Our economic model is unsustainable. We do need change. Real change. Obama seems content on maintaining the institutions and players that got us into this mess. To be fare to Obama he really didn’t promise us a lot. During his campaign if you ignored the rehtoric and looked at his actual stances on policies than you know he is a centerest democrat which thirty or fourty years ago might even mean Republican. ( Nixon even pushed for nationalize health care.) He is a stark contrast to Bush and a rush back to the center feels very good after an administration that was so far to the far right.

Change and progress in American history has only come when people come together, organize, and fight for it. Power is never freely given to others. We can’t hope for change. We can’t be Obama’s army waiting for orders. We must give the orders after all he works for us.  We have to hold him and our elected officials to the fire. Throughout our nations history American workers have overcome far greater challenges in much worse circumstances. As a country we need to look back on the lessons of the past and create an economic model that works for all Americans and not just a few.

Scott is “addicted” to Investors411 blog and often post’s comments. He searching for anew teaching job in California. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Technicals & Fundamentals

Major market had a major meltdown yesterday. Volume again did not rise and therefore did NOT confirm the move lower. Third down day in a row. Often cumulative lower volume can become a factor over time.

 877 on the  benchmark S&P 500  is the support level to watch. The SPX closed at @ 884.

XLF - The ETF that tracks financials (mostly shadow banks ) fell big time -5.08 in average volume. Obviously, the shadow’s are still leading the markets.

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

Reading The Tea Leaves – Why Markets Are Falling

Obviously, technically, bulls have come too far too fast. There another significant reason that involves our broken economic model (see Scott’s editorial above) and our over reliance on credit.

Many Shadow Banks need to raise cash because they are insolvent. So while the markets are high they are selling “secondaries” or issuing more stock to make $ and pay down debt. The other institutions need to raise the cash because the shadow banks are NOT lending. So they too are selling new shares.

All of this new stocks sucks up the limited amount of investors willing to buy. It’s a supply and demand problem. Now that markets have gone up 30 to 35% there’s a stampede of companies creating new shares. This is going to force stocks lower.

So far volume is NOT confirming the move lower and no major technical support levels have been broken. So too early to call a reversal in even the short term trend. This could all end today.

WTIC charts “Light Crude Oil”.(see chart). Oil prices again crested over $60. Prices fell -1.24% yesterday and are further deteriorating in pre US market trading.

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

From Yesterday – There is at least a short term dip coming. Investors411 has already (Friday) dumped positions in financials and techs.   Yesterday we temporarily sold EWZ (Brazil)

NB change to CAUTIOUSLY BEARISH if S&P 500 closes below 877

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !