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China

For well over a decade the big government, tightly managed, Chinese capitalist system has kicked ass.

Their GDP in past quarter was above 10% and its projected to stay near that lofty range.  It has obviously outperformed the casino/free market capitalism of the USA which has brought us a tech bubble and a financial/housing bubble. Both led to two major worldwide meltdowns. It has also outperformed the more socialist models in Europe, that adopted US shadow banking for their own.

China’s growing because money is flowing into a growing middle class while that same middle class is shrinking in  the USA.  In fact every democratic and capitalist economy from India to Brazil that is outperforming ours is growing their middle class. Perhaps China can manage to slowly cool down. Perhaps not. If the Chinese bubble bursts, so will economies around the world.

The problem here is this one party state that does not foster Democracy.

Elections

Primary Day in a dozen states across USA. Some results

• Most under reported is Prop 14 passed in California – “will give every voter the same ballot in primary elections for most state and federal races, except the presidential contest. The two candidates with the most votes would advance to the general election, regardless of party affiliation.” - Interesting.
• Blanche Lincoln won in AK. There was a progressive challenge that fell short. I love Lincoln’s derivative bill and hope it passes congress.
• Harry Reid got who he wanted to win in NV – The Tea Party candidate that wants to store nuclear waste in Nevada. He had little chance against her opponent in polls.
• For more see Huffington Post

Robert Kuttner

Scorecard on Financial Reform

This week/today we get to see what financial reform will look like when it is voted on. Many of what was necessary will be stripped. The Banking Showdown by Robert Kuttner is an excellent source on this.

Your Comments

Some Great threads going in comments section. See comments on right side of blog

• Paul R educational insight and others on stocks. – continues
• Jim J., John S. & Popeye on Israel – Looks like they settled on an International group should look into incident. Perhaps so, but Israel will never agree.
• Yankee Bob and others on BP – Got caught in a BP on line nightmare

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

US markets looked over the cliff, decided not to jump and backed away in increased, above average volume = Bullish

US Markets rallied into the close = Bullish

From Yesterday – “There is two interday lows that were lower this year – the lowest at 1040.78 (see chart) This is the line in the sand major support level for most technicians. Breaking this could open the DANGER WILL ROBINSON DANGER DANGER Floodgates. For right now it’s holding = Bullish”

We went down to the line in the sand for the second time since it was established as the yearly low in February. It held. Technicians call this a triple bottom and get excited. Fundamentally this held because the dollar fell. That’s what to focus on. But the fact that it held = Bullish

Financials was one sector that led this rally (+2.09) Weak financial reform likely outcome in congress. Materials was the other sector (+2.27) = Bullish

Significant Indexes

• McClellan Oscillator rose yesterday to -28.47 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a bit overbought, but basically = NEUTRAL
• US Dollar –  The dollar fell -0.34% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for bearish for US stocks. That big breakout Friday was confirmed by Monday’s +0.25% gain. The dollar fell yesterday so stocks rallied.

Reading the Tea Leaves . From yesterday-”Expect central banks to intervene and BUY the Euro to stop the growing panic….Would expect some sort of relief rally today after two days of significant price declines and strong support level in front of us. But watch out later in week.”

Strong volume behind yesterday’s rally  and a -28.47 on the MO (we are a bit oversold) indicates a rally is getting started and has some room to run.

Bottom Line – The Dollar Rules. This rally will hold as long as whichever (probably a combination of Swiss, German US, French, Chinese? etc.) keeps buying/propping up the Euro.  Short term trend = Bullish

However the long term trend is still dollar up and Euro down – For stocks = Bearish

Positions

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

Traders – Conventional wisdom says that stocks that held up best while others got toasted are the ones to invest in if markets rally – be it for a day, two a week. But sometimes those high beta stocks from YOUR Stock List that are down the most take a big initial first step. Those from YOUR Stock List still above their 50 day moving average and turned with the markets yesterday may be worth a trade today.

• VCI
• SNDK
• SAM
• BIDU

I’m perhaps too emotionally involved, but IMAX looks good and their seems to be a good lineup or 3D movies this summer.

Financials – No real reform = Bullish

• XLF – Investors could nibble here.
• UYG – (2X Financials)
• FAS -(3X Financials)

Still holding VIC, ESRX & SDS (may take profits in SDS) – Today considering positions in FAS (short term) & UUP (longer term) The later mirrors the dollar and also may be good for Investors to nibble

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

1967 TV Show Lost In Space-

Danger Will Robinson Danger Danger

It’s time to take out the Old Lost In Space TV show robot with all its bells and whistles and  have him flap his arms and announce Danger Will Robinson Danger Danger.  We’ve reached a critical technical support level of the US stock market (see stocks below) and if that level falls you could see growing panic.

The fundamental behind all of this is the revaluation of European currency down and the US currency higher. This reflects the worsening shape of Europe’s economy. Eventually a lower Euro will mean their goods will cost less to export. This will help their recovery. Relatively it means a rising dollar. Therefore, our goods will cost more to export. This will hurt American companies that export and cut profits.

It looks like the Central Banks across the world will step in to soften the fall. But right now a fall seem very likely. Lots more below under Stocks

Your Comments

Some Great threads going in comments section. See comments on right side of blog

• Paul R and others on stocks.
• Jim J., John S. & Popeye on Israel
• Yankee Bob and others on BP

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

The Bears Growled Again Monday. Sorry had a hard time reading volume charts (see right side of blog) and click on each Financial Chart in light blue on right side of blog.

Volume has NOT been as relevant as it has been historically as a confirmation factor. This makes the day after a major move more significant. Another decline (about 50% as big as Friday’s) is bad news for bulls. You can feel the fear investors have. = BEARISH.

The benchmark S&P 500 reached 1049.86 – a closing low for the year = Bearish

There is two interday lows that were lower this year – the lowest at 1040.78 (see chart) This is the line in the sand major support level for most technicians. Breaking this could open the DANGER WILL ROBINSON DANGER DANGER Floodgates. For right now it’s holding = Bullish

Approaching support with a lot of downside momentum (last two days), a rising dollar, and not yet over sold MO (see below) gives the bears a big battering ram. = Bearish

Significant Indexes

• McClellan Oscillator fell dramatically Friday to -47.68 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Momentum down/Bearish, and approaching oversold. Remember in the past month+ twice the MO has fallen to over -120 So the MO can go much lower than -60 = NEUTRAL
• US Dollar –  The dollar rose +0.25% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for bearish for US stocks. That big breakout Friday was confirmed by yesterday +0.25% gain = Bearish

Reading the Tea Leaves . Expect central banks to intervene and BUY the Euro to stop the growing panic. They might get overwhelmed by fearful investors today. Eventually it will fall. The fundamentals in Europe are bad (See Investors411 over last few weeks)

Would expect some sort of relif rally today after two days of significant price declines and strong support level in front of us. But watch out later in week.

Positions

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

From Yesterday – “ SDS (2x Short S&P 500) Will sell 1/2 for hopefully 5% profit.”  - Sold 1/2 SDS (3% of portfolio) at 37.32 for +8% gain. Letting the rest ride for now.

From yesterday – Small remaining 1% positions in VCI & ESRX - Also considering selling into rally – Still Have VCI and ESRX will probably sellone or both into any rally this AM

The only position Investors411 has is a 3% in SDS (ultra short S&P 500)

Others we should be in include more ETF’s that short/ultra short major indexes, GLD & UUP (mirror’s dollar) Wating  for dips and MO to be higher to buy. These are all contrarian plays.

From Yesterday – Invetors411 main strategy remains wait for the McClellen Oscillator to fall below - 60 before going long.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Obama, Obama, Obama

• The Obama administration is responsible for us still being in Afghanistan & Iraq. He is the commander in chief (see yesterday’s Investors411).
• His administration is also responsible for the weak financial reform coming out of congress. All Obama had to do it to throw strong vocal support Kafman/Brown, Volker amendment, Lincoln’s derivative bill for them to pass.
• BP, is responsible for the spill, as are a decade of lax rules and enforcers. But its long past time Obama, the commander in chief, did more than talk tough and blame BP. Yankee Bob has editorial on how expensive fossil fuels really are.

Solutions, Solution, Solutions

• John Sovjani in comments sections comes up with some innovative fiscal solutions in comments section of blog A gas tax and legalizing/taxing pot are among his choices.
• Bob Sadinski’s (AKA Yankee Bob) editorial focus is to change more rapidly to alternative energy because of the real environmental costs of fossil fuels. (see link above)

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

Stocks roared out of the gate, but fell in the PM as those huge institutions with those giant super computers all sold.  The translation here is – the bulk of all trading is being made by institutions with complex trading algorithm. They take hold of US markets, usually after 2:00PM and determine direction. That direction was down into close = Bearish

Somehow the rumor/news got out that China was considering taking $ out of the Euro. The announcement  was an absolutely dumb move if you’re the Chinese and are doing this. Probably some large entity that is short the Euro or long the dollar created or contributed to this. Markets still very sensitive to negative European news. China has denied this. = Bearish

The McClellan Oscillator sent out a strong bullish signal yesterday. From Investopedia – “Conversely, when a bear market is still declining, but a smaller amount of stocks are declining, an end to the bear market may be near” Yesterday the financial channels (Bloomberg & CNBC reported a lack of breath and volume behind the PM decline)= Bullish

We’ve not had a bear market, but @ a 13% correction. One technical sign that it is coming to an end does NOT make it so. But the MO has been below 60 for a long time and due for a technical correction or a short run higher.

Fundamentals haven’t changed! But we are long overdue for the McClellan Oscillator to move above -60. A technical bounce.

Futures are up in US and European markets higher. = Bullish

Significant Indexes

• McClellan Oscillator rose to -64.99. [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still OVERSOLD territory, but we are now out of WAY oversold territory. How the MO works. Yesterday was one of those strange days where the markets went lower but MO went up.= Bullish.
• US Dollar –  The dollar rose  a significant +0.62% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. This broke its major resistance level and the dollar is now trading at year + long high. Foe stocks (especially US stocks) =  Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Sold last 1/2 of SDS at 35.50 near market close. There was a +5% gain on 1/2 and a 0% gain on 1/2.

Traders – Bought 1% IMAX at 16.70 & DGIT at 42.26 near market close. Reasoning – These stocks were rallying into the close, markets were falling, Monitor (see comments section of blog announced DGIT and SNDK had made new year long highs ) and these two stocks are clearly out performing well over 98% of the market even though they did not hold onto their breakouts. DGIT & IMAX rallied into close as markets fell.

Still long 2%IMAX, 1% ESRX, 2% DGIT and 2% VCI.

I hope IMAX, ESRX DGIT & VCI turn into long term gains, but fundamentally I seriously doubt it. If lucky will take profits (sell 1/2) on any gain of @5% with DGIT. Also will sell 1/2 VCI (dropped over 4% yesterday – should have sold 1/2 when stock was up over 5%) & IMAX in major rally.

Still waiting for dip to buy EUO. If markets rally strongly today.

Traders Investors411 also bought FAS at open and sold it when it fell back to price it was bought for. (actually lost less than 0.4%)  Caution this is a very volatile (3X financials) stock.

Traders – Trading strategy – Investors411 is taking @5 % profit on any recently purchased position and letting the rest ride. Investors is then putting a stop/sell order on the price it was bought for.  In volatile markets the only thing to do is make short term trades. Will sell 1/2 of  IMAX, VCI, and/or DGIT if criteria is approached at near open. Selling into rally

Investors – Wait for trend to establish itself.

NB – Friday’s Investors411 will be minimal and published early.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Congressman Alan Grayson

War is Making YOU Poor

There are many ways Americans can cut deficits to make the future more solvent for our children. One presented by Democratic congressman from FD Alan Grayson (short video) Here’s some major point from The War is Making YOU Poor Act

• We spend 1/2 the world’s entire military budget
• NATO allies #2 in military spending – Are we going to war with them?
• Distant third China. War with them would devastate our economy and theirs
• Keep $549 billion in yearly pentagon budget & eliminate the $159 Billion for Iraq & Afghanistan.
• Video (link above) has great chart & more complete explanation – so check it out.

How he would spend $

• No taxes on the first $ $35,000 for every American
• No taxes on first $70,000 per couple
• Plus $16 billion a year to reduce deficit.
• Moderate and low income people spend that tax break money and this would stimulate our economy generating both jobs and further taxes.

So you might spend it differently. But the main point is clear – The War is Making YOU Poor

Sign up to be on Grayson’s newsletter list.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

At the open stocks on all major indexes reached lower lows than even the “flash” mistake trading meltdown a couple weeks back. This achieved a lower interday low for stocks. We already have had a lower closing low. The pattern now is lower lows and lower highs. Until that breaks = Bearish

From yesterday - The only silver lining to the up coming storm, is McClellan is oversold and when we get down below -135 we could have another oversold bounce. A 2 to 3% Dow fall in big volume could put us in -120 to -135 territory.

The above happened at the open. In the afternoon the giant institutions with their giant algorithm computers bought into a very oversold market. We rallied  about 200+ points on the Dow to close near even in increased volume. = Bullish

Markets moved higher despite poor global news = Bullish

Analysis – Would expect oversold bounce to continue today. If you are a trader as opposed to investors you could make some short term profits long.

Significant Indexes

• McClellan Oscillator was flat for the third day in a row. Now at -90.45.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish.
• US Dollar – Uncertainty reigned as the dollar had a massive range from a new high to almost below Monday’s open. The dollar rose +0.27% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Yesterday = Mildly Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Yesterday close to open Sold 1/2 position in ESRX at 99.51.& 1/2 position in SDS at 37.21.

Traders & Investors – Reasoning – ERSX was just plain fear on my part of overall bear market. Not a good reason to trade because it was holding up well despite early meltdown. SDS had mad a 5% profit. Because of the extreme volatility and oversold nature of current market I plan to take 5 to 7% profits on 1/2 of all trades and let the rest ride.  This, is because uncertainty/volatility is a clear pattern in the current market.

Looking for dip to buy EUO It’s rallied in weak volume the last few days. May sell SDS (short ETF)

Investors – Until we technically get out of the woods and break the newly established downward pattern only those who love risk should buy. Would suggest the Financial area ETF’s –  XLF.

Traders - UYG & FAS (@2X & 3x what XLF does) Financial reform has basically failed and these institutions should continue to exist in the unregulated, over leveraged, shadows of Casino capitalism. Therefore, make profits while they will make privatized profits while your FDIC insurance subsidizes or protects them from any losses.

Apologies - ran out of time to do YOUR stock list. See past comments from Paul R & Monitor Both have made some excellent suggestions in past few days. YOUR stock list is holding up quite well. While major indexes are below their 200DMA’s almost all of the stocks on YOUR Stock List have not reached that big a breakdown.

They both have good ideas that traders can take advantage of in a rally today. YOUR stock list also has good concepts. to pick from.

NB – I’m trying to make a clear distinction between short term Traders who are comfortable holding a stock/ETF less than a week and longer term Investors whose goal it is to hold positions for months and hopefully years.  Everything Investors411 mentions in Positions section is hopefully a long term position

.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Quantum Economic Shift

Both Jim J & JAB sent in a Simon Johnson & Peter Boone article on how bad the European/American situation-

Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialized countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.

Investors, still have what happened in 2008 fresh in their minds. Now the European debt crisis is upon us. It doesn’t take a behavioral economist to predict what will happen. Fear is twice as powerful as greed according to behavioral economics.

Casino capitalism advocates (Tea Party followers & others) are going to blame European socialism. They are in part right. Patronage, corruption and socialism that went too far exacerbated their debt problem. (see yesterday’s Investor’s411 and Fridays for additional warnings about what’s happening)

Bottom Line – Wolves have wormed their way into the henhouse of capitalism, the US congress, and the Obama administration. Debtor nations, with over leveraged, non transparent shadow financials are privatizing gains and socializing risk. The worst is yet to come.

Why trust these two? Because they have been right again and again. Here’s Johnson and Boone on May 8th questioning the stock market at its hight. Unfortunately as Johnson and Boone warn its not the wolves (shadow institutions and free market capitalists) who are going to pay – it you, me and now Europeans.

Our ship is sinking and the captain that steered it into an iceberg in broad daylight is getting rescued and given another ship.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

US markets fell into the close as dollar soared. =  Bearish

Significantly Lighter Volume indicates things have settled down for a while.= Bullish

Markets still way oversold (see McClellan Oscillator) = Bullish

Dollar’s massive rise = Bearish

Fear over Europe and North Korea (war drums) has futures way way down.

Analysis – Investors411 has been too slow in exiting positions despite making repeated warnings and changing long term outlook to CAUTIOUSLY BEARISH

Mistake not to invest more in SDS as mentioned yesterday

The only silver lining to the up coming storm, is McClellan is oversold and when we get down below -135 we could have another oversold bounce. A 2 to 3% Dow fall in big volume could put us in -120 to -135 territory.

Significant Indexes

• McClellan Oscillator rose slightly to -89.94 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish. Repeat -Hate to say this, but once the trend broke this index has become less effective.
• US Dollar – Friday the dollar rose again to $86.36 Up a massive +1.16% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important .  = Bearish..

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

The whole positions section has been refurbished. Many thanks to one of you who helped and wants to be anonymous.

One of the cardinal rules of investing is don’t loose large amounts of $

Yesterday Sold

• 1/4 IMAX at 17.88
• 1/2 IMAX at 17.52
• 1/2 FAS at 24.45
• 1/2 of FAS at stop loss of 23.75
• 1/3 of ESRX at 101.25
• 2% position bought in SDS at 35.25

Remaining long positions 1% IMAX 2% VCI & 2% ESRX. 2% position in SDS is short.  While all these are out preforming major indexes – They haven’t fallen past their 200 DMA – I’ll be looking to cut back more long positions in any in rally today. Still very interested in owning these companies, but overall bearish trend is established.

New Stock/ETF List

Tomorrow our old “YOUR Stock List will return

Bottom Line - Now is NOT the time to think about going long but  to start to think about using SDS and similar ETF’s that short the market (2X short S&P 500) in a rally.

All the following will go up when stocks go down (TLT is exception but a flight to safe investments and generally moves opposite US stocks)  If we fall to a major correction (Dow now down 10% and falls to 20% – these ETF will make YOU $)

• EUO – Ultra short’s the Euro (ultra = 2x)
• EPV – Ultra short the big companies of Europe (new – very thinly traded)
• SDS – Ultra Short S&P 500
• QID - Ultra short QQQQ(tech stocks)
• TZA - 3X short small cap stocks
• TLT – 20 year treasury Bond fund

Investors411 will open a position EUO on first dip and add to ultra shorts on rally.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Nassim Taleb – “BlackSwan”

Black Swan

There are many doom and gloom prognosticators out there. There are a lot of Johnny Sunshine’s too. Paul R comment’s are today’s editorial. Checkout the other excellent recent comments too. I strongly urge you to also read the 10 points in his referenced Financial Time article.

“Back on Feb 10 Barr mentioned the “Black Swan”. I caught the Wall Street Journal Report on TV last week and they interviewed Nassim Taleb author of many Black Swan articles.

A quick search of the net for “black swan” I found his recommendations for a black swan proof world. LINK

http://www.fooledbyrandomness.com/tenprinciples…

I really like #2.

2. No socialization of losses and privatization of gains. Whatever may need to be bailed out should be nationalized; whatever does not need a bail-out should be free, small and risk bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.”

Bottom Line – Nassim Talib – who was right about the 2008 meltdown wrote this article on April 7 2009.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

Markets recovered a bit on Friday. Some of this may be options expiring.  Nothing to get excited about because as state Friday major support levels and trend lines have been broken.  This usually means the worse is yet to come.

We moved higher because markets were way oversold (See McClellan Oscillator)

Fearless Forecast Last week – Down market at beginning of week and rally at end – was right. But overall prediction of “up week” was obviously toast.

Fearless Forecast This Week - Trend lines and major support levels have been broken. I think European Central Banks like our Fed and Treasury will do whatever it takes to stabilize the Euro.  But the long term damage to their GDP is significant and impacts the world. Hard to see a market recover if GDP is falling. Systemic problems in capitalism and social welfare have to be fixed and this is going to hurt. More investors realize this and sell this week.= Down week.

Obviously expect a roller coaster ride again. Idiot Democrats and Republicans have NOT fixed the “too big to fail” or over leveraged problem that got us into this mess. About 1/3 of the Senators get it – Those that voted for Brown/Kaufman legislation.

Significant Indexes

• McClellan Oscillator rose to -90.99 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish. Repeat -Hate to say this, but once the trend broke this index has become less effective.
• US Dollar – Friday the dollar fell again to $85.36 Down a significant -0.52% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important . . Obviously European & other Central Banks are stepping up to buy the Euro.  Looks like this will stabilize the Dollar/Euro relationship at least for now This is good news but markets have failed to move higher on good news = Bearish
• VIX- The “fear” index is at 40 and back in Oct. 2008 it reached 90. We have a ways to go before we reach 2008 fear levels.

Stock markets are totally ignoring their record oversold conditions and the drop in the dollar. Major trend lines have been broken. Bad reactions to good news is a powerful warning sign that the worst is yet to come. Technically, Friday’s gains need a confirmation and trend line reestablished before going long.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

The whole positions section has been refurbished. Many thanks to one of you who wants to be anonymous who helped.

Usually most positions have stop/loss orders 5 to 7% below what they were bought for. The 12% loss in UWM was due to the fact that UWM gapped lower the next day. The huge 40+% gains in IMAX was because they wee bought months ago.

Forgot to mention Friday a 2% position in VCI.

Purchases made on Friday all have stop/sell orders on them at or @2% below the price they were bought for.  Except for 50% of IMAX. and 100% of VCI. Their stops are a bit lower.

NB – Would NOT invest now, but if you are an experienced short term trader you could nibble. – Only on huge dips. Don’t make the mistake I did and hold short term positions over weekend. Get in , make 5+% profit , sell 1/2 and let the rest ride, or get out.

Friday – we saw the Dow dip 100+ points even after the McClellan Oscillator was at a record low of -136. So the dip would have too be quite large before nibbling again.

Bottom Line – Now is not the time to think about going long but  to start to think about using SDS and similar ETF’s that short the market (2X short S&P 500) in a rally.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Bears Rule

The World Has Changed

We, had a huge shadow financial meltdown in the USA. A massive fiscal response that held up markets worldwide and prevented the second Great Depression. Now, the PIIGS in Europe, who like the USA created massive over leveraged debt, are melting down. The contagion is spreading worldwide.

The root cause, obviously is no checks and balances on casino capitalism which has led to over leveraged massive debtor countries (including the USA) falling even further into debt and continuing their huge opaque financial structures We have not yet fixed the too big to fail or over leveraged problem in the USA. Some consequences from the changing wolrd:

• GDP worldwide is going to fall
• Jobless rate in USA and other debtor nations going to grow.
• If casino capitalism or “free markets” continue to run wild the situation will worsen.
• BP disaster is just another example of unregulated casino capitalism and no government enforcement.
• Democrats are in Huge trouble because they lack a coherent national leader who backs Main Street.
• The EU is structurally damaged as is the USA
• The core issue of too big to fail shadow financials could rip the financial structure of the world into another Great Depression.

KISS & Too Big to Fail

Giant over leveraged shadow banks are FDIC Insured. Shadows take your $, plus printed $ from the Fed & invest it in opaque, over leveraged shadow investments. Once you allow this over leveraged situation to occur on a debtor nation (latest example Greece) putting Humpty Dumpty back together again is a nightmare.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

Huge decline in significant, increased, above average volume. This looks like the beginning of a parabolic move down. Similar to the one in 2008.  Another day of selling like the last and you’d have technically a climax sell off. Then maybe some stabilization. = BEARISH

Far more than the 200 DMA has been broken on the benchmark S&P 500. Virtually all technical trend lines that show bull market momentum have fallen for all major indexes. = Bearish

Sell off accelerated into close and European markets again lower this AM. = Bearish

Dow is now off 10.5% from highs. Historically a 20% correction = a new Bear market

Today is a confirmation day of yesterday’s fall.

It’s going to take a while to sort out things in Europe and many are betting that the debt Crisis will sink the European Union. Problem in a nut shell is China, Germany & petro countries are big exporters and the rest of the world is over leveraged creditors.

Significant Indexes

• McClellan Oscillator fell to record lows -136.21 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish  Hate to say this, but once the trend broke this index has become less effective.
• US Dollar – Yesterday the dollar fell to $85.81 Down a significant -0.54% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important . . Obviously European & other Central Banks are stepping up to buy the Euro.  Looks like this will stabilize the Dollar/Euro relationship at least for now. = Bullish.
• VIX- The “fear” index is at 45 and back in Oct. 2008 it reached 90. We have a ways to go before we reach 2008 fear levels.

Stock markets are totally ignoring their record oversold conditions and the drop in the dollar. Major trend lines have been broken. Bad reactions to good news is a powerful warning sign that the worst is yet to come.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have not had a chance to update the positions section of blog yet. Will update last weeks trades over weekend. All losses under 10%, some gains but its not pretty.

Sold remainder of UWM & ICON at yesterday’s open. Also 1/2 of ESRX & 1/2 of IMAX at open yesterday – most for losses (except IMAX). Positions below. Everything else has been sold last week or this week.

Positions  -

• 2% IMAX
• 1.5% ESRX

Just on a technical basis, another massive sell off in increased volume & Investors will buy back IMAX & perhaps ESRX or another stock that has held up well over the meltdown.

From yesterday – Any close below the 200DMA on the S&P 500 will change outlook to CAUTIOUSLY BEARISH We came close yesterday.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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The Energy Problem

Here’s the energy problem the world has to solve – The question is how. From May 24th’s Forbes – “Worldwide electrical generation is projected to increase 77% by 2030″ according to energy Secretary Steven Chu.  That’s just electricity.

How does the world and the USA as a nation meet this energy demand?  It takes 10+ years to get a possible wind farm off the coast of Massachusetts that in the end will produce 1/2 to 3/4 of the electricity for Cape Cod.  It’s easy to make a case against off shore drilling or nuclear energy, Build a case for a viable solution.

Any takers?

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

US markets dropped as The Dollar rose. The rise in the dollar vs. the Euro is anchoring or pulling stocks lower. This is the dominant theme driving the market.

Volume rose, but was only slightly above average = Mildly Bearish

Markets rose in the last 30 minutes of trading = Bullish

Nothing really happened over the weekend in Europe, but the NYT is headlining Fears Intensify That Euro Crisis Could Snowball = Bearish

Bottom Line - Almost everyone is short the Euro and long the Dollar = The dollar is going to go up & this is going to negatively impact stocks. However, technically, the dollar is more extended over its 50DMA than any time since 2008. If it goes up about another $2.00  it will reach a strong resistance level (the old 2008 highs).  This should at least in the short term, should stem the fall. (see chart below) = Bullish

The McCellan Oscillator has reached OVERSOLD territory = Bullish.

Fearless Forecast Last Week = “Up week” – Correct call

Fearless Forecast This Week = McClellan is OVERSOLD Territory and the Dollar is Overextended from its 50 Day Moving Average.  We may see a wild roller coaster ride, but by end of week stocks should inch higher.

Best case senerio – Stocks fall early this week as dollar rises and we get closer to @$88 resistance level for the dollar. The McClellan goes lower. This would set up an even better buying opportunity.

We have now entered Buy the Dip territory, especially for traders.

Longer term  Investors- The Euro, as the NYT article states could snowball lower, but at least temporarily, there is a short term trading opportunity that could be presenting itself. The dollar is what to watch.

Significant Indexes

• McClellan Oscillator fell dramatically to -65.45 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. Bullish
• US Dollar – rose +1.00% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important Dollar Rules because it broke out to new high is a significant move. = VERY BEARISH

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Investors411 exited all positions mentioned Friday as market opened.  The only ETF position left is 5% in UWM bought two Friday’s ago.

Investors almost also has all the stock positions from YOUR Stock List. Sold 1/2 of SNDK at open on Friday.

Since the McClellan is oversold - we’ve reached Buy the Dip territory. (see above)

Longer term traders – every time we get below -60 on the McClellan its time to nibble.  The further below the better. The recent low was -123

Yes, best read of tea leaves is for markets to move lower at the start of the week. If your panicked about loosing some $ in the short term, sell at the open.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Chucky shredding wire from the movie or one of the remakes

Shredding Democracy

• Before Paulson/Bush asked for the  $700 billion 2008 bailout
• Before the worldwide 2008 stock meltdown
• Before Lehman Brothers went belly up

the FED Bank under Bernanke acting on its owned spent tens of billions of of unauthorized dollars bailing out AIG and Bear Stern. Without any constitutionally mandated congressional approval or oversight Bernanke/Geithner (who was NY fed board member) flooded these failing shadow financials with money. Did Paulson/Bush know this was happening?

“Its {the FED}secret deals, announced almost two years after they were done, violate the democratic process, if not the Constitution itself.” Robert Reich (Economist and former Sec. of Labor) The Fed came clean about this (masterfully) directly before the Easter break and American media has blown the story. Reich accurately explains the fall out here

What other secrets is the Fed hiding?

Shredding the Yankees

Yesterday was opening day for baseball, and hope springs eternal for every team. Most fans walk through a dark ballpark tunnel into a brightly lit transcendent green field full of hope on opening day.  The beloved Red Sox did twice come from behind to beat the evil empire, sometimes known as the New York Yankees, last night. Unfortunately there is over 170 games left if you make the playoffs and the Yankees will certainly shred far more teams than almost every other in baseball. Go SOX’s.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made each weekend

Friday’s March jobs report was better than expected, especially for the critical private sector +123,000 jobs created.

It clearly looks like jobs creation started in November and is slowly growing.  Here’s the ultra right wind Washington Times on the jobs report Clearly good news for the economy. The old Jolly Green Giant (not so jolly anymore – Alan Greenspan) and Obama Administration predicting potential acceleration in numbers.

This report, even though the headline -9.7% job loss stayed the same, was too good for Wall Street. The longer interest rates stay low, the better it is for stocks. A better than expected number in the private sector translate to the Fed rising interest rates sooner than expected.

The big stat out of last week was China’s Manufacturing Index coming in better than expected. This shows global growth in emerging markets is still pulling the world’s economy.

Last Week’s Fearless Forecast – “Up week” –  All US markets near highs as rally chugs along. Like the RED SOX against the YANKEES last night. We won.

This Weeks Fearless Forecast – “Up week” – But really difficult call – The Dollar is King right now. Europe is weak (see past Investors411) and the US (jobs report) is strong. The start of the week should see a rally, but the Dollar is coming up against major support level. (see below) Best read of the tea leaves. Our bullish momentum should carry us higher at the start of the week, but I expect the dollar to hold its support. Earnings season is around the corner and the expectations of better earnings will be the deciding factor making it an up week.

Bottom Line – With the McCellan stuck near zero – no wisdom in buying or selling any large position at this time. Will continue to nibble on dips.

Significant Indexes

• McClellan Oscillator rose significantly to -1.46 yesterday.  [+60 or above = Overbought = sell. -60 or below = oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. – This (at least for a day) broke the downward trading pattern. Downside and Upside risk are about the same. We are neither overbought or oversold.
• US Dollar -fell  -0.44% yesterday. [Anything over +/- @0.50 is significant.] Dollar broke through a more minor support level Friday and ended the day at $80.71. The major support at it climbing 50 day moving average is $80.19. Would be very surprised to see this fall. Falling dollar = rising stocks

As stated before -What the dollar does over the next few weeks is critical to stocks and economics around the world. Falling dollar good for stocks & rising dollar bad in the short term

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

3D and related theater stocks weekend results good. Simply not enough 3D screens to fill the demand.

The big news is the manufacturing growth in China (see above) – Mistake to take profits in FXI (China), but adding EWZ (Brazil) looks to be a good counter balancing longer term move.

Strongly considering adding health care/Biotech ETFs on dips. Their fundamental story is compelling (baby boomers getting older & obamacare covering 30+ million more) Their charts are outperforming. Recently added stocks TEVA & ESRX are in this general area.

Its frustrating, but I’d rather wait till US equities are more oversold to buy larger long term positions.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Democratic congressman Jim Clyburn

“Baby Killer”

YOU, in the comment section of the blog, have had a rational debate over the tax implication of the health care bill starting started by John Sovjani and now ending with a NYT article from Ewanapat that shows, in part, who benefits and who pays. The rest of the nation has not.

One Texas Republican congressman screamed “Baby Killer” while a Democrat spoke on the heath care bill. Later he apologized, but this calculated move will bring huge amounts of cash into his campaign for congress. Across the country Death Threats, vandalism, break ins, gas lines cut, and even photos of hang man nooses have been sent to at least 10 Democrat congressmen and women who voted for the health care bill.

Here’s a report from yesterday. From today, where families of Democratic congressmen who supported health care are moving out of their districts because of the death threats. Sarah Palin’s website is painting bulls eye’s on targeted democratic congressmen CBS reports

When Black Democrats like congressmen Jim Clyburn (D – Majority Whip) gets a noose & death threats faxed to him it is exactly what happened to those who dared stand up for civil rights in the 60′s.

No matter what side of the health care debate you are on – if you do nothing you condone the behavior. At least tell a co worker or friend that this kind of tactic is unacceptable.

Chimerica

(part 2)

The USA has lost 2.4 million jobs because of the trade gap with China -Study reported in WSJ. Yesterday, our House Ways and Means Committee, announced it was holding hearings China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

Bottom Line – We need many of those 2.4 million jobs back in the USA, but a trade or economic war with China would be devastating to the world’s economy.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

The US dollar exploded higher breaking out of its trading pattern. The strong inverse correlation between US stocks and the dollar once again took hold pushing US equities lower. Stocks fell in basically higher volume.

What’s happening is that Greece and some other European countries involved in the Common Market have weak currencies and the relative to them the dollar is stronger. These problems have two root causes -

• The same financial meltdown that hit us is hitting them. Remember, the reckless lending of super banks/shadow banks was a global phenomena. In this case the Greek government aided by Goldman Sachs covered up their debt.
• Greece and some other European countries have swung too far into socialism – example may can retire at 50 in Greece with almost full benefits. This is the exact opposite of the USA which has swung too far into greed based capitalism.

Expect a rebound as momentum is still clearly with the bulls and the McClellan oscillator turned red (below zero)

Significant Indexes

• McClellan Oscillator fell to -1.66 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. – Investors411 manta is its much better/safer to buy when stocks are over sold and sell when they are over bought. When the $NYMO is around zero those who can accept more risk can nibble on stocks & ETF’s.
• US Dollar - Exploded higher +1.34%. Anything over 1.00% is considered a huge move and this move was also a breakout to a new high.

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

Our remaining China position FXI (Also EWZ & MOO)

Over the course of the last few months Investors has decreased FXI holdings from a high of almost 25% to the current 5%. China has been an investment mainstay of Investors411 for many years. Unfortunately many imbalances (see yesterday’s Chimerica piece) especially with the US and a over supply of public and retail housing is clouding the future.

This is also true for emerging markets that have been under performing US stock markets.  Technically after years of out performance this was bound to happen regardless of the fundamental problems in China. Our other major foreign investment. Brazil, EWZ is also under performing. Again over many months we have reduced holdings from a high of almost 25% to 5%. Brazil has a presidential election and the economically successful “socialist” president of the last 8 years is not running. Markets hate change.

The overall problem is does China have a soft landing or a hard one?  Yesterday, our House Ways and Means Committee, announced it was holding hearings on  China artificially keeping her currency pegged to the USA’s. Niall Ferguson is a most outstanding source of info on this.

MOO is an agriculture ETF whose growth relies on emerging markets buying US agricultural products and equipment.  Investors has cut this from 10% to 5% position.

Strategy – Bottom Line – Will drop remaining 5% in FXI into a rally.  Investors is building it own market basket of 3D stocks and health care stocks. (see past blog posts) Investing in ETF’s  (example TYH) that do 2 & 3 times what US indexes do when they are oversold.  Also considering YOUR stock list for investments.

Apologies for everyone who just wants to buy and hold forever.  It’s just NOT your parents market. Blame technology.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING