Trust

One Republican Candidate for President stands out

far above all the others – Jon Huntsman

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Romney lashed out and tried to humiliate Huntsman for being Obama’s ambassador to China in a debate this weekend.

Remember when everyone on the right lashed out at anyone who took a stand against America’s war in Iraq as un-American or not patriotic?

Huntsman replied that’s just what’s wrong with American politics.

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“America is divided because of politics like Romney’s… Romney puts politics first…I’m someone who believes in putting America first.”

Romney is fear mongering to the fact that American’s don’t trust each other.

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If you viewed Friday’s video by Richard Wilkinson you know that Trust has a lot to do with big gap between Incomes of Americans.

Click on photo of Wilkinson below to see video

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In Wilkinson’s presentation he has one chart which compares the lack of trust in 20+ democracies.

The USA is where income disparity is greatest. So to is the mistrust among Americans greater than the mistrust among citizens of other countries with less income disparity.

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Super PAC’s

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How You Lose Democracy

After Romney’s super Pac decimated Gingrich in Iowa, it seems Newt got a billionaire to fund a super PAC and is going after Romney in South Carolina. Story in NYT and here

I’m sure Obama will have his super PAC if he is to compete.

Bottom Line

Democracy is being bought by the uber weathy and corporate oligarchy. Money buys negative campign adds that pounds the negative message home and buys the vote

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STOCKS

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Wall Street Bull and OWS Symbol

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• The correlation between Europe and the USA is still weakening, but still significant. The Bulls are gaining more control in the USA. For three days US markets have done better than European – A trend bullish may be starting in US

• Earnings season traditionally starts after the bell with Alcoa’s earnings report

• Our #1 technical forecasting tool, the McCellan Oscillator (MO) fell to +29.55 . 50DMA at +2.02  =NEUTRAL

• The European Central Bank intervened to support Italian bonds, but the yield is still just over the danger zone 7%.  Today’s news

• Check out links below for more accurate picture of how US markets will be influenced by Europe. Germany dominates, but Italy is significant.

Reasoning – The last time the Euro (European currency) was in such trouble was the summer of 2010, This crisis is worse and the ECB (European Central Bank) is lowering interest rates to fight it.

It also acts as a hedge for the long term dividend stocks I have. It Europe shrinks or collapses, the USA markets and dividend stocks will be negatively impacted.

The euro goes down usually means the US dollar goes up. They are the #1 & 2 currencies in the world and, therefore, pegged against each other. This makes the cost of US goods more abroad and hurting major US exporters.

A Banana Republic?

Let’s look at signs to see if America is turning into a Banana Republic? No not the store. Back a few decades ago a Banana Republic used to stand for a country where a rich oligarchy ruled through a kleptocratic government.

• The wealthy investor class cheer as stock indexes reach or close near New highs for the year while as our employment rate flounders close to 10%
• The real disaster for working class Americans is the not only the 9.8% unemployment rate, but the depth and breath of the employment picture

• Globalization & a oligarchy driven media hatred for lower  working class Americans who struggle to survive, both costing  job loss and salary cuts.
• A US stock markets whose trades are NOT based on a companies valuation, but Trades made by the oligarchy based on finding market discrepancies (arbitrage) These oligarchs (BB/HFT and hedge funds) have only a 15% tax rate for managing their wealth
• We have a country that values REAL WORK less than an oligarchy of managed wealth because we tax workers far more than those who make money off the wealth. (15%)
• A country that doesn’t punish those responsible or fixes the financial fraud that causes  the worst worldwide recession since the great depression.
• Politicians who are elected with the oligarchs money voting to extend tax cut to the wealthy that if given to the working class would = a $500 per family.
• Politicians who are elected with the oligarchs money voting to extend tax cut to the wealthy that would triple the amount we spend on medial research. [For entire list LINK to NYT here]

Somehow my best read of the tea leaves is all that wealth is NOT trickling down to working class Americans.

“Trickle down” was a term first used by the President Reagan and later called “Voodoo Economics” by Bush Sr..  Is the wealth tricking down or are American politicians  simply recognizing that they get elected by the massive amount of media ownership and political contributions of our wealthy oligarchy?

Barr

The Battle for Castle Bear Skull (See Stocks below)

The New Gunslingers

Today’s Investors411 is using analogies to violence, wars, and brutality because we have all become so brainwashed by it. My mind is totally desensitized to violence because of a lifetime of TV. This weekend’s football & violent TV shows have taken their toll. I watched well over 100 people, killed, brutalized, raped etc.

How desensitized to Violence are You? Short Video presentation on how violence is used to brainwash YOU & get your attention. Thanks to Sherwehe for finding this. Dr George Gerbner is the expert

Economically, here in the USA we have been wounded. But for the US stock market and other Stock Markets throughout the world there are new Gunslingers that control/manipulate stocks. [NB - US economic's is often NOT in synch with stock markets] Their firing high powered machine guns to your singe shot rifle. This is a wealthy worldwide oligarchy of investors.

• The BB/HFT’s (see many past Investors411s)
• Sovereign Wealth Funds – (Think big exporting countries/Oil rich dictatorships)
• Emerging Market Investors – (Perhaps some not as filthy rich as everyone else – a growing upper middle classes along with controling oligarchy)
• Hedge Funds (Depositories for wealthy investors whose top managers can make  $900,000 per hour and get taxed at 15%)
• Central Banks (Not exactly new gunslingers, but most countries try to manipulate their currency lower so their exports cost less abroad)

YOUR Comments

Coming tomorrow is Jim J. list of candidates to invest in. It’s rare, but there were comments over the weekend on Stocks Paul R & The Critic) and Yankee Bob takes on one of the major industry groups that makes up the growing Corpocracy (vs. Democracy) in the USA.

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

Index	Percentage	Volume
Dow	+0.12%	up
NASDQ	+0.54%	up
S&P	-0.08%	up
Russell 2000	+0.56%	-

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Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day -Technical Analysis (TA)- From Investopedia

“Technical analysts believe that the historical performance of stocks and markets are indications of future performance.

In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst’s decision would be based on the patterns or activity of people going into each store.”

For me TA is looking at charts and finding patterns- Reasons TA works as a forecasting tool tomorrow.

US Markets -

Friday’s was what’s called “options expiration Friday”. Hard to use as a forecast tool because the increased volume is traders covering (buying) options that are coming due the third Friday of the month. We will go over options later this week.  YOU can look it up in Investopedia.com today.

Below is the same chart of the benchmark S&P 500 (SPX) that 10,000+++ technical analysts are showing their clients and 1,000,000+++ traders have already identified. It’s from Stockcharts.com - A free site that Investors411 uses for all its charting data.

To everyone who follows Technical analysis this chart screams today (perhaps this week) is REALLY important.

The SPX is at a triple top. Three times the bulls have charged the bears cave or Castle Bear Skull (my term for wannabe victorious bulls to call the bears resistance level) and twice before the bears have held. Everyone knows the bears are tough at this point. Lots of bets are being placed on the bears or bulls will win. Bears win markets go down and the level @ SPX 1130 becomes a super strong resistance level. Bulls win and its rally on.

The annotations on the above chart were written by John Nyaradi

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, rose  +0.20% Friday. The dollar broke down below its short term support level, but recovered – Bearish short term (daily) sign for stocks. But, longer term, Falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -2.23% Friday.  The BDI does not have the immediate impact that the MO or Dollar does. Fifth down day in a row, with rate of fall decreased. After 8 week bull run trend could be changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose slightly to +24.97 yesterday. Note – While zero is the center of this chart the 50 DMA is at 19.29 That’s a support level. = NEUTRAL

Reading Tea Leaves

From Friday -If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise…Perhaps Monday will be the key.

Let the battle for Castle Bear Scull begin.

This battle is going to get manipulated by everyone from HFT’s to Hedge Funds (that often are HFT’s)

Lots of bears believe that the bulls are depleted – too many up days have created over bought conditions and the US/Europe economic news is lousy. Oil prices have fallen recently and are near support levels.  The advantage the bulls have is

• Momentum – The rising blue line on chart – That’s the 50 Day Moving Average of Price.
• Many Emerging Markets have already busted out and taken over their castle Bear Skulls.
• The MO has a lot of “wiggle room” to move higher – The MO’s 50 DMA is high and its got 35 points between where it now stands and 60 – overbought territory.

Monday’s are usually the day of the week that bulls make their charge. Ironically, my major concern is too may analysts are thinking/predicting a bull’s victory.

Almost forgot – Watch the dollar – UUP (ETF for Dollar) If it breaks down, bulls have another army of reinforcements.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

Current Longer Term positions –  EWS (Singapore) & USO (price of oil/commodity)

Traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble. Not guts no glory – I’d love to wait for a 100 point Dow dip, but you can feel the bulls breath & it may never come before the rally.

There’s lots of choices (see Positions sections of blog for ETF choices or Paul’s analysis of individual stocks). I’ll probably play SSO (ETF that’s 2X S&P 500) on smaller dips (if I have the time)

Do NOT chase over extended stocks/ETF’s

Investors - Wait for a bigger drop in MO before going long. Also recommend a long term position in USO that is dipping right now. ( See Positions Section of blog & comments section Friday)

If, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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The Big Picture

See OVERVIEW section of blog. There are three major economic mega trends (globalization, peak oil, spread the wealth) being impacted by “casino capitalism” where huge over leveraged, unregulated, opaque, worldwide, financial institutions are allowed to exist that privatize gains and socialize risk.

What you’re watching unfold broadly is an economic restructuring and downturn, & specifically a stock meltdown. The STRATEGY section of the blog opens with the statement – The problem in the financial sector is far far far far far bigger than first imagined. Impact of this mess is going to take years to resolve. All of this was written 1 to 3 years ago.

Globally, the economic growth rate (GDP) is declining, and it’s beginning to look like even emerging markets (China) that have benifited from globalization have begun to falter. Stocks are a bit different, they can be held up by smoke & mirrors (fear & greed)

The bottom line – The more you have a working and growing middle class and upward mobility  the better off the country, countries or planet. The more you have hidden wealth, opaque institutions and a rising oligarch the worse off the planet.

Remember -Oligarchies can take many forms – Monopolies, Politburos, religiouous fundamentalist, corporate, military dictatorships, supposed democracies, etc. – but  the more you confine wealth/power to a few the plant suffers.

* The above photo was from an organization that promotes big picture books. The kind that my grand daughter loves. It has nothing to do with subject matter, except  the title.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	-2.65%	up
NASDQ	-3.85%	up
S&P 500	-3.10%	up
Russell 2000	-3.99%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

Mantra for week - ” Any analysis of stocks has become an analysis of what the ”Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.” They make up 80% of trading and right now the huge currency markets are dictating their moves.

The Dollar War

The red army (short stocks & long the dollar) had a secret group of reinforcements in hiding that emerged yesterday.

Markets got toasted in above average, increased volume as trading went beyond the Black Boxes & currency traders and investors headed for the exits. (big volume shows some long term investors jumped ship) The red army’s reinforcements

• Dollar two day technically rally breaks out to upside of consolidation pattern (see chart)
• Oops a math error first states China’s growth as 1.7% then revised to 0.3%. Without China you can fundamentally forget worldwide growth.
• Delayed reaction to G20 nations saying they are going to raise taxes and cut spending a la Herbert Hover.
• Worries about Obama stimulus running out of gas and its impact on state governments.
• Ireland/Europe worries as FXE (ETF that tracks EURO) also breaks support level and falls a significant -0.63%.
• Consumer confidence numbers come in worse than expected.
• Tech leader AAPL closes below 50 DMA. Never a good side when you see the top US market general get hit.
• Worries over monthly employment data published on Friday
• Weak Financial Regulation reform was thown into limbo. There may not be enough votes to pass even this.

Seems like the green army (long stocks & short dollar) suffered death of a thousand cuts. The biggest cut in the short  term is China. The 41% drop in the BDI certainly predicted China and more broadly world trade was in trouble.

