Crossroads – Nation Building

Violence in Pakistan

The Huffington Post has become a major focal point in opposition to expanding in Afghanistan.  Site founder Arianna Huffington has an excellent article “Why Joe Biden Should Resign. ” LINK Biden has opposed the Afghan buildup in favor of a focus on Pakistan. Three of you have chimed in on the blog and agree that since Pakistan has Nuclear weapons, many more al Qaeda and affiliates it makes sense not to focus resources (financially 30 to 1 ) on Pakistan instead focus on Afghanistan. 41 were killed yesterday in a coordinated attack on Pakistan Police stations. LINK

Looks like we are going to have a do over election in Afghanistan LINK and then send in more troops for another long costly war.  After that Pakistan, perhaps Yemen, the Sudan, Iran, then back to Iraq.  The LOOOOOOONG war in Afghanistan means nation building in a country whose #1 export is opium not oil.  How are we ever going to get out of debt while spending trillions nation building?

Seems like Obama without Biden is going down the same path as Cheney/Bush .  From an editor in London, Simon Tisdall – “With friends like the US, Pakistan doesn’t need enemies.” LINK Another from Paris by William Pfaff LINK Another from Paris by William Pfaff LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+0.47%	down
NASDQ	+0,05%	down
S&P500	+0.43%	down
Russell2000	-0,10%	-

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

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

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

Technicals and Fundamentals

Last hour rally lifts stocks. Always bullish to close at highs of day. Volume falls. We held onto Dow 10,000 and that’s psychologically bullish. Holding Dow 10,000 into weekend important

Google hit and IBM missed earnings reports. Last night GOOG was up 3% and IBM down 3% in after hours trading. GE and BAC missed this AM.

Good news is NOT having the positive impact it had last quarter. How markets react to news is our #2 confirmation factor. It has turned BEARISH

Warning – Financial sector seems ready for at least a light correction. 1120 on the S&P in technical terms a 50% retracement number. If you don;t know what this means – just think the S&P is at 1097 and there is a big boulder in the road ahead to 1200.

Famed investor George Soros this AM is quoted on CNBC saying  “the US will be a drag on worldwide economic recovery”

Rotation/Sector Rotation

What happens in a bull market is different sectors take over leadership. Leadership rotates. So far in the US – energy, tech and financials have lead. Many foreign markets have broken out before the Dow and other indexes reached new yearly highs. (Brazil, Chile, Australia, Mexico, Germany plus more) The US sector now in the lead is energy. Rotation is what the bulls love to see. It’s like a relay race where another runner picks up the baton or carries the markets.

The supporting themes that juices everything is a falling dollar,  the huge stimulus packages around the world, & bailed out shadow banks/financials.

Oil prices have now also broken out over $77 (new yearly high) and if they go north of $80 Main Street is going to get hit and Wall Street will eventually feel it too.

——–

Significant forecasting tools/Indexes for stock markets

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

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

The BDI is @ 40% (I haven’t done the math) off its high (early June) Before that it gained almost over 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI nine day rally flattened out two days ago and has fallen 99 points. It shot up a significant +91 points yesterday and closed at 2688 =  Bullish for stocks & world trade right now

——-

$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

Stocks went up so guess what happened to the dollar – The dollar reached a new yearly low two days and steadied yesterday at +0.04 % The dollar closed at $75.50. We have developed a support level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB -

• Earnings will probably trump the dollar as the #1 influencing factor for the nest two weeks. But the falling dollar is the main driver of stocks right now and we have a long way to go till we hit last year’s $71 low.
• A slow decline in the dollar = good a rapid decline = bad .
  

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

Positions

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

I will try to revise this section to make it clearer – Open to any private suggestions – just went over it today.

Recommendations-

• Buy GLD on dips.
• Our other positions have gone way up and are NOT worth chasing at this time .
  
• If you are a stock picker or short term trader do not chase hot stocks – wait for a dip. Everything seems overbought. Financials on dips still decent plays. Looks like dip is coming.
• Traders – Bought small position in CSCO a few days ago
• Traders – NVS (Novartis) 11+% profit so far. Usually would take profits now or at least sell 1/2, but going to wait till swine flu hits.
• Having reached a higher high on major indexes, you start to think more about how much to hold and how much to sell.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Iran Day 14

Collage of dead protesters – Photo Andrew Sullivan Blog

Sorry, I’m just too emotionally exhausted and heartbroken to continue sifting through the blogs and tweets on Iran. You look at too many videos, audios blogs, tweets, and analysis and it’s overwhelmingly sad.

Best 4 sources still

Nico Pitney at the Huffington Post here

Andrew Sullivan at the Atlantic here

Robert Mackey at the NYT here

BBC- world’s largest news outlet that strives to be unbias here

The Obama Debate

We’ve had an excellent debate over Obama’s policies and effectiveness in the comments section of the blog .  You all have make some great points. Investors411 has both praised Obama and condemned him (mostly over the choice of Larry Summers as chief economic advisor)

Right now Obama is a very popular president (something like 60% positive and 32% negative) So what.

To jumble the title of his book – We have The Hope , but not enough Audacity .  This summer is the time for him to forget about consensus building and take charge. The single issue he alone can make the most difference in  this summer is health care.

"[Obama's]command of the issues — and ability to explain those issues in plain English — is a joy to behold. His administration has spent months talking and working with everyone on health care. Fine. Now its time for Audacity.  Take one plan and lead. See Nobel Prize winner Paul Krugman editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+2.08%	up
NASDQ	+2.08 %	up
S&P500	+2.14%	flat
Russell2000	+2.88 %	-

-

Volume was below average again  and up just a smidge for the NASDQ and Dow. Perhaps some expert analyst can glean something from the volume, but the bottom line is no big moves are being made by the big institutions and there are a lot of people sitting on the sideline. Some of these folks are very unlikely to get back into investing in stocks. Volume is NOT confirming any price move.

Yesterday’s big move higher was probably a whole bunch of traders (as opposed to long term  investors) getting caught having to cover their short positions.

-

Top 3 Recommendations/concepts

Very happy with the mid term results posted yesterday! Obviously Investors 411 toasted the benchmark S&P 500.  Going forward 3 recommendations/concepts

• China (FXI )will continue to outperform USA (See Positions & Overview at top of blog for more on this and other recommendations)
• Brazil, (EWZ ) India (INF ) and alternative energy (GEX/PBW ) are still decent buy the dips plays.  But you have to be careful on all of the above including China. Even though they will outperform USA. They will fall faster in a meltdown.
• The economic problems  created over the past decade are massive. Over leveraged or phony wealth accounted for huge part of economic growth and where is that growth going to come from now?  Our (the USA) debt, dependence on foreign oil, and our inability to change entrenched special interest groups are three large anchors holding our economy back.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING