The Known Universe

Before we jump into Politics, Stocks, & Economics and let your mind go in the following video from the American Museum of Natural History.  It takes 27 seconds to get started in the Himalayas and expands. “The Known Universe” -  LINK

Folks who love video’s like the above can’t wait to see an alternate universe or Avatar in 3D

Health Care

If you really want to get into the nuts and bolts of the Heath Care bill – Progressive Glenn Greenwald’s answer to Nate Silver’s 20 questions (see yesterday’s Update) LINK and Silver’s response LINK

In the NYT today there are two broader editorials on the current Health Care Bill.

• Nobel Prize winning Progressive Economist Paul Krugman – “Pass the Bill” LINK
• Senior Weekly Standard and NYT conservative columnist David Brooks – “The Hardest Call” - LINK

Reality is the Republicans are not going to do anything to seriously change health care. They did nothing significant from 2000 to 2008. This bill will give additional coverage to 30 million Americans and prohibit discrimination by heath insurers. It may or may not marginally bring down costs. It’s clearly not making lots on the left and right happy.  (See comments by D. “I’m Not Happy. “) I’d sure like to see the 27% of insurance costs that is bloated salaries of insurance CEO’s and executives reduced and a whole lot of other changes.

Our politicians  (both left and right) are far more influenced by lobbyists and stereotyping the other side to get elected. So any future change is doubtful because it sure looks like they will gain seats in the mid term elections. Hopefully moving the entropy that envelops Washington will spark a process of change.

Elizabeth Warren

Congressional Oversight Chairman of TARP Elizabeth Warren has been a voice of reason. Mama Jama in the comments section has sent in a valuable 3 minute CSpan video with her comments. LINK

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	-1.27%	up
NASDQ	-1.22%	down
S&P500	-1.18%	down
Russell2000-	-1.14%	-

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

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

Technicals, Fundamentals & Analysis

The dollar exploded higher and stocks took a big hit . Volume did NOT increase. (A small increase in Dow) I’ve followed stocks for several decades and the lack of volume over the last three or four months is very unusual .  We’ve slowly moved higher, but even yesterday’s toasting was in relatively light volume. One thing is certain – no new money is coming into the markets from the sidelines and trading is being even more dominated by short term traders than before.

Fundamentals – Domino’s are beginning to fall . In this case it’s the economic well being of countries that have become over extended with debt. Dubai was the first and may just a case of taking on too much debt – then getting hit by the recession.

Now, there’s worry that countries impacted by our financial meltdown (shadow banks in those countries that traded unregulated financial weapons of mass destruction – credit default swaps) might also fall like domino’s. Greece had its credit rating downgraded over a week ago. Spain & Italy look shaky. All the former Russian satellite s who bought into the unregulated free market (got into credit default swap debt) are on very thin ice – especially the Ukraine. Jolly old England (London brags it is the financial center of the world) is worse off than we are. = Potential big Bearish news

A second fundamental spooking the markets is what’s going to happen to the Fed and shadow banks . The shadow bank lobby is ultra strong (unfortunately). However, there is momentum building to have the Congressional Budget Office (a relatively bipartisan group) oversee the Fed. Pluses and minuses here. Today just the minus. While the CBO is basically apolitical, it is a branch of congress. If congress got control of overseeing the FED, it would become even more political.

Quadruple witching day for stocks. Translation – lots of traders have to buy and sell because their options expire. Irregular trading happens

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.

Bottom Line - The dollar (see above and below comments) is on at least a major short term bull run. Both fundamentally and technicals support this move . Dollar up = Stocks down .

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

——–

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) . -98 yesterday

——-

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 rose a HUGE +1.11% . Anything close to or over +/- 0.50 is significant. Over 1% HUGE The dollar closed at $77.72 . Technically we’ve broken through the 50 day moving average and TWO significant resistance levels = Very Bullish for dollar & bearish for stocks

As mentioned above, lots of the European countries are having problems with debt that are worse than ours. This makes the dollar a whole lot stronger relative to the Euro and former Russian satellite countries currency. The mid term trend is now bullish and the long term trend (looking at weekly or monthly charts of price) is still bearish

——-

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

The index closed at +0.82 This is NEUTRAL Position. We have a long way to go till we reach overbought or oversold.

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 sell 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

Sold BAC (very small position -1%+ of portfolio for a -6 % loss)

Will sell some FXI (China)  (@ 4 to 6% of portfolio) into any rally today – WHY –

• China is a “high beta” ( it makes bigger moves/more volatile than others) ETF’s
  
• Technically (see chart) it has broken through a couple support levels.
• China sells a lot to Europe and if they are in trouble China is impacted.
• BDI is falling
  
• The McClellan oscillator is at zero. Stocks have a long way to go before they reach oversold or overbought levels.
  
• Momentum is with the bears.

Caution here, I’ve made mistakes before in timing. This might be the perfect “buy the dip,” but there looks like more downside to come. (see above)

Also considering selling 1/2 position in MOO

Bottom Line – Waiting for McClellan Oscillator to get close to + or – 60 before making a major move.

Long Term Outlook = CAUTIOUSLY BULLISH

Germany and Jobs

Berlin Wall Falls

The jobless rate fell again in Germany from 8.3% to 8.0% in Sept, then to 7.7% last month. LINK (World News Network which carries this story is a good source for news outside the USA.)

What does Europe’s biggest economy do right beside provide health care for all its citizens? Nobel Prize winner Paul Krugman points out some obvious differences in our economic systems. Basically, Germany has a more regulated free market/capitalist system. They take care of their workers. The rebound from recession is also evidence that outside the USA other countries (especially emerging markets) are recovering faster than ours. LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.91%	up
NASDQ	-0.83%	up
S&P500	-1.03%	flat
Russell2000	-2.09%	-

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

Dollar rose  a very significant +0.78 so stocks fell. The inverse relationship between the dollar and stocks is so strong it is easily the dominating factor in movement of equities.

List of best performing stock markets this year by country from Seeking Alpha – LINK

——–

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 @ 7% 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 VERY significant +206 points yesterday and closed at 3954. Up 12 days in a row. DANGER – This index is going parabolic – up too far too fast – building a bubble. A higher high price on its chart pattern has been confirmed The BDI has rallied about 1800 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

——-

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 was rose a VERY significant  +0.72% yesterday. The dollar closed at $75.68 . “ Usually a major support level at least temporarily halts any fall.” The $75 support level held and now the dollar is in the middle of its range.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.25 this AM . The support level is a little below $75.00 . Both are EXTREMELY important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow.

——-

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

The index closed at -17.81, down 207% – If you look at the chart – once major momentum starts in one direction it usually continues. If stocks and this index close down  below  25/30  today the trend should continue until we reach oversold levels – below 60. (note -207% is significant,but not as big as it looks)

Key to chart – Zero  is roughly  neutral and when you approach to @ +60 you are overbought and approaching-60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy Overbought positions = sell

Positions

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

Sorry have not had a chance to update Positions section in over a week

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD)  Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

Going to add Indonesia & Vietnam ETF’s – but waiting for dips. Also going to add DGP (this ETF does about 2x what the GLD does) – More explanation later. As a trade like GS. Again, waiting for dips

Traders (short term plays) These are not ETFs, but individual stocks

Extra Note of Caution here – Even though I always warn you AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! please note I’m far less confident in individual stock picks

CSCO – (5% of portfolio) Flat since we bought position a few weeks ago . – Going nowhere while markets have moved higher.  Selling soon for @ -1% loss – Hopefully into a rally. Sold 1/2 CSCO two days ago and the rest yesterday for -1 to 2% loss. Position CLOSED

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. Instituted change yesterday , but subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

More than Just Wall Street Horrors

Photo from SeekingAlpha.com

Wall Street

Let’s call it the Halloween Horrors (See analysis below under stocks)

Mideast

Afghanistan – The run off election process in Afghanistan has broken. The challenger Abdulla Abdulla has withdrawn from the process.  The UN, as well as most of the world, determined that the first election was corrupt. The current president refused to even change the head of the Afghan Election Commission who was in charge of the corrupted election so the Abdullah Abdullah resignation is understandable.  This leaves the obviously corrupt Karzi as the only candidate and the future partner of the USA.  Story from BBC LINK

Latest news on tube is that there will be no runoff election .

Pakistan The UN (development agencies) is pulling out of Tribal areas. Story from Pakistan’s Dawn newspaper LINK Hillary Clinton’s recent trip to Afghanistan reviewed by Pakistani newspapers – Reviews basically NOT favorable – “White Goddess Should Leave Pakistan ” LINK Deterioration in Pakistan continues and another massive terrorist bombing LINK

Turkey/Iran – This may come as a shocker, but Turkey, who is seeking NATO membership, seems to be taking a pro Iran stand when it comes to nuclear development. Al Jazeera story (Remember AJ has no reason to have a pro Iran bias – AJ is Arab & pro Sunni and Iran is Persians & pro Shia) LINK

Bottom Line – Nuclear weapons in the hands of terrorist is something no one wants.  But the more we try to nation build the worse it gets. Let’s accept noble prize winner Joe Stiglets estimate that so far our nation building has/will end up costing us almost $3 trillion.

• How much is it going to cost to turn tribal Afghanistan from an opium (heroin #1 economic product) to a viable state?
  
• How much is it going to cost us to maintain Iraq? Remember the Iraq government along with Hezbollah and Hamas was the first to recognize Ahmadinejad. The two main Shia religious leaders – Sistani, refuses to even speak with Americans and Sadr lives in Iran.
• How much is Pakistan – almost 3 times larger than Iraq & Afghanistan combined going to cost?
  

Crossroads moment for Obama – Adding more troops and nation building in the middle of the worst recession since the Great Depression. Can we afford the trillions it will cost? Wouldn’t it be better to economically help Pakistan more right now than have to nation build their later.

Jobs, Jobs, Jobs

The mantra for Investors411 is that job creation is going to be even slower this time than after any other recession. This recession is bigger and badder.  The new jobs from American companies are going to first be in countries with growing middle classes like India, China Brazil and smaller countries – Cheaper labor and you are closer to a growing market.

Nobel Prize winning economist Paul Krugman in today’s NYT offers a short term solution LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-2.51%	up
NASDQ	-2.50%	up
S&P500	-2.81%	up
Russell2000	-3.01%	-

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

Volume the #1 historical confirmation factor is telling everyone - GET THE HELL OUT. However, the dollar still rules .

The Long Term Long Term Outlook is back to NEUTRAL As mentioned last Wednesday – When the Long Term Outlook is changed we often go back and forth for a while as stocks move above or below key support levels

A falling dollar helped stocks move higher under Bush and its doing the same under Obama . (Check out weekly stock charts of S&P 500 & The Dollar for last 5 years) This inverse relationship between stocks and the dollar was quite different before Bush. (more on this later)

Lots of major economic events this week – The Fed meets and October’s unemployment # comes out Thursday are the big events.

FEARLESS FORECAST -  I’ve never seen volume be so huge on the downside days and the markets not continue to fall.  However, right now the dollar rules. It looks like its resistance level for the dollar (see below) will hold. Still downside risk is growing.

Investors411 has taken profits on its (20% of portfolio) position in the SPX and short term TRADERS might want to take a little of some other positions off the table (FIX & EWZ) in a rally. – There is NOTHING wrong fundamentally with these ETF’s.  In fact, the BDI is bullish,

Fundamentally, long term I see the dollar falling and technically it looks as if the resistance level will hold. This is good for stocks in the short term – next  month or two.

I’d rather have some more cash to buy any possible major sell off.

Long term – Bearish on the US economically. The mess in the Mideast could deteriorate rapidly and the long term cost are astronomical, especially considering the deficit & the recession. We still have NOT changed the same unregulated “free market” system that caused the financial meltdown. Agree with Krugman on stimulus/unemployment. Think things will hold up till the dollar reaches the low it had under Bush or the Mideast erupts.

——–

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 @ 29% 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 +90 points Friday and closed at 3103. . A higher high price on its chart pattern has been confirmed The BDI has rallied almost 900 points since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict the daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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 SIGNIFICANT +0.52% yesterday. The dollar closed at $76.36 .  

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.74 this AM . So dollar is 0.40% 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

Friday – Going to sell some SPX-reasons – Free cash for other investments & take profits

Long term investors should realize that positions like EWZ & FXI are going to have more dramatic moves than American stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Paul Krugman

Armed with the Nobel Prize & a NYT column, the Chair of Princeton’s economics department, the vocal Paul Krugman, is perhaps the world’s most talked about economist.

Today he not only spanks Reaganomics or the free market capitalism that got us into the worst recession since the Great Depression, he goes after “All the President’s [Obama's] Zombies.” LINK Excellent editorial and well worth the read.

“Reaganomics has failed to deliver what it promised, yet people still believe that government intervention is bad, and leaving the private sector to its own devices is good.”

Health Care

Even though there has been 11,000 health care events in 2500 towns and a huge 280,000 people Obama internet event (Thursday) occurred I don’t have the foggiest idea of the specifics behind the different competing plans for health care reform. Dozens of the “Town Halls” have been invaded by angry protesters and dominated the media attention. The waters are muddy and people are throwing more mud.

One point is clear – the skyrocketing costs , denied claims, & huge amount of uninsured are growing. The future is going to be one huge mega disaster – Costs up 100% in last 7 years and lots of folks age going to loose coverage because its going to go up a whole lot more in the next 7 years .  If health care costs you, your employer, or the government $13,000 for your family this year will we be able to afford $26,000 seven years from now?

The total cost for just my wife and I now run at @ $18,000+ a year not including dental. (Her employer, deductables, out of pocket expenses)

Republicans are going to do nothing. They’ve done nothing for decades.  However, this whole process is in need of leadership that can only come from the President. So far all that’s happened is the waters have been muddied and lots of people are throwing mud.

Financials – Driving Stocks Higher

This whole week is devoted to why US markets are moving higher – financial stocks or the shadow banks. The long term results may not be desirable economically, but in the short term this is the trend that is leading US equities and the world’s stock markets higher.

While the health care debate is almost the only focus of the media the fundamentals behind the financial trend higher  is becoming firmly established. There’s the good, the bad, and the ugly behind this, but now its just time to mark the fundamentals and change investment strategy to take advantage of the trend

• We no longer have the transparency of mark to market accounting. Bad assets can and are being hidden.
• The administration and the Fed have flooded financials with low interest loans
• Almost nothing has been done to fix the too big to fail shadow banks

These banks are not be loaning out money at the rate they should. But when the big shadow banks do loan out money they are making killer profits.

Bottom Line for YOUR investments – Investments in financials should continue to outperform despite other economic problems.

(more below and throughout the week)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.67%	up
NASDQ	+1.59%	up
S&P500	+1,86%	up
Russell2000	+2.26%	-

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

Both the NASDQ and the S&P 500 had gains in increased above average volume.   The volume was not earth shattering, but enough to confirm the gains.

The one fundamental that is the driving force behind the stocks surging is financials – Lets take a look at the price charts worst of the worst.

• AIG
• C
• FNM

These are the companies (AIG, CitiGroup & Fannie Mae) that were among the leaders on the downside and the trend is clearly higher.  (See above editorial) The trend is your friend and let’s ride it.

——–

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI fell - 78 on Friday . We’ve again broken a support level and formed another lower low. Four days in a row down between 70 – & 90 points. The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. @ 2298 is a major area of support and the BDI has fallen since early June from 4291 to 2468.  This is just 170 points away from a major support level.

In a nut shell the BDI is

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

Bottom Line – This is NOT looking good . While we are still a long way off from major support levels but the mid term (since June) bearish trend is growing. T he case for trade barriers between nations and a growing worldwide recession is getting stronger.

While this index does not have as immediate impact on stocks, as the Dollar does, it is very significant to long term worldwide economics.

——-

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

The dollar fell -0.44% Friday and, you guessed it, stocks rallied. The Dollar is in a range between $79.5 and $77.5 . A breakout to either side will seriously impact stocks. Dollar closed at $78.04.  Its getting closer to its major support level of @$77.5

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession

This is the index to watch because its impact is immediate.

Positions

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

Investors411 will become more involved in the financial sector. – ETF’s – XLF. UGY (2x financials) & FAS (3X financials) Investors411 will also be taking profits in some.  – Even though its not a dip lets start small and reopen the  position in financials.

Do not think we are too late to join this rally train, because the fundamentals (see editorial above) still support it.  There will be dips and Investors will buy those dips up to a 20% total position.

Because the Republicans, Democrats and especially the Obama administration are unwilling or too distracted by health care to go after shadow banks this trend will continue.

This move to add to financial sector is going to be a major change in investment strategy

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

The “Socialist” Joker

Obama – SF Bay photo

The attempts to break up civil discourse at the Town Meetings Democrats are having to discuss health care is turning into anarchy. Encouraged by the FOX news cable channel, the right wing, and host Glenn Beck who considers Obama “a racist,” mobs are trying to break up normal debates and discussions of the issues.  Latest “Violence” at Tampa Bay town hall meeting. Link here Photo below

There are also pictures of Obama with white powder and red lipstick on his face, depicting him as The “Socialist” Joker. For those too young to remember in the first half of the last century white men used to put black powder on their faces and lips to mimic black men as a vaudeville act. Needless to say this was derogatory and racist. Link to story here Photo above.

Tampa Bay mob banging on windows of meeting – Huffington Post.

Propaganda/Falsehoods – HealthCare

The estimated cost of House version of health care plan is $90 Billion a year NOT a trillion dollars a year. The proposed payment is a tax on those earning over $1,000,000 a year. The trillion dollar figure is estimated cost over 10 years. Two sources Debunking the spin

• WaPo’s Steve Pearlstein – Link here
• NYT Paul Krugman - Link here

Impact of Stimulus

The NYT feature story is the impact of the stimulus package. So far @ $100 billion of the $7 80 billion has been spent. Headline – “With Jobs Data Due, Experts See Some Lift From Stimulus ” Story link here

Bottom Line – If you sit back and do nothing the mob wins. The in your face yelling works unless you act.  Send some emails, write an editorial, go to a Town Meeting (see yesterday’s blog) – Do something, anything – Make a Difference - Its your country

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.27%	up
NASDQ	-1.00 %	flat
S&P500	-0.56%	up
Russell2000	-1.48%	-

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

Volume is beginning to pick up and so is the downside moves in front of the unemployment data. Volume is the #1 conformation of a price move. This is a sign that we have reached a top (a bullish higher high of prices) and are due for some sort of correction. Actually long overdue for a correction,

Even though jobs are a lagging indicator in an economic recovery, these figures are very important. Waiting for results…

US employment data for July -247,000 jobs – Better than expected loss . Best monthly number since Aug. 2008.  Rate down to to 9.4% from 9.5% – Markets rally on news.

This paragraph was written last – Rally in stocks

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3051 down last six days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly.

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning - The BDI falling through its support level at 2975 would be very bearish. IT DID yesterday . What’s worse the rate of downward momentum is accelerating BDI fell 109 points two days ago and 144 points yesterday. We broke through a major support level and the rate of change downward is accelerating = Bears Rule

Simply put - if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose a health +o.57% yesterday. Dollar closed at $78.00 (weighed against a market basket of other currencies)  We did establish a lower low for the dollar earlier this week.  This chart is important as a forecasting tool because there is a strong inverse correlation between the dollar and both (most) stocks and oil prices

Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008

Dollar up usually = stocks down.

Positions

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

See Thursday’s comments and those made earlier this week. The BDI breakdown through support and accelerating decline is a longer term BEARISH SIGN .

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!

Liming Nuclear Arms

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

Violent Protests in China

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

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

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

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

The Great American Bubble Machine

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

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

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

HELP in Health Care

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

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

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

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.53%	up
NASDQ	-0.51 %	up
S&P500	+0.26%	up
Russell2000	-0.64%	-

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

Technicals and Fundamentals

Markets were basically flat yesterday. Volume up but below average

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

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

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

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

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

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

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

—–

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

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

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

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

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

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

Again for more information see Postions section of blog.

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

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

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iran Week Three

Two points of view

More Optimistic – Andrew Sullivan here (above photo from his blog)

More Pessimistic – Jaun Cole here

Unfortunately, think Cole has better insight.

Photo to left – Your editor in the fabulous Summer of 1951

Why the USA Is in Such Trouble

-

One of my left wing friends lamented that the Mark Sanford debacle didn’t get enough media attention this week. Sanford is a Republican family values governor who hypocritically had a torrid long term affair with an Argentina "firecracker," then likened himself to the biblical King David.