Market analysts will tell you that both the Dow & the benchmark S&P 500 rallied at the end of the day to finish above major support levels. (see charts at side of blog) This would be the 4th test of the 1040 low for the benchmark S&P 500. I’ve read about a double bottom & a triple bottoms, but never a quadruple bottom. Any things’s possible, but its unlikely we will stop falling here, because NASDQ is already the anchor (at new yearly low) dragging the rest of the US markets lower. = Bearish

Significant Indexes

• McClellan Oscillator (MO) fell big time to -44.39 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. In May the MO reached two lows – one at -120 and the other close to -130. Therefore, potential for more downside risk. = NEUTRAL, but approaching oversold
• US Dollar –  The dollar rose another yesterday +0.49% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The dollar has risen a significant +1.03% in two days and broken out to the upside of its consolidation pattern.= Bearish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high@4200 to  2447 yesterday.(2482 to 2447 yesterday) This is a huge -41% drop in 6 weeks.  Often a leading indicator for stocks. Now just above a major support level (@ 150 points lower) Long term. =Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekends

Have not yet had a chance to Update over last 2 weekend but there are NO positions held at this time.

Still watching DGP (ETF that’s double long gold) for a dip close to its 50 DMA – Will buy.

Don’t plan any buying or shorting (ETF that short the market) until MO reaches overbought or oversold

Time to dust off YOUR Stock List and potential ETF candidates that are holding up better than most other stocks/sectors. When the MO gets below -60 its time to start nibbling. The lower the better. Will try to go over potential candidates tomorrow. Paul or others in the comment section might have some new suggestions/stocks that are holding up well

When panic reigns we buy. We may only get a modest rally to a lower high, (hopefully sell 1/2 into 5+% gain) but we may get a longer term rally too.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Sorry limited time this AM -Shortened Update

US Oligarchy is Kicking Ass

Political overview

One of the classic battles in every country is between the rich oligarchy and the people. In some countries like China, even though there is lots of corruption and pollution, the middle class is growing and they have a government surplus.  In the US the oligarchy is clearly winning & the middle class shrinking and the debt growing. The new administration has made little difference.

• The military industrial complex oligarchy is growing even as Afghanistan (Obama’s "necessary" war) has, like Iraq, become an unpopular war (poll numbers well below 50%).

• The big shadow bank oligarchy is winning. They don’t have to mark their profits to market, have received huge bailouts, still take exorbitant salaries, & no serious methods of regulation have been introduced to regulate them. Little hometown banks getting toasted.

• Small American business, the middle class, and medicare recipient can not compete with other countries or maintain anything resembling the same lifestyle if health care costs rise another 100%. (see past Updates)

• Massive debt built up by past Republican administrations is now being added to by Obama as he stimulates to keep us from falling into another great depression. The oligarchy used to pay a far greater share of this debt – now YOU (mom and pop) do.

Stocks

Everything hinges around the jobs number today .  The back ended stimulus program is working. Some private sources are showing the stimulus creating 500k to 700k jobs.  But these are temporary and in a year or two will run out.  The oligarchy in the big companies that are recovering will hire cheaper labor abroad. (see above)  One big added incentive is they will NOT have to pay growing health care costs if they hire foreign workers from Europe to China.

Markets have been reacting poorly to good news so there is a lot of temporary downside risk possible with today’s announcement.

The good news for markets is Obama will probably cave in on the public option in his speech on Wednesday.  This means the insurance oligarchy has won . Big US companies will not be impacted because they will hire abroad. Small business will get hurt because of the increased cost of heath care.  But most of these small companies are NOT on the major US stock exchanges.

This is perhaps the last chance to fix Health Care in the US.  It’s 16% of GDP and growing. Far less in all other other countries. Economically its hard to see Americans climb out of the growing hole – health care, energy dependence and debt along with an unregulated oligarchy have a strangle hold on government. However, it is plausible to see stock prices increase, because globalized (larger) American companies will hire abroad and make new profits from emerging markets.

All this doesn’t happen overnight, but continues to be the direction we are heading.

Barr

PS – You’d think after the oligarchy’s greed and corruption became so transparent after the shadow bank meltdown last September there would be some larger cry for change.