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Financial Amnesia

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Old FT Front Page

Since the Editorial boards of the vast majority of US financial journals have yielded to their advertisers or the corporate oligarchy, few papers/jorunals stand out.

One is the Financial Times.

This AM the FTimes is running a story accusing   Wall Street of  “collective amnesia” Investors411 readers know that this collective amnesia is purposeful and enacted so profit can be further privatized and the conseuences (risk) can be further socialized.

“Financial amnesia disarms individuals, the market and the regulator,” … “It causes risk to be mispriced, bubbles to develop and crises to break.”

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Politicizing Science

Michael Mann

We have had an all out attack on science that perhaps stated with trying to prove Cancer had no relationship to cigarette smoking.  They were, for the most part unsuccessful then, but that was decades ago.

Now, Cherry picking data and using a massive political and media machine a corporate oligarchy tries convince an American public that the opposite of science fact is true.

Michael Mann in a TED/PSU lecture/video clearly proves how its done over climate change.

The same kind of McCarthyism is happening in the USA with everything from climate change to evolution to financial meltdown

Quite simply

Ethics and morality are being assaulted by

GREED

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The Dark Side

Ron Paul

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Mitt Romney

Last week Investors411 went over the bright side of Ron Paul. This short video shows the dark side.  The new Iowa front runner proclaims 15 things that are “unconstitutional”

Here’s a sample from Right Wing New’s John Hawkins on the national Republican front runner  “Why Mitt is unelectable.”

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STOCKS

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Wall Street Bull and OWS Symbol

From Investors411

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Michael Moore is A Whimp

So is the Left in the USA

Why? They didn’t produce

This Video Ron Paul did.

Ron Paul also recognizes its the shadow financials that are crushing the USA. His solution – return to a gold standard and eliminate the Fed would solve the problem, but create a world wide depression.

Instead we need a Teddy Roosevelt to reestablish our rules, regulators, break up too big to fail banks & a government that does not go to war and cut taxes.

Right now we are playing financial football without most of the rules and far less referees. Pure Free Market Capitalism is playing the same financial  football game without any rules or referees.

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STOCKS

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Obama’s Victories

It may be over the top  to call the events of yesterday Obama victories (credit/blame should be spread), so lets call them birthday presents.

Bottom line -  We should have done better, but it could have been a whole lot worse.

• The BP oil gusher in the Gulf looks to be completely capped. Also, victory for oil industry who now proves they can stop leak at 5,000+ feet.
• SEC gets record settlement against shadow bank GS, legislation to prevent what GS did is included in financial reform legislation, but GS wins by preventing a whole lot of bad PR by going to trial.
• The biggest birthday present is the Financial reform bill passes congress. (Senate, 60 -39)
• Another big victory is Republican leadership, like in health care, promising to repeal it all instead of saying well keep this part because its good and eliminate that.

Here’s the lead NYT editorial on Financial Regulation. Some relevant points.

• “Since January 2009, the financial sector has spent nearly $600 million to weaken reform” – they scored many victories.
• “the margin of victory was really about partisan politics and not the bill’s content.” Majority of blame here is on Republicans, but NYT does not mention Democrats are not without partisan transgressions.

Investors 411 has beat the drum for a tougher bill and it to be more inclusive of transparency in government agencies. However, we got more out of this than we did out of health care legislation. Both are steps in the right direction that need amending.

The next big battle is who heads and is on the board of resolution authority and consumer protection. Geithner is opposing Elizabeth Warren as the new head of Consumer Protection Agency. Warren is perhaps the #1 hero in the accountability, transparency and reform of Wall Street.

YOUR Comments

Sorry I’ve run out of time. However Ewanapat has a fabulous link to a controversial article on Ron Paul/David Stockman . This continues the debate over Barney Frank & Ron Paul stated by SE

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

Mantra for week “Earnings Season begins this week. - How markets react to news has usually been the key. If a stock shrugs and goes nowhere on good earnings news you know there’s trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.”

• 2nd Weak volume flat day in a row = Mildly bearish
• Stocks rallied into close = Bullish
• BP seems to have fully cap oil spill = Bullish
• GS settles with SEC, pays record $550 million fine, but avoids prolonged bad PR = Bullish
• GE reports lowers forecast. Down @2% in pre market trading - Bearish
• GOOG reported earnings and was down @4.5% in pre market trading (7:45 EST) = Bearish
• BAC reports and is down @4.5% this AM = Bearish
• Fin/Reg is over. No ore questions what will legislators do. = Bullish

You can check pre market trading here – Just type in ticker symbol

Significant Indexes-

• McClellan Oscillator (MO) fell to +43.48 [+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. The Black Boxes have not allowed the MO to rise above 80 since 3/09.  Now close to overbought position = mildly bearish
• US Dollar –  The dollar fell a massive -1.04% yesterday [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. This inverse relationship is part of their algorithmic system. There was a delayed reaction the last time the dollar fell over 1.00% – The next day we had an almost 3% rise in stocks.  For stocks =BULLISH
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China. BDI is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop in almost 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a much decreased -0.53% yesterday. The decrease could be the start of the BDI finding a bottom – a bullish sign, but too early to tell. Fundamentally the 60% drop is very BEARISH

Reading Tea Leaves

From yesterday “is Black Boxes push markets slightly higher. Reasons – dollar probably continues to fall  & momentum higher at close yesterday.”

