Tom Friedman Pulitzer Prize winning NYT Editorialist

The Strike Out

The Date – June 29th 2005

The Editorial - The End of the Rainbow – Ireland

Ireland adopted an unbelievably lowest corporate tax rate of 12.5%, America’s shadow banking and casino capitalism (AKA free markets). Tom does an Irish jig for joy over what he sees as a bright  future. Tiny Ireland now needs a gigantic EU bailout and austerity to just survive

The Home Run

The Date – December 1st 2010

The Editorial – From WickiChina – China

What the Chinese officials on their way to world economic domination would be saying about our self destructive government and media if WikiLeaks. At first I laughed then it was just sad. A sample  -

There is a willful self-destructiveness in the air here as if America has all the time and money in the world for petty politics. They fight over things like — we are not making this up — how and where an airport security officer can touch them. They are fighting — we are happy to report — over the latest nuclear arms reduction treaty with Russia. It seems as if the Republicans are so interested in weakening President Obama that they are going to scuttle a treaty that would have fostered closer U.S.-Russian cooperation on issues like Iran. And since anything that brings Russia and America closer could end up isolating us, we are grateful…

Well worth reading and passing on to your friends,

START

Strategic Arms Reduction Treaty (Part 2)

YOUR Comments – Yankee Bob is back and you can read his full comments by linking to yesterday’s blog. Here’s how he starts

There was nothing heroic about Ronald Reagan. He declared war on the government and did much to land us in this deregulated un-unionized social welfare state for the rich and corporations. Beyond the petty politics he was a murderer. He gave funding ,training, aid and comfort and the green light to Death Squads all over Latin America. He condoned torture and murder without due process to further his political agenda…

Jim J concludes

I understand that the joint Chief of Staffs all support the new START treaty. What happened to Republican patriotism?

Paul R on START

I don’t recall who recently said it, but when asked about rep support for START his comments were “sure, but we need to modernize the military first”. “Military” Republican stimulus plan

START – Part 3 (tomorrow)

Stocks

Investors411 tries to keep it basic.

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

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Technicals, Fundamentals & Analysis

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

World Stocks - December has historically been the best or outstanding month for stocks.

USA – Today is confirmation day for yesterday’s rally. If stocks can come close to holding onto their gains or improve on them the rally gets confirmed. This more often than not means our newly born bull will continue to grow. The big news is still Friday’s jobs report. Built in are expectations of improvement.

Europe - Early in the day there was hyped news that the US Treasury was going to help Europe with its problems – later it was denied.

Emerging markets – EEM the ETF for emerging markets was up +2.87% yesterday. Good news especially for long term investors is that emerging markets outperformed the major US indexes. USO – (oil ETF) another rally leader +3.22% UCO (leveraged ETF 2x oil +6.20%) When energy prices move up it often not only reflects economic expansion in USA, but increasingly emerging markets.

Reading The Tea Leaves -

The “Good News” from yesterday was - Trend exhaustion  -49 on the MO shows we are technically reaching a point where there are fewer and fewer sellers out there.

Congratulations to several of you who recognized how over sold markets were getting and took the risk by buying the dip on Tuesday.

Ideally you’d like the MO over -60 but The Critic (see comments section of yesterday’s blog) is right – generally – the lower the MO goes the better your chances are for catching an oversold bounce and a more successful longer term trade. Her statement from comments section -

“So I buy when the MO is at -50. There’s much more room from -50 to +100 than -50 to -100. The odds may not be perfect, but they are in my favor.”

Also -The McClellan Oscillator (MO) and other forecasting tools are far more related to broader Indexes or ETF’s than individual stocks. Example - Paul R points out how over extended both DECK & IMAX are right now in the comments section.

How you play the MO and other  forecasting tools depends on your level of risk. The Critic uses leveraged ETF’s (EWM, SSO, UCO & TYH) as part of her portfolio and although she has NOT announced it in the comments section she has done quite well. TYH was up +6.53% yesterday. If she bought near the previous day’s low the total gain was +10% She also has a diversified portfolio of long term assets and uses YOUR Stock List.

Direxion and ProShares are the two companies that offer leveraged ETF’s. See POSITIONS section for blog for links. Obviously something that’s leveraged 2x is less risky than most 3x leveraged funds.

Bottom Line – As I stated in the comments section – This big a move off a retest of a major support level. It usually indicates that the rally will continue. (This Retest = Price moves down to support level,  remains above the support level for a period of days (9 days), then falls back down and retests strength of the support level. It held. Then, in one day stocks moved higher than the higher of the previous 9 days – A breakout. = Bullish

Positions

• EEM - (Emerging Markets ETF)
• UWM - (2x small cap stocks ETF) This is now up over +7% since it was bought @ 10 days ago. Once a leveraged ETF goes up 5+ % I usually sell 1/2 or put a tight trailing stop on that 1/2 of @2% on it each day. I’ll do this today.

From Yesterday – This means at least a short term oversold bounce. And what a bounce it was.

Long Term Investors - Mea Culpa – I like the odds to be more in our favor before making major long term investment. So I did NOT put out a clear BUY signal. However realize if you can tolerate the risk -60 on the MO is NOT a line in the sand and like The Critic you don’t have to wait.

THE PURPOSE OF INVESTORS411 IS TO EDUCATE YOU ON HOW TO USE SOME BASIC FORECASTING TOOL AND ACT ACCORDINGLY. Stock Markets are moving faster than ever before and by the time I get the information out it sometimes has gone stale. Also I’m NOT watching stocks move all day and sometimes ignore markets entirely. THEREFORE, USE INVESTORS411 AS AN EDUCATIONAL TOOL - If you have a problem I will answer your email ASAP.

Investors – A -15 on the MO still gives us some wiggle room. Considering UCO and more UWM on a dip today. This is a higher risk trade/investment.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

Heroes

Inside Job -  The Charles Ferguson (above) Docudrama lists all the major players from an IMF President & French Finance minister to the insiders who got fired that stood up stood up to Paulson, Greenspan, Bernanke, Summers, Geithner & the shadow banks etc. and told them of the coming economic catastrophe.

What Can YOU Do? - You can Link to The Official Facebook page. It has some great ideas

Russ Feingold – Obama should give Feingold the #1 economic position in his administration. Below is a copy of the letter he sent to his supporters –

Thank you. Thank you for your support over the years.  Representing Wisconsin in the Senate has been the greatest honor of my life and together we accomplished many great things. No one has ever had such a strong foundation of support as I have.  You gave me my backbone.

In the words of Bob Dylan:  “But my heart is not weary.  It’s light and free.  I’ve got nothing but affection for those who have sailed with me.”

Forward!

Russ, Thank you.

Ted Kaufman – Mr Smith Goes to Washington (Joe Klein) Maryland’s appointed Senator who did more to take on Wall Street insiders than anyone else in the Senate along with Russ Feingold. A quote from this article is what I’ve always taught my kids and what this blog is all about.

When I mentioned that many people thought that work was doomed to failure, since the wizards will always find their way around the rules, Kaufman exploded, “Baloney!” Only he didn’t say that. “That is the stupidest argument. It’s like saying you don’t put cops in the toughest neighborhoods because there’s always going to be crime there. We need cops on the street, on Wall Street. Good cops, like the ones in the current Justice Department, Securities and Exchange Commission and FBI. Our problem was that the cops weren’t doing their job. They’d stopped regulating — not just on Wall Street but also food and drugs and in the mining and drilling sector. Look what happened in the Gulf.”

Elizabeth Warren – She’s been featured in Investors411 more than anyone else except the President. The later is obviously NOT on this list. The following lecture on the The Coming Collapse of the Middle Class at prestigious Jefferson Memorial Lecture Series is outstanding. Over 427,000 have seen this interview.  More fun – Warren on Jon Stewart.

If any of you has someone else who stands up to Wall Street and can explain why. I’d be happy to post.

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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	+1.96%	up
NASDQ	+1.46%	up
S&P	+1.93%	up
Russell 2000	+2.56%	-

Technicals, Fundamentals & Analysis

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

US Stock Markets -

Dollar broke its support level two days ago &took a significant hit yesterday. This confirmed the breakdown through support. So stocks rallied yesterday.

Volume was higher and above average, but not the massive volume you’d usually associate with a rally of this magnitude. Let’s go back to or remember an old mantra – The Black Box/High Frequency Traders control 50 to 80% of the US stock market. This is their rally and its based on the downward plunge of the dollar.(see below)

The BB/HFT are now going to get some resistance from what’s left of regular traders/investors (the other 20 to 50% of traders) and they are worried.

• Insider selling is at all time high.
• S&P is at major resistance – this years high.
• Many Oscillators and Indexes are showing overbought US markets
• Our own MO while not in overbought territory yet is the highest in over a month.

US stocks used to be controlled by normal investors and traders – If it still was I’d be ducking, covering & selling big time. But its not. See Bottom Line below.

JS in comments section posts an interesting editorial on emerging markets fighting back against the Fed pumping and dumping truck loads of $$$ into our economy. This will be a concern in future and may lead to a currency war. But

• Mostly all bark and no bite right now from emerging markets
• China’s currency is pegged to dollar, so they are irrelevant in this.
• Europe, a slightly bigger economic entity than USA has even less bark.
• USA rules, in part because oil prices are tied to dollar and we are still (getting smaller each day but) the Big Kahuna

Employment numbers for last month just in +156,000 jobs rate even at 9.6% More here

Again the Mantra for the last week - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors. “Looks like Wednesday Fed meeting is the big event.”

The MO was near zero and we had the Fed announce a large pump and dump of Quantitative Easing ($600 billion in QE2) so as forecasted many new relevant ETF’s were added. – EEM TYH DGP. These were all bought as the dollar broke down through support after the Fed announcement.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.”

Announcements of purchases/selling can first be seen in the comments section of the blog and/or if you are on the private mail list. If you’d like to get on mail list send me an email – see HELP/EDITOR section of blog

Casualty Battle for castle Bear Skull yesterday as Bulls stampede

Again a must see short video from Dr George Gerbner on Violence

Hope you joined us in making $. Yesterday Investors411 called for a rally –  Castle Bear Scull fell and, as predicted, BULLS rallied – “Not guts no glory – I’d love to wait for a 100 point Dow dip, but you can feel the bulls breath & it may never come before the rally.” (more below) .

Jim’s List

Here’s a short list of Senate candidates I’m supporting either with cash and in one case time. I also like F.S.’s Congressman Grayson in Florida. He’s been “change we can believe in.” I’ve tried to choose close races and focused on solid candidates like those who had the conviction to vote yes to break up shadow banks. The other criteria was if they were running against someone that is truly over the edge on the far right.

#1 Russ Feingold Wisconsin – Progressive maverick who haas done everything from more body armor on HV vehicles in Iraq to campaign finance reform.

#2 Harry Reid Nevada – Harry did vote to break up the shadow banks,but it is more his Tea party opponent who is the concern. Example she no longer wants us to be the leader of the free world – she wants us out of the UN.

#3 Alexi Giannoulias Illinois – Close race & Alexi does not take a dime from corporate PAC’s or federal lobbyists.

#4 Chris Coons Delaware – Good man in race against Tea Party/Sarah Palin opponent whose latest scandal is being investigated for stealing living expenses from her campaign fund. See my post in comments section of blog for this.

#5 Barbara Boxer California – Strong progressive who is running against someone who did a poor job running HP computers. Her opponent knows how to outsource jobs.

That’s my list in order of preference. Barr thanks for letting me publish them and you guys for asking him for it in the comments section of the blog for the list

Jim J.

[Jim's right - Lots of you in comments section were vocal about wanting his list - so here it is. Like the list? Don't like the list? Have your own list of candidates from whatever party. Post them in the comments section of the blog. Barr]

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

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day -Over extended – From Investopedia

US Markets

US stock markets rallied is what has become standard – reduced from day before and below  average volume. Just about every standard text book on stock analysis uses volume as the  a very or most significant factor in a price move. This is no longer the case for many many months.

Long Term Is this a bubble building? – Yes Here’s what’s holding us up technically & fundamentally

• You have a bunch of hard core investors who are holding onto stocks no matter what
• Companies are buying back stock instead of creating jobs or using $ for expanded research.
• BB/HFT’s trading.
• Investments by wealth sovereign wealth funds and hedge funds (the world’s oligarchs)
• A central bank that keeps pouring/printing money ($5 billion yesterday) into the economy
• Emerging markets are red hot. US money is investing abroad in these emerging markets – not US jobs.

Bubbles can take years to build – Look at the stock market leading up to the housing/finance crisis. So for now we ride the wave using the MO as our guide.

Obama gave an hour long town hall for  the ultra right wing financial channel CNBC and stocks rallied in front of & after his speech.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.08% yesterday. Dollar seems to be starting another consolidation but longer term, falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -1.79% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. 6th down day in a row, with rate of fall decreasing. After 8 week bull run trend could be changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to +48.47 yesterday. We’re only 11.5 points away from overbought territory, but still = NEUTRAL

Reading Tea Leaves

The benchmark S&P 500 stands at 1143 and just about every analyst is telling their client that 1220 is the next serious resistance level. Also, the strong triple top resistance level or castle bear skull was shattered (see yesterday’s Investors411)

Bulls are going to do everything they can to drive stocks to 122o. Today is a confirmation of rally day.

• give back over 1/2 of the gains bearish
• the less we retreat the better
• Adding to gains bullish

Our early change to CAUTIOUSLY BULLISH seems to have been the right call.

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)

Current Longer Term positions –  EWS (Singapore), USO (price of oil/commodity) SSO (2x what S&P does- this ETF is more a trade that may turn into an investment)

If, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Since we now have a bullish trend Investors411 is going to adopt a different set of parameters around the MO.  (see earlier Investors411)  Traders instead of waiting for -60 on the MO the area around +20 or the 50 DMA seems to be a support level. Just remember over the last 3 years 3 months is the maximum period the MO has gone without reaching -60.

We can also allow for a little bit more on the upside of the MO (+60)

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Was getting Saddam worth it?

Blood, Sand & Dollars

Obama last night gave a major address on Iraq as we have decreased the number of US troops (private mercenaries?) to 50,000 supposedly “non combat” troops. One can give Obama some point because he brought the troops out faster than McCain would have.  But lets look at the fractured mess of blood, sand & dollars left in Iraq and its impact on the US & the world.

• The fractured coalition of former US support and condemnation by UN for this war has seriously undermined our worldwide credibility
• How many lies, distortions and fabrications told by the US government to its citizens and the world?
• The strengthened positions of Hamas, Hezbollah, Iran, & the Taliban as US occupation acted as a recruiting tool for every terrorist group in the world and kept troops tied to Iraq.
• 75,000 US troops killed or wounded in both combat & non combat rolls. Many more coming home with deep psychological problems.
• Costs on the ground will go over $1 trillion and according to nobel prize winner Joe Stiglets and additional $2 to $4 trillion caring for those returning etc.
• Up to 4 million displaced Iraqi’s. 1.7 million still living abroad. Who really knows over the  projected 100,000 dead Iraqi’s there really are?
• Stalemate in Iraq elections for over six months and majority of officials friendly to Syria or Iran.
• A country in shambles, corruption rampant, and police stations still getting blown up. (level of violence has decreased from two years ago, but still higher than when we first invaded.
• The damage to our constitutional laws and international laws were deeply wounded in this disaster.

The list could go on & on. Nailing a brutal dictator that was an insignificant threat (the Germans’, French, Russians, UN and others realized this) to us was simply not worth the cost.

Israel & Peace

It’s fashionable for some to lay the blame on Israel in the upcoming peace negotiations. They have made mistakes. But how do you make peace with Hamas when on the verge of peace talks they ambush 4 civilians (one pregnant women) and hold a 3000 person joyous rally in celebration of and taking credit for the “heroic “massacre of civilians?

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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!

Technicals, Fundamentals & Analysis

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

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Sure was a whole lot of volume going on for a flat trading day. In Wall Street technical language they call this “Churning.” More often than not a big battle like yesterday between bulls & bears means a reversal in direction. In this case that would be a rally.

YOUR stock list is now contained in the POSITIONS section of the blog. It’s at the bottom.

Another strategy that some of YOU are using is more conservative and it involves buying stocks with high dividends. Here another list of the top 10 dividend stocks of the Dow. The obvious benefit of these stocks is the second revenue stream from dividends for long term investors. Example CVX offers 3.4% or VZ 6.3%.

The same, but longer term buy/ sell strategy can be used. But when conditions are oversold and the Dow is lower and at a certain date in the future sell when conditions are overbought. Use the MO as a guide.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar rose +0.03%. and closed just above its falling 50DMA. For Stocks = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Again rose a marginal +o.04%. After a 5 week rally the BDI has flattened out. Now consolidating. = Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to -32.52.  We’re on the minus side of Zero, but not yet near -60. Therefore = NEUTRAL

Reading Tea Leaves

Sure looks like the calm before the storm – flat markets & neutral forecasting indexes. One anomaly was a massive -3.33% drop in the price of oil yesterday.

Overall think the BB/HFT’s are setting up for a rally. Flat dollar & MO on the negative side of zero. The “churning”  has also been a fairly reliable indicator.

Nation Building in Iran, Afghanistan etc. is a trend that’s is is doing serious economic harm to the UA.

Positions

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

Current positions - Small position in EWS (Singapore)

USO (commodity-Oil) hit the stop I had placed on it. This position is now closed with no gain or loss. Still plan to buy USO & UCO (ETF that is 2X USO) on dips lower.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Disaster Capitalism

The major news this AM is that the BP spill is twice as large as originally thought.

Giant financial/economic and in this case also environmental catastrophes are opportunities for great change. The bottom line in the BP disaster is just like the bottom line in the 2008 financial debacle. In great disaster comes great opportunity.

• For the 2008 over leveraged casino capitalism disaster – We can change to a system where taxpayers no longer subsidize the risk and the giant shadow banks no longer have privatized gains
• For the 2010 (another free market/casino capitalism) BP catastrophe we can make a significant change toward alternative fuels.

Disaster Capitalism is referenced in Naomi Klein’s The Shock Doctrine One example she uses is how Cheney/Bush used the 911 disaster to invade oil rich Iraq. This war had nothing to do with 911, but shows how far you can move American opinion when a disaster happens.

Quite simply Wall Street is taking over our democracy. We have members of congress who are willing to challenge this. (example the 3 Republicans & 30 Democrats who voted in Senate to break up the shadow banks), but we lack a Teddy Roosevelt in the White House who is willing to lead the charge.

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

Yesterday stocks stopped dancing on the edge of the cliff. We had one of those, now typical, decreased volume mega rallies. = Bullish

Volume has lost its significance, and The Dollar has taken over as the single most important factor moving stocks. (see below) The dollar moved significantly lower and crossed a major resistance level. The trend higher has not changed, but a technical analyst will tell you its 5 day breakout to a new high has failed. (see chart) and the dollar has moved back into its consolidation pattern.

Fundamentally – Some auctions of treasury bonds in the European (PIIGS) countries turned out OK. Translation, like the USA the interest rates were not too high = there were buyers. A couple reasonable  auctions in the PIIGS’s  bond market [bond market is bigger than stocks, but not as big as currency] does not end the crisis, but it is a positive sign. = Bullish

Yep, as a couple of you mentioned in comments section there was short covering and some other decent fundamentals, but none significant enough to cause a huge rally

BP did recover @ 2/3 of yesterday’s loss. This indicates that traders have changed their mind about the solvency of BP. The roller coaster here is still in play. Good news reported is that BP is considering not giving part of its $10 billion dollar dividend. = Bullish

Futures are Flat = Moderately Bullish

Holding stocks over weekend = Moderately Bearish

Significant Indexes

• McClellan Oscillator soared to +20.49 [+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 smidge oversold, but basically = NEUTRAL
• US Dollar –  The dollar fell a Significant -0.91% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar falling significantly = Stocks rise significantly= Bullish

Reading the Tea Leaves -  The more time an Index, Sector, or Stock keeps testing a support/resistance level the stronger it gets.  Each test pulls back a slingshot. We had 4 tests of the 1040 level on the benchmark SPX , so we pulled back that slingshot 4 times. What happens to arm the slingshot is traders buy more puts and calls each time we test a support/resistance. This is why we saw such a HUGE gain aided by the afterburners of the dollar’s fall.

Obviously, if you’ve been reading Investors411, today is the confirmation day of yesterday’s rally - Therefore important.

Longer term – right now we have a short term counter rally in a bearish mid term trend. The dollar is key to market direction and those moderately successful treasury bond auctions in Europe have stopped panic (for now). There are other debt shoes to drop, but its impossible to call where and when.

The chart to follow is the UUP [ETF for the dollar]

Positions

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

Still holding very minor positions in VCI, ESRX & now UUP.  Was stopped out of SDS at 34.53 for 0% gain. 1/2 this position made +8% & 1/2 made +0%

Traders - High frequency traders and hedge funds dominate this market. Be careful.

China (its GDP, import, & export numbers) is the country to watch. BIDU is their AAPL [Both on YOUR Stock List] BIDU exploded +7.76% higher yesterday while AAPL was in line with major indexes – up +3.01%. BIDU, on a dip, seems like a decent but risky play.

The Beta play is back for now. If you do not understand “beta play” look it up in Investopedia & you should NOT be trading short term till you understand more. At the point you realize how much more everyone else knows than you/me, then think about short term trades.