Farrah Fawcett (an actress who fought a courageous battle against cancer) and Michael Jackson (music icon with some strange behaviors) died and they sucked up all the news coverage. He wanted the Republican toasting to be the story of the week. All these events were secondary.

There was one big headline last week and these three events will have far less impact on your life and especially those of your children. - The US House of Representatives for the first time passed a major climate and environmental bill. As a society we just don’t get what’s important. That’s why this country is in such trouble.

There are 4 reasons why climate/environment legislation is so important, but today let’s deal with reason #1

Global Warming and The World Is Flat Society

In every society there are the flat worlders who for some reason (mostly self interest or emotionalism) want the opposite to be true. Example: Smoking doesn’t cause cancer or the CIA orchestrated the 911 attacks. Usually you will find a mix of these two groups in Flat Worlders – one that makes a profit and the other, close minded followers.

If you search through any relatively unbiased media source like Wikipedia you’ll find that "the Scientific community has reached consenus that global warming is man made" and "Since 2007 no scientific body of national or international standing has maintained a dissenting opinion." Link

Unfortunately, American culture is locked in the here and now of the Stanford of Jackson stories. Just like  smoking causing  cancer,  global warming will not kill me now and Stanford and Jackson sell.

Nobel prize winner Paul Krugman puts it bluntly -  those who think global warming is a hoax are committing "Treason against the planet" Unfortunately there are Republican members of the Flat World Society who voted against this legislation because hey believe global warming is a "hoax."

Research, the latest from MIT , (an evil scientific institution that the World is Flat Society hates and ignores) are seeing an even more rapid deterioration than expected. There are imperfections in the climate change legislation, but to vote against it because you think science is a "hoax" puts you in The World is Flat Society.

Reasons 2,3 & 4 tomorrow & apologies to Tom Friedman who has a totally different meaning in his book The World is Flat.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.40%	up
NASDQ	+0.47 %	up
S&P500	-0.15%	up
Russell2000	+0.79 %	-

-

Technicals & Fundamentals

Big spike higher in NASDQ volume. Other major indexes up, but below average. NASDQ spiked probably due to rebalancing of the Russell 2000. So, no real help from volume in making a prediction.

Big events of the week

• Madoff Monday – The financier gets sentenced
• Consumer Confidence Numbers on Tuesday.
• Gov’t employment numbers come out Friday (Market closed on Friday)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool.

BDI - The Baltic Dry Index measures the flow of goods (world trade). You have to get out of the box and stop thinking just of the USA. This is a worldwide integrated economic planet and this Index is perhaps the best forecasting tool. If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Look at the chart. (Click on the blue BDI above) You can adjust it from 5 years to one day.  You’ll see what looks like a recovery. Friday the BDI was flat and its started to trade in a range. This is better than the bearish fall over the previous four days. Right now the long term momentum is bullish and short term neutral

$USD - The Dollar fell-0.72% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX – Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling.  This is clearly a long term bullish indicator .

Reading the Tea Leaves

Last weeks  fearless forecast – Another down to flat week. All indexes except the NASDQ were slightly down. NASDQ rose 0.6% .

This weeks fearless forecast – A rally, but one that does not get to new highs. Volume, the #1 forecasting tool, is not cooperating.   Its hard to have confidence in the prediction because volume is not confirming the price move. Secondary indicators are more positive than negative.

Our Positions

Let’s take the 5% loss on SDS and sell it. SDS was bought as protection against a big downside move. For Mid Year Results see last Thursday’s Post.

Our Hedge (SDS & QLD ) is starting to work.

Our other new position IFN (India) is also off to a good start.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Market Updates – The Fork in the Road

 

Index	Percentage %	Volume
Dow	-3.41%	down
NASDQ	-3.71%	down
S&P500	-3.47%	down
Russell2000	-3.99%	-

-

News

-

 

The Stories/News not Covered in Depth Today

• Long Term Structural Analysis (part 2) The How and Why the imbalance of wealth between the rich and poor in the USA caused the “Great Recession,” and why we need to address this problem.
• AIG – The mother of all Insurance companies is again near collapse. If the collapse of the much smaller Lehman Brothers sparked the financial crisis and sent 400+ billion dollars of over leveraged debt throughout the world, imagine the collapse of AIG.
• GE – The mother of all conglomerates is now trading below $10 because of its financial units over leveraged positions. Sure looks like a death spiral similar to auto industry.
• Banks – “How Stressed is Your Bank” from Time magazine. The real problem s not now, but what happens when the bad/toxic debt grows in 2010 and beyond
• The latest wisdom from Nobel Prize winning Princeton economist Paul Krugman  ”Banking on the Brink” or multi time Pulitzer Prize winner Tom Friedman “Start Up the Risk Takers.”
• Obama speaks to nation tonight

Today’s editorial is on the technical fork in the road.  Just at the mention of the word technical your eyes may glaze over, but - 

We are at one of those turning points in the history of the US Stock market and perhaps the world.  

See stock section below.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Stocks

-

The Fork in the Road

Who knows why looking at chart patterns usually works as a forecast of future events. Perhaps its because we are creatures of habit or perhaps its because so many analysts simply believe technical analysis works. One item of technical analysis that works better than others is the more time that occurs the more accurate the predictability and significance the pattern becomes.

The benchmark S&P 500 is at one of those critical forks in the road and so are world economies.

1970 to 2009 Chart of the S&P 500 below

(sorry for the overlap)

Here’s the Fork on the benchmark S&P 500 – Notice just like the price peaks in 2000 & 2008 at about 1500+, there are two vallies around 750 in 2002/2003 and today.20002/ 2003 was the result of the tech bubble bursting and the uncertainty behind 911. Today, two economic bubbles have recently burst – housing and credit. The critical support level for the S&P 500 is around 750. Since November the rapid fall of the S&P 500 (as well as the other major US indexes) has leveled off at @750 like in 2003.

The good news – The fact that we’ve held onto 750 since November shows strong support. (note – this chart is a bit distorted but it gives a rough approximation)

The bad news – The rate of decline falling to from 1500 is faster than 2000 to 2003, and yesterday the S&P 500 closed just below 750 at 743. If support at 750 fails we could really see some additional significant stock meltdown.

The Dow has already broken down though its 2002/2003 lows but the NASDQ and Russell 2000 are doing a bit better than our benchmark.

This is the mother of all technical trading pattern battles  

Long Term Outlook = BEARS RULE

-

See STRATEGY, POSITIONS, OVERVIEW (new) & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Trends, Politics & Economics

Index	Percentage %	Volume
Dow	-0.12%	down
NASDQ	-0.01%	down
S&P500	+0.15%	up
Russell2000	-0.59%	down

Banks – Is the Sky Falling?

Answer – No, but its being held up by smoke and mirror

The simple truth is, if you were to value the assets vs. the liabilities of most major banks and many smaller banks you would find that they do NOT have the collateral to back their loans.  Plane and simple – If the government (your tax dollars) paid the market price for troubled assets now these financials would go bankrupt . No assets would be left. If this happened, the whole banking sector would probably meltdown in panic. What’s more – as the unemployment figures grow this problem is going to increase.

Tim Geithner , like Paulson before him is going to take a shot at blowing the smoke and moving the mirrors today at 11:00AM EST.  The question is can he keep the banking/financial sector afloat long enough for the economy to turn positive and some of over leveraged positions become more solvent.

The ultimate answer or last line of defense to this problem that nobody wants to even take about is NATIONALIZATION .

The Bottom Line –  there is a massive shift in wealth from those who created this problem (they made truckloads of $) plus those who own the banks/financials, and you the American taxpayer who is bailing out banks to prevent an economic collapse. MAD? – smoke should be coming out your ears. The co director for The Center for Economic Research, Dean Baker makes the case Nationalization or Welfare

Obama on Stimulus

Lost count last night of the times Elkhart Indiana (middle class America) was mentioned is Obama’s stimulus speech  You can read or watch videos of the Obama’s speech at CNN – Paraphrasing his money quote – "It s only government that can break this cycle of recession."

Early review- NYT – unfortunately concludes "Odds are…even an $800 billion stimulus package will fall short of what’s needed to combat today’s downturn, and that more will be needed later. When the Obama administration asks for more, it will need to be able to make a compelling case that the first round was the best it could possibly be. It’s certainly not there yet."

#1 Progessive Voice in American Media

He’s quoted by everyone from Pelozi to Limbaugh – Nobel prize winning, NYT columnist Paul Krugman . His latest editorial "The Destructive Center"

What’s Pork?

A Bridge to Nowhere, Compensation for Filipino WW 2 Vets as part of the stimulus plan are certainly pork. But as one of you suggested does a "water park" wanted by a governor as part of the stimulus program constitute pork? Thanks for this and all your emails .

First a water Park like Disney World or a baseball park creates jobs to build the facility. Both workers and suppliers benefit. Once built it continues to create jobs for workers and revenue for products it sells (food, souvenirs, etc) It also generates tax revenue for the state.  So is a Water Park pork?   I’d certainly prefer money going to education bridges etc., but a ready to go water park in the right location (not Alaska) could create jobs jobs jobs and increased tax revenue for states.

Stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Technicals

US stock markets held onto last weeks gains. Technically, this is a positive sign .

Troubled GE shot up like a rocket reversing most of last weeks losses.  Another positive.

Both volume and how markets react to news (our primary indicators) still show a rally building .

Secondary Indicators

Both Treasury Bonds and LIBOR have moved in a bullish direction over the last few months. The Baltic Dry Sea Index that measures the flow of goods between countries, is on fire +48% over the last 4 days and another +10% on Monday. = Big Time Short term bullish signal.

Fundamentals

Today we learn what Tres. Secretary Timothy Geithner and what he plans to do with the second 1/2 of the TARP money. (see yesterday’s comments) Can’t over emphasize the impact the importance of this plan to both financial stocks and world markets.

Dr. Doom and the Black Swan – These two guys predicted the current financial crisis. Their comments "Even if we play our cards right…it will take at least 12 months to get out of this recession." That’s the good news. For the bad news read full article on Roubini and Taleb

Short Term Outlook/Strategy

Technically signs of a rally building are about as strong as they get. Fundamentally, the stimulus package has passed the Senate and that’s a whole lot of money about to juice US economy. However, what Geithner says about allocating the the TARP money is key to any short term rally.

Oppenheimer analyst Meredith Whitney, a financial bear,  is on a winning streak and therefore the analyst that has Wall Street’s ear. If she goes thumbs down on Geithner so will the markets according to CNBC’s Jim Cramer

Bottom Line – Still no long term light at the end of the tunnel, but technical signs for the rally to continue exist.

Long Term Outlook = BEARS RULE

• On a 1 to 5 scale Bears Rule is at the bottom.
• This section rarely change s
• Changed are bolded and in plum or crossed out

Technicals - Best read of the tea leaves – 2009 Markets range bound between Dow 7449 (last year’s low) and 9654 (November 08 high )

Fundamentals – Problem in financial sector is far far far far far bigger than fist imagined. Impact of mess is going to take years to resolve.

Asset Allocation

15% to 30%+ Stocks (Depends on your level of risk) Buy/nibble the dips below 8,000 – the bigger the better.  -

Recommended Sectors

• 5%+ US Index ETF’s - UWM (Exchange Traded Fund does @ 2x what Russell 2000 does ) & QLD (does 2X what NASDQ does)
• 5%+ Emerging Markets - FXI (China ETF) & EWZ (Brazil ETF)
• 5%+ Alternative energy - GEX (alternative energy fund)
• 5%+ Gold - GLD (ETF for gold)

Chief Strategy -

Buy the dips. Use the Dow as a barometer for all of the above sectors except GLD. This is NOT your fathers buy and hold market. Under 8 years of Bush the Dow went from 11,000 to 8,000 and left a whole dung heap of economic problems.

Protect your gains – After rallies you can protect your long positions by using ETF’s that short the market. Two ETF’s that short major indexes (@ 2x the loss). These indexes go down you make money. The closer markets get to 9000 the more you think about shorting. Until the long term outlook changes this hedging strategy will remain.  Note – long positions/ETF’s  NASDQ & Russell, short positions/ETF’s S&P & Dow

• SDS – Ultra short S&P 500
• DXD – Ultra short Dow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING