Russian and Stock Bears

START

Strategic Arms Reduction Treaty (Part 1)

Background

If we survive as a species, President Ronald Reagan, will be remembered as a true hero for placing in motion the first START Nuclear Arms reduction treaty between the USA and Russia (the symbol for Russia is a bear) that was eventually signed in 1991. Key to this treaty were Reagan’s words “Trust but Verify.“

Today – Russia’s Economic status is more improved than the vast majority of countries since 1991. Russia has vast natural resources and oil/gas exports account for much of that growth and a trade surplus of $10.4 billion in Sept. Russia fell further in the world wide recession and last quarter under performed other emerging markets when its GDP growth fell from 5.0 to 2.7%. Great source for economic data is Tradingeconomics.com

Two significant problems in Russia

1. Corruption – On the list of the 178 most corrupt countries rated by Transparency International in the world Russia comes in #154. For all Investors411 chides the USA for its growing corruption (we have, for the first time fallen out of the top 20) we still come in a respectable - #22.
2. Terrorism - Russia has had 4 separate major terrorist incidents in 2010 resulting in at least 67 deaths and over 300 serious injuries.

Background and problems in USA

1. The USA has 5113 nuclear warheads Virtually all them dwarf the 2 atomic bombs that destroyed Hiroshima and Nagasaki in Japan and ended WW2. The smallest weapons today are at least 7 times more powerful than the first rudimentary bomb that leveled Hiroshima Although the # of Russian weapons vary according to source, they are thought to have slightly more. Video of  57,000,000 ton Russian Tsar bomb – compare to 15,000 ton Hiroshima bomb. Tsar Bomb about 4000 times more power.
2. We are, by far, the most militant country on the planet. Only country in 3 declared wars – Iraq, Afghanistan, Terrorism. Who knows how many attacks in other sovereign countries from Pakistan to Yemen.No country even comes close to our 1000 military bases/installations around the world. Multiple sources indicate if you include homeland security, and other appropriations like nuclear weapons that fall outside of listed “defense spending” we create over 50% of the worlds military budget.

tomorrow (part 2)

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	-0.42%	up
NASDQ	-1.07%	up
S&P	-0.61%	up
Russell 2000	-0.67%	-

Technicals, Fundamentals & Analysis

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

World Stocks -

USA – Volume up & Stocks down. Benchmark S&P 500 fall to 1181. Just above major support at 1173. Falling through 1173 will probably intensify selling. Lots of economic data released today, but the big report is Friday’s monthly jobs number.

China – FXI (ETF for China) is down over 10% from its high and trending down. But manufacturing numbers (just out) rose.

BAC – US giant shadow bank dramatically broke through  a major support level (down -3.14)on rumors that it was the next target of WikiLeaks.  BAC has an opaque accounting system, so selling here could intensify on the rumor. = Bearish

Europe – Worst month since May and the 50 Euro STOXX Index break below “upward trading channel”

Reading The Tea Leaves -

Look above – There’s lots of red Bearish signs.

• Combination of BDI and FXI (most important emerging market) along with Europe trending down is trouble in the long term.
• Dollar rally hurts
• BAC breakdown and AAPL one day fall (-1.81%) are two leaders that got smacked yesterday

The Bad news . If/When  the S&P major support level (1173) falls, selling usually intensifies.

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

There are other indicators I use to show trend exhaustion and one of the best was created by Tom DeMark. His nine day trend analysis is right more than its wrong and some of the more important forecasting tools used above concur with his theories. If you are trading short term and have NOT reviewed his system or one of his books be assured almost every hedge fund manager has. Investors411 tries to “Keep It Simple” but if you trade as oppose to invest this is one system to know.

Positions

• EEM - (Emerging Markets ETF) -
• UWM – (2x small cap stocks ETF) -

We’re at or approaching “buy the dip” territory. I’d love to see another 20 points cut from the MO before I nibbled.  However, I’m afraid the High Frequency Traders that dominate trading are probably going to see “trend exhaustion” like I do. Right now emerging markets are ripe for an oversold rebound, and the dollar is also close to trend exhaustion. This means at least a short term oversold bounce.

Would love to see a clear buy the dip opportunity arise today or later this week, but afraid we might not get the chance.

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.” -

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!

Index	Percentage %	Volume
Dow	-0,83 %	up
NASDQ	-0.69%	up
S&P500	-1.01%	up
Russell2000	-1.18%	-

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!