Our President…

… mindful of soaring deficits, was pushing bold action to shore up the nation’s balance sheet. Cloaking himself in the language of class warfare, he calls on a hostile Congress to end wasteful tax breaks for the rich.

“We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,“ he thunders to a crowd in Georgia.

Such tax loopholes, he adds, “sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary – and that’s crazy.”

Preacherlike, the president draws the crowd into a call-and-response. “Do you think the millionaire ought to pay more in taxes than the bus driver,” he demands, “or less?”

The crowd, sounding every bit like the protesters from Occupy Wall Street, roars back: “MORE!”

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The President who spoke these words was not Barack Obama

The year the above speech occurred – 1985

The President was

Ronald Wilson Reagan

• When did today’s Republican Party abandon their hero Ronald Reagan who raised taxes 11 times when faced with a deficit?

• When did the Republicans abandon Reagan’s “bus drivers” and the middle class?

• When did Republicans become the party of the richest 1% of Americans?

“The GOP has undergone a radical transformation, reorganizing itself around a grotesque proposition: that the wealthy should grow wealthier still, whatever the consequences for the rest of us.”

How, Why When?

The LINK

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Ohio and Debates

Republicans debated last night, but on Tuesday Ohio voters went to the polls.

They defended the freedom of working Americans to collectively bargain.  By a 61% to 39% vote they granted middle class working Americans the freedom to fight collectively for their rights

All Republican Presidential candidates were against this and latest poll show Obama’s popularity (a supporter of collective bargaining) at least 9% above Republican candidates in Ohio.

Its just one vote/poll/major issue, but when you compare it to the rights we give the elite oligarchy in America its very significant.

Thanks to Jim and Popeye for a heads up on this.

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STOCKS

That cut Bear Cub didn’t hang on but his mother is back and she’s angry.

The tipping point was when the Italian 10 year bond rate hit 7.00%.  The rate that others (Ireland, Portugal, and Greece) began their meltdowns. = Meltdown in US Equities.

WSJ on Euro Crisis. -

“the risks to the global economy are broad. The European and U.S. financial systems are deeply intertwined”

Every investors411 reader should realize by now the major link between European Bank debt, European Banks, and American Banks is the opaque Derivatives Market (CDS’a) that exchanges trillions of dollars of privatized over leveraged risk on European Debt.

Media virtually ignores the same derivatives that multiplied the over leveraging in the 2008 financial meltdown, because to many too big to fail shadow banks profit from it.

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Our #1 technical forecasting tool, the McCellan Oscillator fell to -10.66. 50DMA at +22.80. = NEUTRAL

Since derivative markets hides whose on the other side of a transaction, and too big to fail shadow banks and central banks have hidden or irregular accounting, its impossible to accurately predict stock trends.

Therefore Hedge plays like the GMCR listed below is far less risky than picking a market direction.

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Paul’s Corner

The Big Blue Line

Dave Landry is one of the many excellent market technicians kicking around Wall Street and is known for his Big Blue Line approach to the market and stock selection. It’s a very simple method; take a look at Dave’s excellent Big Blue Line YouTube video:

LINK

Pay attention to the three ways the Big Blue Line points and his discussion about buying in very oversold markets. Which way is the line pointing with respect to our current market?

Kindly post your thoughts about The Big Blue Line.

A short Paul’s Corner today,  that’s all folks!

[Editor's Note - Landry  presentation is enlightening]

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A Liberal Icon?

.

Default

According to today’s Tea Party dominated Republicans, Ronald Reagan must look like a dirty liberal/socialist icon. He amassed the greatest increase (in percent) of national debt and then raised taxes over 5 times in the later part of his administration to bring his run away spending more into balance.

Reagan and Dem. House Leader Tip O’Neill may have disagreed but they worked for compromise. However in the age of Murdoch ratings generated media journalism has changed.

The no compromise brinksmanship of the Murdoch inspired far right Tea Party (Remember it was FOX news in the USA, like the now defunct  168 year old News of the World in Britain that did everything it could to instill right wing no compromise bias) has seemingly backfired on the far right.

Poll after poll is showing the unwillingness to compromise on the part of the far right dominated Republicans as an overwhelming negative in the debt crisis debacle.

A Member of the No Compromise Far Right

Consequences

It’s time to take a serious look at what may happen to your financial well being if the USA does default.

Note - I don’t think this is likely (best guess 30% chance of no compromise) and if 8/2 does happen without a compromise I expect Obama to invoke 14th amendment.

Therefore, Louise Story’s Wall St Makes a Fallback Plan for Debt Crisis is a must read.

