Afghanistan

Huffington Post has a huge Afghanistan section. No other news outlet even comes close. LINK

Steve Clemons has one of the best websites on issues facing America. He is both realistic and a relative moderate. He features a big Af/Pak Debate by some foreign policy experts LINK Title of debate “AMERICA CANNOT AND WILL NOT SUCCEED IN AFGHANISTAN/PAKISTAN.”

Today’s WashingtonNote.com , Clemons blog focus is Iran – “Imposing More Sanctions On Iran Will Not Work” Both these articles give some in depth analysis.

Bottom Line – Afghanistan, Pakistan and other countries – I don’t want these countries to become havens to those who will attack America, but in no way do I want to continue  spend $100s of billions to nation build democracies around the worlds.  Our results in Iraq are a Shia government that is corrupt, best buddies with Ahmadinejad, and still a nation deep in poverty despite having huge oil reserves. Furthermore, while we focused on Iraq, Afghanistan/Pakistan deteriorated.

Just like in the colonial empires of the 20th century (from England to Russia) you’ll find that nation building has brought former dominate powers down. This is just history repeating itself. In the middle a recession for Main Street these funds should go to help Americans not nation building abroad.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.37%	up
NASDQ	+1.71%	up
S&P500	+1.37%	up
Russell2000	+1.84%	-

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 and Fundamentals

The Dollar is currently the #1 factor influencing stocks.  Yesterday’s significant move down created a major rally for stocks.  Earnings season which officially opens today (Alcoa reports) will be a fundamental driver of stocks, but the dollar will still be very important.  What investors are looking for is top line sales growth. Last quarter Inel Computer had some top line growth and that sparked a rally. INTC is obviously again a key factor.

Volume moved up, but only the NASDQ was above average. You might call this partial confirmation of the move higher.

Australia raised interest rates and this show signs of an improving worldwide economy. LINK The US is not going to raise rate for a while until the jobless situation turns.

Mortgage applications are at a 4 month high as rate falls is the headline on the major financial news channel LINK – Bullish news

Markets are overbought, and you should notice that huge amounts of $ are NOT entering the market

There are some strong technical resistance areas around the old S&P high of @ 1070, 1120 and 1200. (more later on this) These are areas I’d take some money off the table. Especially 1120 & 1200.  S&P or SPX is at 1055.

——–

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 @ 46% 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 +79 points yesterday and closed the day at 2441 .   Longer term (since the June high) the rate of decline has softened, but its still going in the wrong direction. We seem to have started to reversed the longer term June move. We’ve had a rally 8 of the last 9 days from a low of 2166 .  Resistance level of 2491 (last months high) first major hurdle to cross – Bullish for stocks .

——-

$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

The dollar fell -0.51% yesterday. Three down days in has brought the Dollar to $76.31 less than 0.50 of its yearly closing low of $76.00 (major support level)

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

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

See yesterday’s update for a full outline of current positions. Sold XLF for +7% gain. Over the course of this year Investors411 has sold XLF (financials) for 23% gain (10% of portfolio) and twice for 7% gains (both 5% of portfolio)

Both GLD and EWZ are trading at new highs. Like US markets right now these stocks (GLD might be termed a commodity – gold) are over bought. Looking for a buy the dip opportunity .

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

Perhaps the World’s Best Known Economist

Joe Stiglitz – Photo John Thys/AFP/Getty Images

Joe Stiglitz “is cited by more economists than any one else in the world” Stiglitz is an “economic prophet” and Nobel laureate who predicted the current economic meltdown. Investors411 has for years been quoting Stiglitz starting with the true trillion dollar cost of the Iraq war.

So why is the Obama administration ignoring this Nobel Prize winner? This is one of the major stories in this week’s Newsweek and can be found here .

Paul Krugman , another  Economic Nobel Prize winner goes even further here

Instead of surrounding himself with some progressive economists who warned of upcoming economic meltdowns, Obama has surrounded himself with a Goldman Sach’s crew featuring Larry Summers who participated in building the economic mess.Remember,  Goldman Sach’s, who was a prime mover in creating the economic mess and  took both bailout & Fed money, had a huge positive earnings surprise this quarter.

Health Care

Photo – WaPo

Jim DeMint the Republican Senator from S. Carolina who considers the Obama government “national socialist” (a nazi – like Hitler’s Germany ) says the right wing will use the health care debate to “Break Obama.” Story here

He’s right about the break Obama part.  If health care reform does not get off the ground this summer (some form passes both House and Senate) it will die because unemployment will rise before it falls. This will put Obama in a far weaker position.

It’s time for Obama to stop worrying about consensus building in congress and to start playing hardball.  WaPo on Obama’s next move Hardball?

Your Comments

Popeye adds some more information about the secret  fundamentalist group behind US politicians (see Thursday’s post & comments to the left) – The Family . You can find out a whole lot more here As you might have already guessed this group has strong links to Sarah Palin .

But it not the obviously hypocritical ties to the three adulterous  Republican politicians that is most ominous. It is the past ties and philosophy of this secret group and their allies that is even more significant. (more later)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+0.37%	down
NASDQ	+0.08 %	down
S&P500	-0.04%	down
Russell2000	-0.54%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

Technicals and Fundamentals

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

We did have the best week in many moons for stocks . We did take out a resistance level on the benchmark S&P 500. We did have one day of strong volume confirming the price move.

However, after big gains like last week, technically, overbought markets need some rest. That plus the SPX is at 940 and this year’s high/major support level is 956.  We may appraoch this level, but the bulls need a rest. Hard to see other companies come in with the earnings results of Shadow Banks like Goldman Sachs and Morgan Stanley Bearish momentum.

The NASDQ did close at a new high for the year and this certainly creates a Bullish pattern. Biggest fundamental of the week is Microsoft’ s earnings report and Apple also could give overbought index some bullish momentum.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) The big gains at the beginning of the weakened Thursday and more on Friday. It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern. Remember, this index usually moths a lot smoother and turns more slowly than other indexes. It hasn’t turned yet but Bears seem to be gaining momentum

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern
  

$USD - The Dollar is on the verge of falling down through in its in its 5+ week long consolidation pattern between $79+ and 81+. It did briefly break its support level but rallied Friday. Dollar closed up 0.32 at $79.51.-

Fearless Forecast For the Week

Last Week’s Fearless Forecast – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week This happened, but Investors411 failed to predict the magnitude of the rally till after Intel’s earnings.

This Weeks Fearless Forecast – Technically overbought markets need a rest . 30 to 40% of Dow & S&P report this week and it would be surprising to see as many positive earnings reports as last week.  Therefore, most likely a down week. But because the NASDQ broke out and created a higher high, we could see another shot at moving higher later this summer. It looks like bearish pattern developing on BDI. If so, this is trouble.

Positions

The whole Positions sections has been revised (Click on “Positions” at top of blog). Check it out

QLD – which was bought independently of “the Hedge” at 38.2 last week will get sold today . QLD closed at 40.47 Friday – why be greedy. We added a lot of positions last week. (QLD, IFN, EWZ, EWS ) Time to take profits on one.  Will buy back in on another dip.

The Hedge – The SDS part is down -3.44% and the QLD part up +5.51% The net gain is +2.07% We are hoping that the QLD outpreforms the SDS.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

Michael Jackson

Photo – Huffington Post

Jackson’s memorial service ("a variety show with a coffin") was carried by 19 networks and seen by 31.1 million viewers. Chris Hedge’s – The Man in The Mirror editorial has an enlightening view of American culture it begins like this.

"I n celebrity culture we destroy what we worship. The commercial exploitation of Michael Jackson’s death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever-changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture. And his fantasies of eternal youth, delusions of majesty, and desperate, disfiguring quests for physical transformation were expressions of our own yearning. He was a reflection of us in the extreme…"

You can read the whole editorial here

Chris Hedges is author of "Empire of Illusion: The End of Literacy and the Triumph of  Spectacle."

Iran

Friday could be an important day in the country that now has more jailed journalist than any other county. Rafsanjani , who is not an Ahmadinejad backer, is leading Friday prayers and the opposition has promised to flood the area. Story here

Huffington Post’s Nico Pitn ey still #1 in coverage here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+2.27%	up
NASDQ	+2.12 %	up
S&P500	+2.49%	up
Russell2000	+2.56%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

Technicals and Fundamentals

Note - Repeated statements in brown.

Markets staged a big time rally and volume increased, but it was still not above average. The major technical question becomes can we break the series of lower highs and lower lows? We have held and formed a strong support level at SPX 875 . The S&P closed at 901 and we need to close above @ 930 to take out the lower high or major resistance level.

After falling, as predicted, to the S&P 875 support level, the bulls have reinforced the barricades and held their position for the last two days.  The longer they hold out the stronger the bulls position becomes. Here come the bulls led by financial stocks that have been soaping up low interest money from the Fed and TARP programs. Loans are not pouring out of these institutions to struggling homeowners, but they are making a killing on the loans they do make, the government bonds and derivatives they sell/insure.  Not having mark to market accounting allows them  special accounting methods other institutions do not have.

Financials are probably going to continue their charmed existence, because t he Obama administration & the Fed has deemed the big ones too big to fail and they keep kicking the can down the road on any major fix of the problems that created the economic meltdown. Financials led yesterday’s rally  XLF up +6.4% – Increased, above average volume indicates Bulls Rule – rally to continue in financials.

Mea Culpa – The amount of the rally in financials has caught me a little off guard. I thought all the traders were already long this sector and the rally would be about 2 to 3+% not 6+%.

Earnings season is off to a good start. But technically markets were oversold and the 875 level held. Fundamentally, Still looking for Intel (reports after closing) to set the tone.

Intel’s earnings report (after the bell today) is still the key to any breakout. US markets have started to move higher on good news  So momentum is with the bulls

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell for the 9th day in a row.  However, the rate of decline has slowed dramatically & more each day  This chart works a little different from most other charts in that it is a lot smoother and less volatile. The fact that the decline rate has dramatically narrowed is a positive for bulls

Unfortunately, over the last six weeks we have a series of lower high, lower lows, and a broken support level. That’s positive for bears. Over the last six months we have dramatically risen off the lows – Long term Positive for bulls

In a nut shell the BDI is

• short term - seems to be turning bullish (emphasis on seems )
  
• mid term – clear bearish pattern
• long term - bullish pattern
  

$USD - The Dollar is still comfortably in its in its 5+ week long consolidation pattern between $79+ and 81+.

—–

Fearless Forecast – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week

Our Positions

The Hedge – Still little change in overall position QLD -5.11% and SDS +5.89% = a gain of +0.79% This trade may take a months to reach a 5% to 10% gain/loss.

Alternative Energy – GEX/PBW – Now completely out of this sector and looking for a way back in or a buy the dip opportunity. There are several fundamental factors going on here. Most importantly it looks like oil prices are moving lower and that will hurt alternative energy.  If we have a significant summer rally oil prices and alternative energy could rise and we will miss out on some potential gains.

Financials - For traders (not investors) there is potential buy the dip opportunities in the ultra long ETF’s not XLF but UYG (@2x XLF) and FAS (@3x ELF)

Foreign ETF’s – Still would like to see a bit more of a dip to buy more FXI, EWZ & IFN . For a short time, momentum may swing back to US equities, but the long term trend is clearly with these growing economies.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

140+ Dead in Demonstrations in China

You’ll here a lot more about Iran, but the Muslim minority has demonstrated or rioted (depends on which side your on as to which term is correct) in a far western Chinese Provence. The BBC headline story here

China owns a huge part of our debt and we need her cheaper goods. Will condemnation here be as great as Iran or hypocritically silent?

Biden – We “Misread”  Problems

Photos – Huffington post

Since last fall Investors411 has continuously repeated “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.” See positions section of blog.

Investors411 continually cited a significant group of economic thinkers who clearly demonstrated just how bad the economic problem was. Investors411 also criticized Larry Summers and the economic crew of the Obama administration.

The only good news is they finally woke up and smelled the coffee . Tax cuts good, Stimulus plan good but way too back ended (only 10% spent so far) The same problems that led to the financial meltdown are still out there. Yes, we’ve moved back from the edge of the cliff and everyone starting with Paulson, Bernanke and Geithner do deserve some credit by throwing the car they were driving into reverse as we approached the cliff.

However Greenspan, expanding deficits, wars, housing and unregulated capitalism have created a massive economic black hole. Short term stimulus usually worked as a solution in the past. The problem here, besides the holes massive depth, is the accumulated debt was already humongous. Biden’s admonition of misreading economic crisis here

For in depth previous prediction and solutions see Overview section of blog.

Iran (Week 4)

Huffington Post’s Nico Pitney’s daily blogging on events here

There has been one group of cleric’s come out in support of demonstrators and he wonders what’s happened to the head religious leader in Iraq – Sistani. He supported democracy for Iraq, but has remained silent on Iran

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-2.63%	down
NASDQ	-2.67 %	down
S&P500	-2.91%	flat
Russell2000	-3.91%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results at 6/25-scrolldown)

Technicals and Fundamentals

A huge price decline, but again in weak declining volume Friday. How markets react to news is just behind Volume as a prediction tool. In this case it was the Unemployment figures that sparked the fall are lagging indicators.  Therefore, the huge downside reaction is way more than expected = Bearish.

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. Weakly forecast below.

Earnings season begins next week. Historically, this week companies that are not going to do well warn – this is bearish

Oil futures are way down this AM trading at $63.88 at 7:15 EST. = Bearish

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 Friday.  This index is winding up like a spring, within a consolidation pattern and is close to a downside breakout (3452 is breakdown point and index closed at 3529)  See chart  Watch out! Long term Bullish rise from bottom, but coiling right now for next move . Potential bearish breakdown possible this week

$USD - The Dollar rose 0.74 % . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up = markets down. That’s just what happened Friday Long term Bearish pattern for Dollar that is consolidating pattern now (neutral) = Bullish for stocks

Fearless Weekly Forecast – Last week Broke Investors411 winning streak of forecasts for the week  as US markets fell on some bad consumers confidence and unemployment data. Momentum is with the Bears as we enter earning season. Check out all the red bearish signs above.

The S&P resistance level (@875 & SPX now at 896 )  should at least get challenged, especially in the beginning of the week. Watch BDI. Forecast – Bears Rule

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.

Our Positions . -  China, Brazil, & India (FXI, IFN & EWZ )(Partial list)

Unlike the USA that has seen two economic bubbles burst housing and financials these growing countries have been relatively less impacted. The decline in trade with US is going to impact all 3.  China and India have positive GDP’s predicted for the year and resource rich Brazil’s GDP is predicted to be close to zero. The World Bank predictes a -2.9% loss of GDP for the rest of the world..predicts a-2.9% loss of GDP for the rest of the world.. For more see Positions section of Investors 411.

Recommendations – Investors has a very big position FXI a very small position in IFN , and a closed position in EWZ .  Again see Positions section of blog. Short term traders might want to take some profits in FIX and both traders and investors  should look at possible “buy the dips” opportunities that should emerge this week or next in IFN & EWZ .

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

-

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

Index	Percentage %	Volume
Dow	+1.15%	flat
NASDQ	+1.29%	up
S&P500	+1.47%	up
Russell2000	+1.90%	-

-

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 !