Today – Yesterday’s huge drop in the dollar gives bulls something to rally on. See analysis of events above. Is the BDI turning? – another sign of hope. The MO is at 43 and there is some wiggle room till 60 and a lot of distance to major resistance at @80. Bad earnings news from giants GE, BAC & GOOG will hurt budding rally.

Wow  - an enormous amount of cross currents impact US stocks differently. Looks like a roller coaster rally. Watch UUP the ETF for the dollar – if it keeps falling stocks go higher.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

Same strategy still holds. Our one small short position SH seems to be in some danger today. Short term  traders may  get in trouble with short positions today.

Photos of Ron Paul & Barney Frank from Wikipedia

Kissing Cousins?

SE writing in the comments section has a revelation and points out  similarities between Libertarian Ron Paul & Barney Frank. He concludes “We need to change our foreign policies and redirect the savings to our domestic policies.” Source – A Paul/Frank joint interview on public radio

Ron Paul is perhaps even more aggressive about getting out of Afghanistan, Iraq and closing our costly European bases than Barney Frank. Paul’s position is often echoed in the comments section by Mama Jama who believes we should bring everyone home and protect the USA (also Israel).

Jsovjani has always wanted Europe to pay more in the defense of Europe & the world, but realizes that’s not going to happen. (see comments section) In the far right’s eyes Europe’s major threat is (“old communist”) Russia. But the Russians would rather get rich selling the Europeans their natural resources than fighting them.

The problem with most libertarians is they want not only to eliminate almost all military spending they also want to eliminate almost all social security, medicare and supervision of capitalism,  etc.  They’d let the shadow banks run wild.

Black Box Algorithms

I know this is boring, but its YOUR money.

One major change from black box traders is basically all stocks are moving together in concert. CNBC had an analyst/chartist on at noon EST who demonstrated that for decades US stocks have not moved in concert like they are now.  They all go up together and down together.

This is directly due to Black Boxes that buy and sell (they also use puts and calls) sector and Index ETF’s. They also concentrate on mostly liquid stocks. They make up 50% to 80% of trades in a given day – so with their High Frequency Trades everything moves in concert. (more later)

This is one major reason Investors411 is using ETF’s right now.

This does NOT negate our stock list or selecting best stocks out there – something Paul R and and a few others do quite well. In fact, picking the best stocks in oversold conditions may be even more relevant.

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

Mantra for week Earnings Season begins this week. - How markets react to news has usually been the key. If a stock shrugs and goes nowhere on good earnings news you know there’s trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.

The Intel earnings home run went from a +8% move in pre market trading and ended the day up +1.67% = Bearish

Black Box traders rallied into the close = Bullish

Markets went no where in weak volume. If they do this again its bearish. Now = Neutral

Largest market news event - China economy slowed as expected in the second quarter. It’s hard to trust any government’s economic proclamation – especially China. Numbers are usually massaged in favor of who is in power. Translation – China is growing, just not as fast as they say. This fact is generally accepted by most investors/traders so its not news.

Significant Indexes-

• McClellan Oscillator (MO) fell to +51.57 [+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. The Black Boxes have not allowed the MO to rise above 80 since 3/09. Now close to overbought position = mildly bearish
• US Dollar –  The dollar fell -0.26% yesterday [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. This inverse relationship is part of their algorithmic system. For stocks = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China.) BDI is in free fall from a high of @4200 to 1710 Monday. This is a huge -59% drop in almost 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a decreased -4.53% yesterday. You have to go back to April of 2009 to find a lower BDI. Fundamentally this is very BEARISH

Best read of tea leaves is Black Boxes push markets slightly higher. Reasons – dollar probably continues to fall  & momentum higher at close yesterday.

Positions

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

Updated over weekends Investors411 holds ONE position at this time

The overall stagey at this time especially for traders (as opposed to longer term investors) is to buy ETF’s that short the market. As the MO shows the market is more overbought add to those positions using ETF’s that short more and make bigger purchases.

• Yesterday Investors411 bought SH – The ETF that shorts the S&P 500. @% of portfolio position at 51.45
• US markets did not rally enough (get overbought enough) to use the EFT’s that double or triple short the indexes and even buying the SH might be premature
• If when indexes move higher I will add these ETF’s (see yesterday’s investors411)
• Will keep a 5% stop loss on each position.
• It depends a lot on how high the MO goes, but for the next couple days a rally of the benchmark S&P 500 above 1105 will probably be the next buy area.

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Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING