Investors 411 Blog

Putting Money Where You Mouth Is

Charging Bull- Bowling Green NY

Investors in everything from Wall Street to the Dollar (a much bigger market) put their money down because they believe that at some future time they will profit from their investment. These are primarily the world richest people and money managers investing in the future.  Of course, it also includes a lot of upper and mid level middle class people who the money managers (mutual, hedge, 401k university, institutional etc) invest for.

Lets say there are two groups – one willing to invest in riskier assets and the second group (perhaps burned too many times) who seek safe havens – Put  money under the mattress, low yield CD’s, government bonds.

Government bonds are popular . Right now across the world and in the USA almost every time our government sells debt (usually in 2, 5 10 year  and longer term treasury bonds) there is an over abundance of buyers in this safe haven This is great for the USA . Not only does low rates mean the gov’t borrows at low rates, but it is an investment in America’s financial future.

The dollar is rising . The short & mid term trend for the dollar is higher (see explanation below). For the sake of this editorial (putting money where your mouth is) a strong or rising dollar says investors from around the world have confidence in the direction the USA is heading .

Wall Street rising . The fact that equities have now basically moved up over the last 8/9 months is a positive signal for the economic direction of US companies. Wall Street historically looks 6+ months into the future. (This does vary radically from day traders to decades long stock holders.) Wall Street is saying confidence is rising in the USA.

Bottom Line – There are a whole lot of connected and wealthier people around the world who are optimistic on the future of the USA. This does not mean there are not problems. You can also argue over who is responsible for this rising confidence from Obama to emerging markets. But the bottom line is people are putting money down and expect better economic results in the future of the USA.

You can argue that there is not a lot of volume behind the stock move higher is a bad sign. However when you see people flocking to buy our treasury bonds, the dollar rising, and stocks still near yearly highs – Investor’s mouths may be saying one thing, but they are investing in our future. That’s a good thing

Afghanistan and $

The Huffungton Post & TMP  this AM is headlining a story (Surge 2) that there will be 56,000 private contractors in Afghanistan to rebuild there economy. Sorry I’d rather see those 56,00 rebuild our economy. LINK

Bernanke, Time Magazine’s Man of the Year

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	-0.47%	up
NASDQ	-0.50%	up
S&P500	0.55%	up
Russell2000-	-0.57%	-

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

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals, Fundamentals & Analysis

Fed Chair – Ben Bernanke is Time Magazine’s Person of the Year (more later)

The Fed meets this week and makes an announcement tomorrow. Any change in outlook (unlikely) will impact markets. Trading usually light before Fed meeting. No change in the Fed statement about interest rates would be bullish.

Dollar went up so stocks went down yesterday. This inverse correlation has weakened recently. However stocks couldn’t rally in the face of a major move higher in the dollar. (See below)

Again were seeing down days with increased volume. Historically a bearish sign .

FEARLESS WEEKLY FORECAST – Up to flat week . But be careful we are entering overbought territory (see below) and if rally continues I’ll be taking profits rather than adding to stocks.

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

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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  fell (was flat) -12 points yesterday and closed at 3518. It’s interesting how smooth and seemingly predictable the BDI is in the short term. The rate of the decline is declining and with about 80+% certainty you can predict a flat to up day today.   Since Mid November highs the BDI (see chart) has established a clear downward trend = bearish signal

What it means long term – Since the low of Oct 2008 technically the long term chart is = Bullish. However we are now in a month+ long correction. Mid term trend = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets.

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The Dollar is currently the #1 forecasting tool (now weakening as a predictor)

$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 was rose a significant yesterday +0.76% . Anything close to or over +/- 0.50 is significant The dollar closed at $76.93 . Technically have broken up through the 50 day moving average resistance level and now broken out through another significant resistance level the Oct/Nov highat 76.82 = Bullish for dollar & bearish for stocks

The mid term trend is now bullish and the long term trend (looking at weekly or monthly charts of price) is bearish

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

There’s been a dramatic change in the last 4 trading sessions. We broke out of the range (see below) and are close to  overbought/sell positions . The index closed at +21.20 This is a slightly Overbought Position

From past updates – It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 for a month+ =  There has been no clear buy or sell signal for over a month.

Oversold conditions (@-60) = buy, Overbought positions (@+60) = sell The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Bottom Line – Start thinking about taking profits, especially into any continued rally.

Positions

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

(again a little behind on latest moves)

Will wait to buy some ETF’s and stocks when McClellan Index/Oscillator approaches overbought (@+60)

Recommended ETF’s and Trades

SELLING & BUYING

Your Comments - (See “Monitor’s” comments on side of blog – About a week  ago Investors411 sold its positions in GLD. DGP, AMZN & NVS ) – Not interested in opening any new positions right now Waiting for a clear signal from MCellan Index to commit additional capital or sell existing positions .

If we rally into the end of this week I’d take some more profits

Near bailing out on small investment in BAC

Long Term Outlook = CAUTIOUSLY BULLISH

Iran

What was supposed to be demonstrations marking the 29th anniversary of the Iranian revolution turned into a night and day that members of the Green Revolution let their voices ring out. Professor Juan Cole’s website has details and video. Its heatening to see so many protest (“huge crowds”) despite those that have disappeared into Ahmadinejad’s Iranian prison system. LINK

Vietnam & Iraq/Afghanistan – Optimism

Even though many including this blog have focused on the negatives surrounding the “unjustified” invasion of Iraq and long term consequences,there are some major reason for long term optimism.

In Vietnam we used chemical weapons (agent orange) carpet bombing and even resistance was slow to organize. These weapons were not used in Iraq. Democracy was insisted on by Sistani (the #1 Shia religious leaders) and after a year of demonstrations the US relented. In Afghanistan the poll numbers have already turned negative LINK This poll was before the election debacle.

In no way does this excuse our growing nation building disaster in the Mideast under Bush and Obama. But, it is a long term ray of sunlight in an otherwise dark cloud.

US Elections

Republicans won two governorships in NJ and VA formerly held by Dems. The Dems won a congressional seat in NY – formerly heavy Republican district.  Overall a better night for Republicans and bottom line is about the economy.  Three out of mainstream observations

• NJ Democrat Gov. candidate was a mucky muck at Goldman Sachs.  GS & Wall Street are loved about as much on Main Street as the New York Yankees outside NY metro area.
• The “conservative” running in NY congressional race considered radical right wing FOX commentator Glenn Beck “his hero.”  He had huge support from the “tea bagger” or dominant wing of the Republican party.
• Long time incumbents spent huge money and had difficulty getting elected – example mayors Bloomberg in NYC and Menino in Boston.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.18%	down
NASDQ	+0.40%	down
S&P500	+0.24%	down
Russell2000	+1.46%	-

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 the last post for the week

Friday’s jobs report is the news for the week .  What we have is an oversold market going nowhere. Wall Street term for this is “churning.” Because we are so oversold a good jobs number (loss less than 200,000) would probably move market higher.  Oversold also limits downside risk.

Best Read of Tea Leaves – We will not get a sub 200,000 number.

For traders – A high unemployment figure means the stimulus will keep flowing  and I’d buy the dip. Even though everyone is watching Friday’s employment figure – keep an eye on the dollar. If we have a significant break through of the resistance level expect a meltdown in stocks as the dollar rises.

In Asia and Europe oversold markets rallied last night, so this could carry a positive bias to the USA today.

FOMC meets to day – expect no change.  Any changes in wording would be negative and a shock.

The Dollar War - (Part 2) The big news of the day was India buying $6.7 billion dollars worth of gold from the International Monetary Fund. This is an investment in gold not dollars. Still, obviously central banks did buy enough dollars to halt any dollar decline yesterday.

FYI - Best 25 preforming stocks since Obama’s election LINK

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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 @ 24% 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 +62 points yesterday and closed at 3247. The rate of change is diminishing slightly. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 1100 points since late September. =  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 rose a modest -0.12% yesterday. The dollar closed at $76.33 . The dollar did briefly rise above its 50 day moving average.  The dollar is technically doing what prices do in front of major resistance/support levels – hesitating. The longer it hesitates the better the chances for reversal.

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.67 this AM . So dollar is only 0.34% away from major resistance. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions  as we get close to this resistance level.

Positions

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

Our major core positions into weekend. (See Monitor’s post in comments section)

NB  – These core positions have been long term positions for years and are STILL OUTPERFORMING the benchmark S&P 500 – For more see overview section

GLD – Gold rose a significant 2.41% and broke out to a new all time high in huge volume. This was based on the news of India buying a huge hunk of the shinny yellow stuff. (buy the dip)

EWZ – Brazil – has gone up too far too fast and was overdue for a correction. (see past updates)It had about a 10% correction (see chart) and its 50 day moving average is acting as strong support.  Think those of you who bought the dip will be rewarded in the long run.

FXI – China -  too recetly had almost had a 10% correction, another buy the dip opportunity.

Both China and Brazil could go lower if the jobs number is bad or the dollar rises too high. They go down faster than US markets, but rise much faster than US markets. The BDI recent move higher is favorable for both.

Considering diversifying into Indonesia & Vietnam ETF’s Also, for traders as an individual stock AMZN – great technicals& fundamentals, but also a swine flu play. If the flu ends up keeping folks housebound AMZN should profit. (more on Monday) It is currently dipping.

Concerns – 10 even 20% corrections are healthy for FXI and EWZ in the long term. Yes, these and other emmerging markets are recovering fundamentally far faster than the USA. But anything that goes up to too fast forms a bubble and they burst.

SPX – Selling entire position as soonas I get back from art show – taking profits and freeing $ for other investments.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!