Investors – We’ve had the first signs of the EURO stabilizing – Good treasury bond auctions abroad. The FXI EWZ(China & Brazil ETF’s) are still the best plays.  You could nibble a little on dip. However MO is +20 and it would be better to nibble at -20 and much better at -60 and best below -60.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

What’s Up? – David Patraeus on torture and Gitmo – The Supremes sing in Spanish – Californification, Is the Golden State falling into the sea? Will the US join them – Women’s historic win in the Islamic state of Kuwait – Fearless market forecast.

Petraeus – Huffington Post photo

Torture

• Obama says – torture bad – closing Gitmo good – Right wing says NO
• McCain says the same thing – Right wing says NO
• Powell says same thing – Right wing says NO
• Admiral Mullin (chair joint of staff & a Bush appointment) says the same - Right wing says NO
• Sec. of Defense Gates says the same (another Bush appointee) says the same - Right wing says NO
• Now the hero of the right wing General Petraeus says Obama is right – what will Cheney, Limbaugh and the rest of the right wing now say  about torture and closing Guantanamo Bay?

Californification

California is up to its neck in quicksand. Its one of the leading states in foreclosures and unemployment. Will the US follow California? Previous posts over the years have brought up California’s two major problems

• Proposition 13 - This state taxes property at what you payed for it. So for example if you payed $50,000 for a property 30 years ago and it is now worth $1,000,000, you pay only a tax on$50,000. Someone who buys property now pays today pays a whole lot more – This has lead to a serious short fall in revenues.
• You need a 2/3 vote in the legislature to make any serious changes in tax structure.

In the USA we too have self interested people who want to pay almost no taxes & have to overcome a 60% filibuster in the Senate to make any serious tax changes.  Not as bad as California, but still a problem.

Want to learn more – See Nobel Prize winner Paul Krugman’s editorial California - A State of Paralysis. 

Sotomayor – AP Photo

Supremes

Front page of every newspaper – An “inspired” (obviously others might disagree) choice for the Supreme Court – Sonia Sotomayor. – - Impressive legal background, compelling life story, first Hispanic ever nominated to Supreme court. For more see NYT editorial

Aseel al-Awadhi photo – Boston Globe

Women in Kuwait

4 of the recently elected 50 members of parliament in Kuwait are now women. This begins to breaks the mold of how women are treated in Muslim countries and a first for the Gulf States. This is truly a historic move

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals 

Forecasting what markets will do is all about how potential investors feel about the  fundamental aspects of stocks and the economy. Technicals (looking at chart patterns) gives us some idea of where the traffic signals are. It all about predicting attitude.

Yesterday the US stock markets exploded higher as volume rose. However volume was below average and below the down days of both Wed. & Thur. of  last week. While the price move is encouraging and explosive, what natural for a sustained rally is increasing above average volume. This show buyers or potential investors are not moving back into stocks.

Yesterday is certainly not a bad day and it may be the start of another leg higher. However for right now it is a move from near the bottom of the consolidation pattern we’ve been in for the last three + weeks to near the top. Therefore, no big green light till volume confirms a breakout.

One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains.

Good consumer confidence numbers were said to be the fundamental behind the market move. Never seen consumer confidence boost the markets this much. Very suspicious over lack of volume.

News this AM – GM bondholders say no and it looks like GM will go into bankruptcy.

XLF - The ETF that tracks financials (mostly shadow banks ) rose +3.26% . This index closed at 12.04. As stated in past updates for the last 3 weeks financials have been trading between @ 13+ and @11+ (more specifically support at 11.33 and resistance at 13.08) Any close above or below these support of resistance levels would turn confirm a longer term trend for bull or bears.

WTIC - Oil prices again closed over their $60 support level +1.26% at $62.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.

Reading The Tea Leaves - Yesterday we moved up within the consolidation range. (see above or chart of SPX) There has yet to be any breakout in any US or world indexes.(except Brazil) The formerly leading Financials (shadow banks) are now a bit behind the major US indexes. The NASDQ (techs) seems in the lead.

Positions - (See positions section of blog for more)

•  EWZ - sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday. As stated Thursday looking for a dip (-5 to 10%) to get back in.
• Inflation – GLD (gold) is one of the hedges against inflation. As recommended last week I was able to add to this position as about $93. We sold some gold at $95 earlier this year. 
• There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now.
• FXI – our major position here only rose +1.24% yesterday due to the proximity of China to the nuclear test in North Korea. 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

WHAT’S UP – China leading world out of recession; Huge stimulus and Chinese banks loan package has dramatic positive short term impact on stocks; Shadow banks are winning in their tug of ear with Obama’s administration: Stress test results; Investors411 recommended positions have possibly best day ever!