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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

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• Remember, FEAR is generally thought of by market psychologists as TWICE as powerful as GREED

• Yesterday was the confirmation day of Tuesday’s big rally. What we got is a weak confirmation – a slight decline but in weak volume. Technically this is a wee bit bullish.

• As mentioned two weeks ago – “If the US debt default starts to hurt stocks, politicians will fix the problem rapidly because their campaigns are all funded by an elite oligarchy of insiders.” However, it matters what investors worldwide think of our political/economic system. That confidence was shaken in 2008. Idiot politicians can further destroy this confidence with their inability to compromise.

• Two of our most successful technical forecasting tools listed below – The closer we get to August 2 the less these forecasting tools will matter.

• The McClellan Oscillator (MO) chart rose to -7.81 (-30 somewhat oversold, -60 oversold, -90 OMG oversold. The more oversold we get the better the chance for an oversold rally) Lots of room for MO to move higher or lower = Neutral

• $USD The Dollar fell a significant -0.57% yesterday (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) Price chart shows we are in a month+ long trading range. It is still in that range, it broke though a major support level. It’s 50 day moving average. Normally I’s give this a Neutral/Bullish for stocks, But because investors are focused on the  US debt crisis = Neutral

• Reading The Tea Leaves Solid earnings in techs are bullish, but all eyes still on US congress.

Longer Term Outlook

weeks, month, months

• May 20th forecast still in effect.

• Repeat - It’s impossible to accurately predict how the politically manufactured Kabuki Dance over the debt will end. Therefore, hanging in their with a NEUTRAL Long Term Forecast. However, perception slightly favors bulls.

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Paul’s Corner

It’s  July 21 and TIMBERRRRRRRRRRR!

The market? No RVBD, a former member of YSL, reported earnings Tuesday  after the close. It didn’t meet revenue expectations, and took a 23%  hit. This is a very important lesson as why it’s best  to wait until after an earnings release for a buy. Some times in a good up trending market one can gamble a bit prior to earnings, but 2 weeks or more prior to earnings is suggested.

I trust  none of you folks were in still RVBD as it should have been exited back on Mar 18 when it dropped through the 50 DMA in the market down turn and it kept heading south. True it had a nice double bottom, but it wasn’t a good double bottom since the second bottom wasn’t lower than the first. Sure it had a nice climb up the chart with the strong market two weeks ago, but when it started ticking off prior to the expected earnings date profits were best taken.

If you are the true BUY THE DIP optimist, have loads of spare cash and we were in an up trending market, a buy in this area could be a good gamble, IF you give it a few days to settle down before you dump your wife’s Christmas Club into RVBD. (Christmas Club’s, remember them?)

Another YSL member FFIV reported after the close yesterday, met expectations and is off about 15% in after hours trading. FFIV is a competitor to RVBD and seems to being taken to the cleaners along with RVBD. Talk on Wall Street suggests “tech” isn’t a safe bet until September. Interesting forecast, we shall see. BTW FFIV’s chart has been horrible for months and sale was suggested many months ago by Investors411.com.

Dave Steckler in his latest blog discusses the current market and  “Consolidation“. A new term for some and an important thing to watch for in the market. As always, Dave gives  a great chart lesson.

LINK

Off the stock subject, the current Republican front runner appears to be Romney. Great looking, charismatic, and knows how to talk the issues. He is touted as a job creator, but is he? Here is a good article from the left wing press Bloomberg, tearing apart his job creating myth. Remember this next fall folks!

LINK

So what’s the market going to do today, is this a new morning in America? Let’s load up ThinkOrSwim………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

NLY - Annaly Capital Mgt. Ultra high dividend stock - Has dipped down into buyable position. Caution if we do have meltdown over debt crisis this stock will take a hit.  However through 2008 meltdown it still produced a double digit dividend.

All the blow concepts are at least, in part,  considered of the potential of a US default

GLD & SLV - Will buy GLD today simply as a hedge against default.

UDN & UUP – Considering holding UDN – An ETF that shorts  the dollar. Another possibility in “Puts” on UUP – An ETF that is double long the dollar.

BZF – ETF that tracks Brazil’s currency.

Disclaimer - Personally I own  a group of dividend stocks (also a couple other long term investments) including NLY. I have placed puts on one ETF that shorts a major index and a couple of stocks. JS in the comment section has used the term “insurance” to describe the way “Puts” are used protect long term investments. – email me if you want to know more or post a question in the comments section.

I firmly believe you can make money with BOTH long term investments and short term trades. See POSITIONS Section of blog for ideas

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative Comments Section every day.

Don’t forget to send in your stock choices fro our new Stock List #5

Deadline Friday noon

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

The Hive – Goldman Sachs brand new billion dollar building

Goldman Sachs Fallout

From movie Casablanca – Captain Renault to Rick:” I’m shocked, shocked to find that gambling is going on in here!”

Perhaps Alan Greenspan’s Shocked disbelief in front of congress was real in 2008 – Greenspan ” I made a mistake” in believing free markets could regulate themselves without government oversight.

Investors411 readers understand that market manipulation - GREED – exists and it is unfortunately its human nature that if you cut the amount of regulators and regulations, greed can run wild.  A hypothetical and real examples.

• Cut penalties for theft, eliminate guards and surveillance cameras, leave chunks of money laying around the bank and what happens?
• Cut regulation, call for smaller government with less regulators in the Energy market = Enron
• Cut regulations, regulators of SEC and Justice Department = Bernie Madoff
• Cut  regulation in banking and you get “repro trades” driving the collapse of Lehman Brothers and Greek current debt crisis Lehman’s collapse (almost 1/2 trillion dollar loss) was the breaking point of the 2008 financial meltdown.
• Now Goldman Sach‘s has also been accused of “Fraud” leading up to the 2008 meltdown.

Best analysis – “Goldman Sachs Too Big to Obey the Law” – comes from MIT’s Simon Johnson. Also, decent article on legal ramifications in NYT for both SEC and Goldman

Bottom Line - In this case, Goldman Sachs is Goliath and the SEC is  David. GS has a dream team of legal experts that would make OJ Simpson, and the SEC look like little leaguers. GS face a danger of others piling on. We all face a danger of a run on the bank that is too big to fail.

Best Line you can tell your right wing friends who will argue that the left will over regulate everything from Credit Default Swaps to Shadow Banks -” I just want the regulation to be like they were under Ronald Reagan or was he a socialist too.”

Post Script – Bill Clinton has also admitted he was given the “wrong advise“ on derivatives (by Summers, Greenspan and Rubin) It’s time a lot of other politicians admit this error too.

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 for changes made each weekend

US markets took a major hit in increased HUGE volume on the news that the SEC had launched a case against mega bank Goldman Sachs.  Quote/paraphrase this AM on CNBC from SEC – “The Agency [SEC] is not done yet.” translation – there are more prosecutions to come involving the time period before the 2008 meltdown.

The best analysis I could find on what will drive markets this week. Interesting in this analysis they put the Greek debt crisis ahead of Goldman Sachs. (I wouldn’t) It also ignores the economic impact that the Iceland volcano is having on European economy.

Fearless Forecasts Last Week - “Up week” 3 of 4 major indexes were higher, despite Goldman Sach’s news.

Fearless Forecast This Week – We should have better than expected  earnings, but ash clouds over Europe, Goldman Sachs, European/Greece crisis will probably overshadow earnings – “Down Week.”

Significant Indexes

• McClellan Oscillator fell dramatically to -29.37 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still in NEUTRAL territory – but we are approaching oversold territory – A time to buy.
• US Dollar – rose +0.39% yesterday. [Anything over +/- @0.50 is significant.] Mantra – right now The Dollar Rules Remember, dollar down almost always = stocks up. The 50 day moving average is a major support/resistance level. Right now the dollar is just above the 50 day MA.  Think of a huge battle going on over the last 4 trading days as to wether the dollar goes up or down,

Positions

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

TYH position has been completely closed – O% gain. UWM will be probably sold for what looks to be a 7% loss today.

When the McClellan Index gets below 60 Invetors411 will again add to positions.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Ronald Reagan – Historic Hero

For most of the World (and me) Republican Ronald Reagan and Russian President  Mikhail Gorbachev most historic and heroic event was the signing of the 1987 Treaty Limiting Nuclear Weapons.

Democrat, Barak Obama, along with Russian President Dmitry Medvedev have agreed to another historic & heroic treaty further limiting nuclear weapons to about 1550 deployable warheads each. Now its up to our Senate and their Duma to approve the treaty. Trouble is  US Senators like John McCain have promised “no cooperation” with Democrats and their is an election coming up in November. Happy we did not elect a man who puts political vengeance in front of American safety. Why we should pass this treaty (all the protocols have been set in advance)  ASAP and not wait is obvious.

• A 30% reduction means less nuclear weapons in the world (US & Russia have @95%)
• A 30% reduction, and no reduction in defensive missile systems, means 30% less to defend against.
• A 30% reduction is 30% less missiles a terrorist can get his hands on.
• A reduction by Russia and the US gives them a better moral position in asking others to reduce or not develop nukes (Iran)
• Another verifiable treaty with Russia, like the first could lead to more.

Behind the scenes, those who benefit from fear & profit from weapons growth are powerful and will fight this treaty. Ironically terrorists have killed 30+ in Russian subways today.

Frank Rich Scores Again

NYT’s Frank Rich scored another slam dunk with his Sunday editorial on right wing rage/violence – “The Rage is Not About Heath Care.” Today, when you think about left wing radicals in the USA you think about Michael Moore, and a huge group of pacifists protestors, but right wing radicalism has a clear and present violent side that YOU have voiced concerns about in the comments section of the blog.(See Bob Sadinsky for latest).

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.

Light volume and stocks went nowhere Friday despite a big drop in the dollar (see below). The sinking of a S. Korean warship was used as the reason stocks went nowhere.  This has been downplayed by western governments.

Monthly JOBS report on Friday is the big news of the week. Analyst’s expect a positive +100,000+ jobs created. Some are expecting a lot more.

Fearless Forecast for Last Week - Oops, expected a down week and we rallied a bit. This breaks a string of correct calls.  Expected Republican investors believed all the “Armageddon” hype surrounding Health Care and it would transfer to stronger regulations for financial stocks.  It barely dented stocks. Money talks.

Fearless Forecast for This Week. – Up week. The big dollar drop Friday took some of the pressure off stocks. The conventional wisdom is that there will be a good (+100,000 to 150,000) jobs report on Friday. Remember –  Too good is bad for stocks, because it will mean interest rates will rise sooner rather than later. While stocks rallied last week the McClellan Oscillator fell. So we are no longer over bought.

Believe Market’s closed on Good Friday.

Significant Indexes

• McClellan Oscillator fell a bit to -19.61 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO)LINK. -  The $NYMO chart has made a series of lower highs and lower lows = Bears Rule.
• US Dollar – fell significantly -0.69%. This takes some of the pressure off Friday’s “almost merits a DANGER… warning” What the dollar does over the next few weeks is critical to stocks and economics around the world. The dollar has risen 10% since Dec.. This means that US & China (their money is pegged to ours) exports are 10% more expensive to the rest of the world.

Positions

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

3D stocks – IMAX, DWA, RGC, CNK - Investors411 will be trying to build long term positions in these and related 3D technology stocks. The last two are major theater chains.

The DWA, 3D How to Train Your Dragon’s movie opened to a respectable $43+ million weekend, but still popular AIWL (#2 at 17+ million) stole some 3D screens from Dragons. Comparison to another 3D movie same time last year (Monster’s vs. Aliens) $59.3 million. Detailed Box Office info here

Bottom Line – DWA will probably be the weakest of the 3D stocks.  In part because of the competition. If I remember correctly there are going to be 24 3D movies released this year. We will probably see a dip in in 3D stocks today/this week. All 3D stocks fell on Friday and will probably fall today (maybe tomorrow) Would look at this as a Buy the dip opportunity especially for IMAX, RGC & CNK.

Sold FXI position (see Positions section at top of blog)

One rule of investing is to limit your losses – No matter how good a stock or idea is its always good to limit your losses or know when you will sell.  I usually have a 7% loss limit on stocks.

if a Have a stop on 1/2 of DWA at what it was bought for.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

A Financial Dr Strangelove

Larry Summers , Obama’s chief economic adviser, is the financial Dr Strangelove of this administration. Ever since his nomination was first suggested, Investors411 has strongly objected to his controlling influence in our economic policy. Summers was the protogee of Goldman Sachs CEO Robert Rubin. He took over as Sec. of Treasury under Clinton and approved laws that gutted consumer/taxpayer financial protection.

Summers, has time after time backed the unregulated capitalism, that even Alan Greenspan has admitted was a mistake.  The latest expose comes from the $1.8 billion that vanished from when he was President of Harvard University. Boston Globe LINK

Summers has over ruled the voices of reform within the Obama administration.

Trickle Down Economics

Summers and the Obama administration are running the same kind of trickle down economics that widened the gulf between the rich and poor under Ronald Reagan . They’ve continued Paulson’s (Bush’s Sec. of Treasury) socializing the risk for the wealthy and making the middle class taxpayers pay.

Wall Streets wealth (rise in stock prices & shadow bank bonuses) is being led by rebounding emerging markets and American companies investing their money and jobs abroad.  The reason the Russell 2000 (smaller companies) lag the other major US indexes is they do less business abroad. Big Shadow banks (up collectively well over 100%) are getting bailed out with trillions of dollars (both printed money and your tax $) Main Street gets chumb change.

Nobel Prize winner Paul Krugman editorial in NYT states on jobs”There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers. This is wrong and unacceptable. “ LINK

He offers the following jobs solution LINK

The Bigots Demonstrate at Our School

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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, Fundamentals & Analysis

For the moment the Dubai economic meltdown has stabilized because oil rich Abu Dhabi has promised to bail out the over leverage Mid east playground for the ultra wealthy. Volume, was, of course up over the 1/2 day trading Friday, but still below average. 3 of the 4 major indexes (not small caps – Russell 2000 – This index makes most of its profits from within the USA) have all achieved higher highs - Bullish Hopefully they are now in proves of achieving higher lows.

Repeating mantra = The dollar rules – The trend here is a moderate or slow decline of the dollar.  What would reverse this is an event like an attack on Iran – stocks would fall & the dollar would rise.  Perhaps, technically, there could be a short term rise in the dollar.

Obama’s Afghan speech tonight – Escalation in war, to a rational person, would ususally mean an immediate drop in stocks.  But, these are NOT rational times.

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 fell -87 points yesterday and closed at 3887. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1700 points since late September. After 16 up days in a row, now, 8 down days in a row & down through the former resistance/now support level 0f 4291 .

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. Recent price drop-Nothing to panic about yet

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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 fell an insignificant -0.17% yesterday . The dollar closed at $74.80 . 

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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 -17.07 This is a slightly Oversold Position . This chart is showing we seemed to haveave 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

Positions

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

I did get a chance to do some editing in the Positions Section of the blog. ( Note 2 added positions)

From Friday – Probably going to take some profits today (sell 1/3+ positions) in FXI, EWZ, GLD & all of DGP. Hopefully, will get a chance to buy back into these positions when the McClellan Index gets oversold. Personally I did sell/take profits on 1/3 of FXI & all of DGP . No one ever went broke taking profits – but right now this move looks like a mistake.

List of positions & percent of portfolio (see positions section for more)

16% FXI

16% EWZ

11% GLD

10% MOO (agriculture ETF – more later on this)

5% AMZN (stock)

5% NVS (stock)

5% BRSIX – not listed in Investors411. A small cap mutual fund that I’ve owned for almost a decade ( I liked the company because they gave a lot of profits back to charity)

10% -  3 Bonds – not listed in Investors411 that I’ve owned for years.

sometimes @15% in day & swing trading I do not discuss in Investors411 & the rest in cash.

Best recommendation – It’s time to buy some protection. Iran, lost a 25 to 3 vote in the UN regarding their desire to achieve nuclear weapons or nuclear power (if you trust Ahmadinejad believe the later) The chances Israel or the USA will attack is growing. Obama committing more troops to Afghanistan further surrounds Iran. The price of oil will skyrocket if their is an attack. Yesterday Iran’s navy picked up some Britsh racing ship.

Some other terrorist event may occur reguarding oil.

So, on dips, buy the commodity oil. I have to check this out further, but the appropriate commodity (not company based) ETF’s seem to be USO & OLO (OLO does 2x what oil does) The later is very thinly traded. Going to work up to 10% of portfolio.

Long Term Outlook = CAUTIOUSLY BULLISH

Nation Building Quagmire

Ronald Reagan was right

Once again Frank Rich’s Sunday NYT editorial is outside the American corporate media news box. It deserves your attention and is, in part, the basis for the points below. LINK

• We, getting out butts kicked in the war on terror – The call for a 3rd unilateral surge of troops (see Oct 25th post) is  a major example of failure – you don’t call for more troops when you are winning.
• The debacle or “unjust” war/nation-building in Iraq is the underlying cause of the trouble in Afghanistan. – While we fiddled with Iraq – Afghanistan, Pakistan and Iran all burned. This was predicted over and again since the Iraq war started by Investors411 and others.
• Pakistan (2 to 3 times larger than Iraq+Afghanistan and a nuke power) is deteriorating rapidly – All polls show the #1 party in the polls is now the Muslim religious party who campaign slogan is “Go America Go”
• Systemic failure of the military/pentagon to foresee the Hasan/Ft. Hood disaster.
  

Solutions fromthe far right and the military

• Of course right wing solutions blather fear and religious leaders like Pat Robertson are calling Islam “Not a religion, but a violent political system bent on the overthrow of the governments of the world.” Every Islamic terrorist is using Robertson’s (or some right wing American like him) quote to turn moderates into terrorist recruits.
• This right wing view is diametrically opposed to US military/General McChritstal’s call for 40,000+ more troops in Afghanistan   “The key to success – a strong personal relationships forged between security forces and local populations.” A worthy goal, but is it doable, what are the costs, and like Iraq will it just make things worse.

Iraq/Afghanisatan

• Maliki, our guy in Iraq, is one of the founding fathers of the Darwa party. The Darwa party is responsible for killing almost 250 American marines in a bombing in Lebanon. Reagan was smart and he got our troops out of the Lebanon quagmire
• The two major religious leaders in Iraq – Sistani refuses to ever speak to Americans & Sadr hates us worse than Pat Robertson hates Islam. They hate our occupation.
• Our invasion of Iraq has created the biggest refugee crisis in the world according to the UN. 4.2 million people have been displaces when the Shia just about destroyed the Sunni’s in Iraq. Sunni’s were responsible for most of the violence. LINK
• Maliki/current government along with Hezbollah and Hamas was the first to recognize (insert most negative adjective(s) you can think of here) Admadinejad election in Iran
• Iraq’s economy is rich with oil & Afghan’s rich with Opium. To create/nation build in Afghan means creating a whole new economy. Far more costly than Iraq.
• Our guy, Karzi, in Afghan, is corrupt, an election rigger, and his family directly related to the opium trade.

Solutions - Absolute worst solution is some form of  Obama compromise – (send in 20,000 troops)

If you’re going to commit to war/nation building in Afghan do so absolutely . Otherwise you’ll never win . If you do commit – Expect/be prepared for of tens of thousands of casualties, a lot more than 40,000 troops sent, many trillions in cost, a huge extended cost of occupation/nation building beyond Iraq, Afghanistan to other countries, our huge deficit to explode higher and the majority of Americans/world (already against the war) to grow in size and anger.

My choice – Ronald Reagan made a wonderful decision NOT getting us involved nation building in Lebanon after the bombing of the marine barracks.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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, Fundamentals & Analysis

Dollar fell  a  significant -0.60 so stocks rose The inverse relationship between the dollar and stocks is so strong it is easily the dominating factor in movement of equities. The other forecasting are distant seconds to the US dollar’s movement.

Monday’s since September have been historically very good for stocks. If the dollar is going to breakdown and stocks breakout higher it most probably will happen this Monday or next.

Major rally in most countries overnight.

KISS = Keep It Simple Stupid – The dollar rules

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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 is @ 4% 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 rose a VERY significant +155 points yesterday and closed at 4111. Up 12 days in a row . The BDI’s growth did slow down a little as it approaches its major resistance level at 4291 . (This years high)  The BDI has rallied about 2000 points since late September. =  Bullish for stocks & world trade right now. Especially good for our positions in FXI & EWZ

Like most major resistance /support levels expect 4291 to hold. Technically – Upward momentum slowing is a sign that the 4291 resistance level will hold and after being up 20 of the last 22 days the BDI is certainly overbought.

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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 was down a  significant  -0.60% yesterday. The dollar closed at $75.23 . “ Usually a major support level at least temporarily halts any fall.” The $75 support level held and now the dollar is near the bottom of its range.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at $76.20 this AM . The support level is a little below $75.00 . Both are EXTREMELY important lines in the sand. A breakout on either side will move US equities in the other direction and the world will follow.

There is a major squeeze play going on as the resistance level keeps falling as does a major trend line. Support remains flat at @ $75.  Only $1.20 separates the two. Which ever side the Dollar breaks out through will set the momentum for it and the opposite will happen for US ( and most world) equities.

CAUTION – The first breakout (up or down) is often false. Right now the momentum (since the long term trend is down) is with the Dollar bears and consequently stock bulls

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

The index closed at +5.83. This indicates stocks are just a wee bit overbought and moving is either direction is possible.

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching -60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

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

Sorry have not had a chance to update Positions section in well over a week – see past updates

Investors

Comments – NOT the time to buy or add to recommended positions. (FXI, EWZ, GLD )  Enjoy the rally. Shorter term investors may want to sell part of the 3 major positions while they are at highs.

Going to add Indonesia & Vietnam ETF’s – but waiting for dips. Also going to add DGP (this ETF does about 2x what the GLD does) – More explanation later. As a trade like GS. Again, waiting for dips

Traders (short term plays) These are not ETFs, but individual stocks

Extra Note of Caution here – Even though I always warn you AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING! please note I’m far less confident in individual stock picks

Long Term Outlook – The dollar looks like it may break down through major support and the benchmark S&P 500 is on the verge of a yearly high – Outlook will change to CAUTIOUSLY BULLISH if/when this happens. But subject to further change back to neutral since breakout was weak.

Long Term Outlook = CAUTIOUSLY BULLISH

Wins in Missile Removal

About a week ago Obama decided not to deploy a radar & missile outposts in Poland and Czechoslovakia – supposedly for use against Iran-

• Russia is now NOT deploying missiles near Poland. Unfortunately this is a big deal in foreign press, but not here. LINK from India
• CNBC is reporting this AM that the Russians are “more willing” to accept sanctions against Iran.
• Biggest countries benefiting from this is Israel, Saudi Arabia, & Gulf states who will see increased spending on mobile defensive missile ships that will be placed directly between them and Iran.

Losses in Afghanistan

Obama said Afghanistan was a “Necessary” war and surged another 21,000 troops right after his election. Total now 68,000 vs. @ 140,000 in Iraq. Now generals are asking for a whole lot more (40,000+)More Americans are dying thee now than in any year since the war started.

• The recent elections were a fraud
• Why do we need to nation build there?  The chief product there is opium not oil.
• Did we not learn anything from Iraq? – Iraq is poorer now than when we invaded, now has the 3rd most corrupt government in the world, (LINK) was the first government to recognize Ahmadinejad’s victory, etc. (could write a page on other financial and human losses)

Bottom line – We need to keep terrorists from getting nuclear weapons in Pakistan.  The US needs to stop throwing money nation building in Iran, Afghanistan or any other similar country like the Sudan, Yemen, Libya etc. Ronald Reagan was right when he took troops out of Lebanon.

If you want to launch a missile and kill a bunch of al Quaeda who are a threat that’s OK, but Colonialism didn’t work in the last century and we should learn from history. Best Link for more info.

We could fix a whole lot of problems if we stopped spending trillions nation building and teating every problem as a military problem. Come on Obama – Remember “Change we can believe in? Those of us who voted for you do.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Major US markets after rising over 1% after the Fed announcement gave it all back and then gave back more. Volume was up especially NASDQ) The other major indexes had average volume.  It sure looks like this is the beginning of the expected correction mentioned for the last two weeks.

The dollar, of course, moved higher. However it seemed to be US stocks leading the much larger currency market and not visa versa.

If you look at the charts of the major US indexes they are well extended over their 50 day moving averages. (More sophisticated traders look at something called Bollinger Bands) and at least a technical correction seems likely .  How this happens is everyone is expecting the dollar to fall further and consequently stocks to rise. Traders have to rush in to cover their positions or loose out on gains. So you have short term traders panic and a selling spree.

The troubling fundamental behind all this is the BDI (see yesterday’s post) The rate of fall is growing.

Earnings season is around the corner.

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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) .

2388 is support level/number to watch – Yesterday BDI fell -71 t o close at 2175. Major support level has been broken and the rate of fall is still intensifying = Bearish for worldwide stocks.

The BDI is @49% 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 )

What this means – World trade is in trouble – lots of ships are sitting in ports empty.  To some degree, China has stopped buying raw materials and/or the US consumer is not buying as rapidly as earlier in the year. Braking a support level is significant, but 2250 (current level) is still a long way from the Dec. 2008 663 low. = Storm clouds gathering

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

As predicted the $76 support level held.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

The dollar rose +0.32% yesterday and closed at $76.33 This is above its support level

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

Positions

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

For traders (not long term investors) on individual stocks. I personally cashed in on a 8% gain in APPLE yesterday.  Will buy back in on dip. I often get burned with this – my major mistake was taking profits in Google at 150 and never got back in.  I do plan to buy more AAPL on a dip. Holding onto flu play NVS until flu epidemic breaks. Also considering buying MVIS (Microvision) or CIEN (more later on this stock) on any dip.

Shorter term traders may want to take some $ off the table in recommended ETF’s.

Note Investors 411 is covering a few stocks for traders.  This blog will remain focused on ETF’s for reasons previously discussed.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Ronald Reagan:

The Great American Socialist

All of you made outstanding public comments on Friday’s blog from a must see video of the Tea Bagger’s to an excellent editorial by economist Ravi Batra – “Ronald Reagan: The Great American Socialist. ” The far right is calling Obama a socialist because he wants to “redistribute the wealth” yet Ronald Reagan by this definition can be credited for a huge redistribution of wealth.

• Reagan’s 1981 tax cut was massive especially for the wealthy and corporations. This ” large reductions in income tax rates in 1981 were followed by abnormally slow growth” Source Wikipedia
• The rate fell from 70% to 28% 1980 to 1988 for wealthiest Americans. Check out changes starting in 1980 (when Reagan took office) Great chart of tax rate of wealthiest individuals and tax rates from 1903 to 2003 at TruthandPolitics.org LINK
• Batra continues – “deficit soared from 2.5 percent of GDP to over 6 percent, alarming financial markets, sending interest rates sky high, and culminating in the worst recession since the 1930′s”
• Reagan was in trouble so he “looted” YOUR savings in the Social Security system. To fix the massive losses YOUR Social Security trust fund (taxes you paid) were now used to pay for programs, stop inflation, fix the recession by paying down the deficit.
• By 2007 this totaled “$3 trillion dollars ” (including 1+ trillion in interest we would have had) and is a major reason why Social Security is in such trouble. But the reality is the fund is empty and used now to reduce the deficit.
• In fact “In 1986, Reagan slashed the top tax rate further. His redistributionist obsession led to a perversity in the law. The wealthiest faced a 28 percent tax rate, while those with lower incomes faced a 33 percent rate; in addition, the bottom rate climbed from 11 percent to 15 percent.”

So now we have Heath care/public option and are afraid to tax the wealthiest individuals to pay for it. Those that benefit from Reagan and Bush tax cuts and have accumulated millions in compounded tax savings to protect themselves from the lack of funds in Social Security or heath care problems.  Those millions/billions have been amasses since 1981.

45,000 Americans die each year because they do not have health care (700,000 go bankrupt each year because of lack of decent health care-figures quoted on Bill Mahr HBO show) That’s equal to the deaths of 15 world trade center attacks . All this happens in the only civilized country in the world that makes a profit off of breast cancer, heart attacks, leukemia, aids etc…

Heath care is one component of this wealth distribution. It would redistribute more funds to lower and middle class families.

Special Note – The Investment philosophy of Investors411 continues to be invest in countries with a growing working class of people NOT a growing oligarchy of wealthy individuals. This is why the ETF chosen are focused on India, China, Brazil, South Korea and other area where money flows because middle classes and those aspiring to the middle class spend money.

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Mea Culpa – Many of you sent personal and public emails or talked with me about Friday’s editorial “Why You Should be Afraid for America” One of you stated this is not a headline you’d find in the NYT and suggested , this is a fearful  “tabloid headline”  He’s right. I am an emotional guy who spent part of his youth marching for civil right, against the Viet Nam war, and income equality from the deep south to the infamous 1968 Democratic convention in Chicago. The headline was designed to attract your attention and in my heart I’m fearful for America’s future. I’ll try to watch it but please allow for the occasional over the top headlines.

Thanks to Paul R who sent inthe Batra editorial and all those other who make the comments section perhaps the most exciting part of this blog.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Volume was way down and that’s just what bulls want to see on a mildly bearish day for the S&P 500 and the Dow. Considering how strong the dollar was it is surprising to see the markets fall so little. (see below) The NASDQ even gained ground.

The Dollar is still the key index to watch right now. The inverse correlation between the dollar and stocks dominates the US markets

Fed meets today and makes announcement tomorrow.

Fearless Forcast = Rally continues. this week.

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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) .

2388 is support level/number to watch – Yesterday BDI fell -33 to close at 2357. This is not a big fall, but a major support level has been broken. = Bearish for worldwide stocks.

The BDI is 44% off its high (early June) Before that it gained almost over 630% from its all time low of 663 (April high of 4291 )

What this means – World trade is in trouble – lots of ships are sitting in ports empty.  To some degree, China has stopped buying raw materials and/or the US consumer is not buying as rapidly as earlier in the year. Braking a support level is significant, but 2357 (current level) is still a long way from the Dec. 2008 663 low. = Storm clouds gathering

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

As predicted the $76 support level held.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

The dollar rose +0.40% yesterday and guess which way most major US markets went – D__N.  ) 0.40 is a relatively large move up for the dollar.

Note that if you look at the longer term chart of the dollar that it has NOT been above its 50 day moving average since April.  The dollar is in a short,medium and long term BEAR market . Would buy stocks if the dollar got close to 50 day MA.

The two day rally in the dollar has also impacted oil prices that fell -3.53% yesterday. Right now this looks like a technical correction.

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

Positions

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

Individual stock – One of you last week has asked me about MVIS (Microvision) See chart This chip company has exploded and broke out of its trading pattern even though stocks have been down/flat the last few sessions.  Would buy this on any dip. There are a whole bunch of traders out there ready to do the same thing.

Our swine flue play NVS and tech play AAPL are out peforming US markets – but it looks like we are in for some minor correction as the dollar rises.

NB – I just offering these trades because you folks asked for something other than ETF’s – I do NOT know enough about the fundamentals and a zillion traders know more. Also,its far easier for major players to manipulate these stocks than ETF’s which are huge market baskets of stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!