Occupy Wall Street

Oakland Epicenter

More Photo/Stories of the 99% at

LINK

Oakland is the epicenter of the Occupy Wall Street Movement as protestors try to protect their first amendment rights.

Oakland’s mayor has flip flop flipped on the OWS movement.  Weak leadership (flip flopping) almost always makes a situation worse.  Here’s the Google news feed for Occupy Oakland

From Popeye in the comment section of the blog on the OWS impact.

• “Stories about the wealth gap are now front page news.
• Herman  Cain’s “if you’re not rich, blame yourself” is NOT resonating like it used to.
• The discussion is focus on democracy over an elite oligarchy.
• Change in public opinion – now even the wealthy think the 1% should pay more taxes.”

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Democracy or Crony Capitalism

The Greek PM has called for a January referendum (democracy) on  if Greece should accept the austerity measures forced on it. Or should it all be left in the shadows for a hidden elite and their politicians to decide?

One wonders, if we had the time, how the vote would have gone on the 2008 bailouts. What conditions would have been forced on banks?

Links  Robert Reiche,

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STOCKS

Will The Baby Bear Market Hang On?

We’ve had about a 5% drop in major indexes in the USA over the last two days. Will the Bears hold on? News that impacts stocks and the cute bear cub pictured above. -

• Treasury announces a 35% increase in bonds over next 6 months ($864 billion total) Printing more $ is always short term BULLISH

• European leaders meeting with Greek PM to discuss referendum. Killing referendum short term would be BULLISH

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Reading The Tea Leaves

• Our #1 technical forecasting tool, the McCellan Oscillator, has taken big two day fall to at -11.17 . 50DMA at +24.49. = NEUTRAL/bullish

• Our secondary indicator, the Put Call Ratio is at 1.35. Well above its 50DMA which is at 1.15 = Bearish/Neutral

• For more on MO & PCR see POSITION Section of blog (scroll down)

Technically, the one big defensive support level for the bull is @ 1225. That was broken (close 1218) but not enough bear have poured through the gap and establish a foothold. So todays close matters. Above 1225 bullish. Below 1225 bearish.

Personally, I believe in the below animation  There is no credible Euro bailout plan – Only smoke and Mirrors. But what I believe doesn’t matter.

Click on photo for video

What matters is what market movers think -giant institutions, hedge funds,uber wealthy ,sovereign funds, bankstas etc.- they move the markets and have better information than little old me. -

Do they believe the Fed and the European Central Bank has their back?  Where is the $$$ for the bailout coming from? Obviously transparency is almost non existant.

Bottom Line - My read of tea leaves is insiders know somethings up – the Central banks (our Fed and Europe’s CB) or taxpayers (privatize gains and socialize risk) will provide – otherwise why the 20+% rally off the bottom? They have let it be known that they will do whatever it takes to keep the casino/crony capitalism going.  The threatened Armageddon this time is potential the collapse of  banks, sovereign bond yields go higher, and possibly the end European Union.

Economics are also better now than they were back in July. (2.5% US GDP and China still strong) Our technicals are mildly bullish. This is a strong support level. The Fed is injecting 35% more Treasury bonds (see above)

So, at least for now, that baby bear is in trouble.

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Paul’s Corner

As I mentioned last week, Gil Morales was a guest speaker at the HSGI workshop. Gil worked as a portfolio manager for William O’Neil  (Investor’s Business Daily Publisher) and now works as a full time trader and investment adviser.

He spoke about “Pocket Pivots” and selling short. Pocket Pivots as defined by Gil are subtle changes in volume of a basing stock that can precede breakouts. Some chart providers are now including Pocket Pivots indicators. While not an indicator to use as the only buy signal it appears to be a good confirming indicator. Gil has a PDF available for download that explains Pocket Pivots.

LINK

Gil spent quite a bit of time discussing short selling. What he discussed helped me make the decision to short GMCR last week. He co-authored the book “How To Make Money Selling Stocks Short” which was published by William O’Neil.  It’s available from Amazon.com for $14. It’s a small book but it’s well written and includes lots of charts for review. If you want to learn how to properly short, this is a good resource.

Gil and his trading partner Dr. Chris Kacher recently published a book “Trade Like an O’Neil Disciple”, it has a sub title “How We Made 18,000% in the Stock Market”. It looks like the new bible of high growth stock trading. It’s also available from Amazon and costs about $38.00.

I just received copies of both books from Amazon, so I have some reading to do, so for once a short Paul’s Corner.

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Positions

The following is a link to the results (so far) of YSL #5.

LINK

The results were compiled on the 29th so they are a bit out of date and do NOT reflect results of last two days. Also the dividends were not included on NLY & ABV

Remember TSU, RES, CROX, GMCR, & CPHD are now closed positions.  So the list has shrunk to 9 stocks.

Results so far since 8/11 inception

• S&P 500 = +9.41%
• YSL #5  = +6.50%

This is the first of 5 stock lists that is losing to the S&P.

Learning from mistakes – The BIG mistake that was made, unlike YSL #4, we did NOT close down the stock list through earnings season and we were hit with some very bad reports.

Any changes in YSL #5 will probably first be announced in the comments section.

SPY – Our other position has a stop/loss order at 1211.

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Long Term Outlook

3 to 6+ months

Yesterday the benchmark S&P 500 closed below the 1225 support level at 1218. If it again closes below that level (confirmation day) the Long Term Outlook will change to NEUTRAL.

NEUTRAL/

CAUTIOUSLY BULLISH

Investors411 has 5 different valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMER ERRORS.

Globalization of US Elections

Foreign Funding of US Elections

• Money is easily manipulated and obviously many US corporate entities make the bulk of their profits abroad.  Now they make huge investments in US elections.  For many compnies it is in their interest to see countries like China manipulate their currency and hire more foreign workers. These corporations now can donate any amount of $ they want.
• Wealthy Individuals can set up their own dummy companies, have foreign investors donate, and they too can donate any amount of hidden money they want.
• Latest is the US Chamber of Commerce who has many “foreign companies” as members who pay at least $10,000 to join. Chamber lobbied for foreign oil company BP is best example. Now Chamber  using foreign money (this is illegal) to run attack adds.

Bottom Line – The role of foreign investments in US elections is increasing. Obviously major trend of globalization is having an impact on everything from jobs to elections. Just as obviously this has a negative impact on US jobs and our Democracy.

Comments Sections

Lively debate on the Tea Party going on and Paul R keeping traders updated on stocks. YOUR stock list up 3.83% yesterday

Last blog for week – Happy trading – Back Monday

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KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index	Percentage	Volume
Dow	+1.80%	up
NASDQ	+2.36%	up
S&P	+2.09%	up
Russell 2000	+2.97%	-

Technicals, Fundamentals & Analysis

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

US Stock Markets -

Dollar down big time = stocks up big time.

Yesterday it was Japan, but everyone is printing money from Europe to our Fed. Collectively, they all fear deflation and are printing money to solve economic troubles. Downside is inflation ahead. Why the dollar is falling is the Fed’s printing press which has been hard at work since the 2008 meltdown. The Fed had made it clear it will do whatever it takes.

Enjoy the manipulate ride.

Volume was slightly above average, which is not saying much considering its down over 30% from last year. The retail investor is largely gone from this rally.

Earnings season starts Thursday with Alcoa reporting and bloom next week. Earnings usually take over as catalyst for stocks.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell a massive -o.89% yesterday breaking though a weak support level and establishing a new 8+ month long low.   For stocks falling dollar trend is = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose a dramatic +3.67% Monday.  An 8 week bull run, then a two week fall. After short consolidation, looks like bulls are back.  = Neutral/Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.]   Rose to to +20.22. Still lots of room to move higher or lower. Location= NEUTRAL

Reading Tea Leaves

Still lots of room for bulls to move higher before overbought on MO. Still lots of room for dollar lower before it reaches a a major support level.

Today is one of those confirmation of the rally days.

Sure looks like we have a runaway bull market. SPX at 1161 with 1221 as this year’s high and major resistance level.

Positions

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

(I do manage 6 accounts that have other positions)

• EWS (Singapore)
• USO (price of oil/commodity).
• SSO (2x what S&P does)  Still held onto last 1/2 of SSO. But will place another 2% trailing stop loss today.

Sold or took over profits in 1/2 of USO & EWS yesterday. USO = 10+% profit & EWS= 12-% They were both over extended and I frequently take profits after making 10% and let the rest ride. Will buy back in on dip in these and other emerging markets ETF’s. See Positions section for more info on everything from YOUR stock List to ETF’s

Paul R reports YOUR stock list again clobbered the benchmark S&P 500 and gained +3.83% yesterday. See comments section of blog.

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Shock & Awe for Bears

The unemployment report Friday both shocked and awed Wall Street Bears and almost all economists . Even more than the startled jumping Panda. (Thanks David Fry for photo)

The dramatic drop in job losses coupled with a positive +2.8% GDP growth for the last quarter is certainly good news for every bull on Wall Street and Main St. Economic momentum is flowing in a positive direction both in the USA & especially emerging markets.

Why?

There’s good, bad, and ugly behind the positive economic news . Since, Obama’s Afghanistan policy is such a disaster (at least to those of you who have commented and Investors411 – See additional Clinton, Gates LINK [we're nation building & there for as long as it takes] and Friedman [against surge LINK ] on Talk shows over weekend) lets start out today with the good and give Obama some credit.

There are 4 major reasons why we have seemingly turned a corner. - TARP, emerging markets, printing money, and stimulus.

TARP – Bailing out Shadow Banks was started by Paulson/ Bush and continued under Geithner /Obama.  TARP is working better than almost everyone expected. Last week Bank of America announce plans to pay back $45 billion (plus interest)and losses far less than expected. See NYT. See LINK

Emerging Markets – They kept emerging, especially China. (see past Investors411) They’re the locomotive and we are the caboose.

Printing Money – The Fed just kept printing trillions of dollars faster than a super market buys toilet paper. The unusual part is investors from around the world bought truck loads of that toilet paper in the form of US treasury bonds with insignificant interest rates. If/when rates go up, boy will those  investors have a huge supply of TP to whip their ____.

Stimulus - Around the world governments stimulated their economies with programs. You can make a case for Germany & China’s program being better than ours, but Obama’s stimulus (he was limited by Republican opposition) was relatively good.

Remember the old story of you can give a poor man a fish or you can teach him to fish. Well, economists have ways of measuring just how stimulative throwing money at a problem is. Does your dollar buy  even one fish or lots of fishes?

• The Republican mantra is always cut taxes – Mark Zandi , economist from Moody’s and a McCain’s economic adviser “making all the Bush tax cuts permanent and cutting the corporate tax rate–would raise GDP by at most 37 cents for each $1 of revenue loss. ”
  
• Obama’s stimulus – “By contrast, increased outlays for infrastructure, aid to state and local governments and extended unemployment benefits increase GDP by between $1.41 and $1.57 for every $1 spent.”

The bipartisan Congressional Budget Office measured the whole thing and you can find more on why/what stimulus worked at LINK

Common Sense – Yes there are time tax cuts work especially targeted and in a recession.

But, when you cut taxes to a company you never know where that money is going to go – Fat bonuses for executives, a new home in Dubai (the global sex slave capital of the world), buying financials WMD’s (Warren Buffett’s term for Credit Default Swaps) or sometimes even good stuff like into research & development.

What you want to have happen is DEMAND increase for your product. The more money flows, the more demand. The reason you see sources like CNBC, right wing polls and think tanks always call for tax cuts is they control the companies or the companies are their big advertisers/sponsors.  Greed is good for me is their mantra.

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage percentage	Volume
Dow	+0.22%	up
NASDQ	+0.98%	up
S&P500	+0.55%	up
Russell2000-+2.38%		-

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

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

Technicals, Fundamentals & Analysis

Economic Bears were shocked and awed at the fall in unemployment. Great news for Main Street USA, but we have a deep deep hole to climb out of.  This is mixed news for US Stocks.

The news is mixed for Wall Street, because good economic news in employment means the government/Fed will probably stimulate less. Therefore,  financial companies will no longer be able to borrow for nothing,  and their interest rates will rise sooner rather than later.  The dollar also gets stronger and those companies making more because the cheaper goods sold faster overseas will cost more – looss demand & profits.

Technically we had HUGE volume accompany a price rise. Unfortunately, for most major indexes the rally was less than a significant 1%. Stocks first went way up, then down and settled for moderate gains.

Small cap stocks, are more dependent on a recovery on Main Street did gain a significant +2.38% Bigger companies have more contracts abroad.

Fearless Forecast – Last weeks unexpected positive jobs number helped create a positive week. Investors predicted a flat to down week. Oops. This week we should be all over the place, but some solid economic fundamentals are coming into the light. This should help stocks in the long run. Once the dollar calms down (expect it to rise and gold to fall) we should improve. Flat to up week .

Now going to get a bit more technical

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

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI a small rose +45 points yesterday and closed at 4107. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1800 points since late September. After 16 up days in a row, 9 down days in a row & now up 3 days in a row. Multi day moves in one direction are common and the decline in rate of change usually signals a reversal.

What it means – Long term we created a higher high on the chart = Bullish. The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. After, what looks like a technical correction we are agin moving higher.

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The Dollar is currently the #1 forecasting tool .

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar. Mantra – Dollar up = US stocks down & Dollar down = US stocks up US dollar rose an ENORMOUS +1.44% Friday . Anything close to or over +/- 0.50 is significant  The dollar closed at $75.59 .

The dollar’s rise did temper the rally, but the whole dynamic or fundamentals have changed. See Positions below.

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

The index closed at +23,51 This is a Slightly Overbought Position . This chart is showing we seemed to have reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  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

Positions

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

(again a little behind on latest moves)

We’ve had, and volume has confirmed, a quantum shift in markets. This may be temporary and it may be long term, but it necessitates major changes in positions.

Today is a confirmation day for Friday’s move.  More than anything else – looking for dollar to hold or add to gains.  Will buy some ETF’s and stocks until McClellan says we are overbought (@+60)

Recommended ETF’s and Trades

SELLING

GLD – Investors411 sold all of DGP several trading days ago and 1/2 of GLD on Friday. Last entry into this position was at $92.7 .  Traders should sell the rest and longer term investors could hold onto last 1/2 position (5% of portfolio).

Gold will rise again, but for now there is just too much downside momentum. Will be back into GLD & GDP late.

NVS -The flu scare is over. Thenumber of states that have serious flu has dropped from 43 to 25. Time to take profits on last 1/2 this position. Let’s take our profits 21+%

AMZN – Taking profits. Markets rallied yesterday and AMZN dropped 2.54%. Never a good sign to see NASQ rally 1% and your tech stock drop. Again, this in part, was a flu play. Why be greedy we have about a 16+% profit.

BUYING

FXI – Adding more to this positions. If Main Street is recovering faster than expected, so will China. Their currency & exports is tied to the dollar. So in one major sense, their recovery is tied, in part, to the USA. They have under performed major USA indexes recently.

IWM or UWM (an ultra fund that does basically 2x IWM) These ETF’s both track small cap stocks (Russell 2000) IF, Main Street is recovering faster than expected they should outperform the other indexes. They have under performed so far and should,like China, make up soe lost ground relative to other major US indexes.

BAC – Bank of America. They’re paying back TARP shows solid fundamental strength. (I know they are a shadow bank bad guys) Bought BAC Friday.

Start small & Build your position – Buy the dip.

Again any stock investment or ETF that doubles or triples what a normal ETF does is a short term play for traders and short term investors – NOT long term Investors .

Long Term Outlook = CAUTIOUSLY BULLISH