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China

Chinese Banks are lending money - big time They were not nearly as over leveraged as American shadow banks and China. Their stimulus which is bigger per capita than the USA’s is also helping turning the Chinese economy. A second stimulus package is projected soon. Some outstanding growth stats announced yesterday. Some details on China’s stock’s explosion higher yesterday here and here

For more see 4/16 Investors411 blog on China or (recommended) Positions section of blog

Bottom Line – China is leading the rest of the world out of the recession. In the long run this much stimulus is going to be inflationary.

Shadow Banks

There’s the good, the bad and the ugly about shadow banks. But the the good is the fact that they are leadings stocks higher, It seems in the tug of war between increased governance  by our government and allowing US banks to continue to move in the shadows is moving in one direction –  the Shadow’s are winning, NYT story.

Stress Test

Shadow bank, Wells Fargo was thought to be one of the banks that failed the government’s “Stress Test” and it moves up +24% on the stock market.  Talk about moving higher on bad news = great for stocks.

“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter”    Full WSJ story

Why Tom Friedman is Wrong (part 2)

Sorry Started this when my server/modem went crazy on me last Thursday. See his editorial “A Tortuous Compromise.” in which he invisions a decent wesern US democracy in Iraq. 

Imagine Rush Limbaugh and the far right coming together as “brothers” with Move On and the far left. Multiply that times 10 and add a mountain full of oil money/power to fight over and you have how the Shia feel about the Sunni’s in Iraq.

What happened is the Shia (60% of the population) kicked ass in a civil war over the Sunni’s (20% of the population and Saddam’s group) Add to this years/decades of mass killings. This is almost as bad as imagining Hamas and Israel coming together in one democratic love fest. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

China (FXI =+8.95%) (see April 16th blog)and Financials (shadow banks) added high octane jet fuel to last week’s breakout.

S&P 500 turns positive for the year! SPX closes at 907 – First major technical resistance level at @ 940 (an old high and close to the 50 day moving average)

XLF - The ETF that tracks financials (mostly shadow banks )Broke out of its consolidation pattern and rose +10.14% in increased above average volume.  Therefore, volume confirmed a huge breakout. If you’re in recommended ETF’s that do 2x & 3x what the XLF day you did spectacular. (see positions)

The XFL had been consolidating between @ 9.4 & 11.3. XFL closed  above breakout levels at 11.73 .

A Wowie Zowie Rally!

Wow! Yesterday was a fabulous day for Investor’s 411 recommended Positions.

See Positions at top of blog. Most Investors411 recommended  positions did 2 to 4+ times better than US markets. Both China and Financials are recommended ETF’s (see positions) 

Even GEX (alternative energy) was up +9.95%.  Also Brazil (EWZ) was up +5.98%.

Reading the tea leaves - Obviously, would love see stock positions hold onto their gains and not rocket higher or lower. Moving too far too fast is reason for concern. Consolidation over a few weeks is best in the long term for bulls.  

Those shorter term traders should obviously book some profits soon. Why be greedy? There should be a whole lot of traders buying the first dip today.  Let’s see what happens after that.

Caution – Don’t get all caught up in this good news. There are massive economic problems out there in the USA and many foreign countries.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

THE BIG TAKEOVER- “The global economic crisis isn’t about money, its about power. How Wall Street insiders are using the bailout to stage a revolution.” The growing tent cities across America – a slide show.  Also an overview or reading the tea leaves of the US economy and the stock market – a longer term view. 

(photo from Rolling Stone)

The Big Takeover

Matt Taibbi piece in the Rolling Stone is a must read for anyone who wants to understand why your lives will change dramatically over the next decade. 

First you have to check out the comments by Robert Sadinsky on the right hand side of the blog. In passionate colorful terms he offers in a much shorter vision/comments on Taibbi’s Big Takeover.

(NYT photo)

Tent Cities of California

As the unemployment rate keeps growing, tent cities are spring up around the country. The NYT has a slide show of this growing problem in hard hit California.  

Even supposedly healthy tech giant IBM is accelerating laying offs - another 5,000 people.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING