Investors 411 Blog

+48% Profit in TYH in 1st quarter of 2110

For more see Positions section below

Who Creates Deficits?

Chat from zFacts.com

Scott Herwehe has produced another worthy editorial in the comments section of the blog. Your comments section is an excellent source on politics, economics and markets. Suggest you check out, not only Scott’s editorial on Republican hypocrisy over the deficit, but  all other comments.

Here’s his conclusion on the deficit -

“Even the financial bailout is significantly small compared to just Bush’s tax cuts. Social spending doesn’t even compare. Our corporate controlled media will never talk about the Bush tax cuts because that would be acting against their own interests. Who benefits from a tax cut for the rich? The wealthiest among us. Who control and finance our corporate media? The wealthiest among us. The only way to get out of this recession of the real economy (not Wall Street) is to spend money in a manner that creates jobs or in other words benefits the majority and for once not the minority.”

India Ascending

Economically, India only experienced collateral damage from the 2008 meltdown. Why? – Dr. Yaga Reddy, the former head of the Bank of India, did not buy into the American concept of unregulated free markets. Bob Kuttner editorial on India, King’s College and those who withstood the breakdown of our unregulated capitalism that had to be bailed out by taxpayers.

Dem’s to Attack Wall Street?

Democrats seem eager to attack Wall Street was the headline, by Lisa Leher, on centrist web news site Politico over the weekend. Will we finally get some financial reform? If so expect Wall Street to get hurt in the short term. But in the longer term this is good for the economy of the US and world that we fix the problems that caused the 2008 meltdown.

If the Democrats follow through with this they will salvage the 2010 elections. Most Republicans will protect Wall Street. Problem is so many of the Democrats are owned by Wall Street. So much of Wall Street money will go to candidates that protect them.

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

Another up day in reduced below average volume. The major indexes are even further above their 50 day moving averages than last week. This means they are even more overbought than last week. None of the major technical factors that have historically worked as prediction tools have correctly predicted US market direction in past months. – We should according to volume and distance from the 50 day moving average already be falling.

However, our McClellan Oscillator is holding up fairly well. Still NEUTRAL and not OVERBOUGHT. Lesson here is different technical indicators or theories work better at different times

Of course, the fundamental that’s behind all this is we have failed to fix any of the root causes that caused the 2008 financial meltdown that was created by  the almost completely non regulated US “free market”) financial system.  If anything they are even less regulated today.

This is the beginning of earnings week

Fearless Forecast for Last Week - “Up week”   Another correct call

Fearless Forecast for This Week – How markets react to earnings will be key. Earnings start to trickle in this week. The dollar again (see below) rules.  The Greek crisis seems settled (see below) and this will help stocks.  

Best read of the Tea leaves – We are in an “irrational exuberance” period – The trend is higher  so predicting up week.

Significant Indexes

• McClellan Oscillator rose  to +3.26 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 NEUTRAL territory – technically neither overbought or oversold.
• US Dollar – fell a significant  -0.60% yesterday. [Anything over +/- @0.50 is significant.] There has been some settlement in Greek debt crisis so Euro should rise and dollar fall in short term. Mantra – right now The Dollar Rules Remember, dollar down = stocks up.

Positions

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

+48% Profit in TYH 1st quarter of 2110

TYH is the ETF that does @3x what technology does & ROM (suggested, but not used) does 2X what technology does

Before we go over these figures and there are 2 important points.

• Caution Don’t let it go to your head. For the most part these stocks were chosen when the US markets were oversold, other reasons, plus we were lucky
• Re-read point 1

The dumbest thing you could do go out any buy TYH today.  Investors has a 0% stake in this ETF today.  Its way too far above its 50 day moving average and markets are in a neutral and not oversold condition. To see actual buys and sells link to Positions section of blog . Why TYH worked -

• A bull market
• Oversold conditions – Investors uses the McClellan Oscillator or as Monitor named it the Mickey O. The more oversold the better. Investors411 bought TYH in more or very oversold positions.
• Technology and small cap stocks generally outperform in a bull market. (Its not quite this simple)

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Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

What’s Up? – Not the stock market; Financials fall –  financials flooding markets with  more shares to raise capital; First in,hopefully, a series of guest editorialist: This one by Scott Herwehe “ Is this a financial crisis or is this a crisis of an unsustainable economic model?” The American Worker.

American Worker, by Michael Florin Dente, 1990. Photo flickr.com

Is This a Financial Crisis or Is This a

Crisis of an Unsustainable Economic Model?

By Scott Herwehe

(highlighting mine)

 From approximately 1820 to 1970  worker productivity increased in America and wages increased for most American workers as well. These increased wages were won through a vibrant labor movement that battled and fought for higher wages and better work conditions.

From 1945 to 1970 the average American enjoyed greater wealth than any other time in American history meaning the distribution of wealth was more equitable than any other time period. In fact, the bottom half of American workers made more significant gains than the top half.

Realizing the gains of the labor movement of the 1930′s the owners of production began looking at ways to increase profit and productivity. Two major ways that this was accomplished was outsourcing ( this was accomplished through polices that were undemocratic such as trade polices and the breakdown of Bretton Woods and also see Operation Bootstrap) and increased reliance on the secondary labor force which is workers such as immigrants who have fewer rights than an American citizen.

A massive propaganda campaign was made against unions and we have seen a steady decline in union membership as well as policies beginning with Reagan that have decreased union power and workers rights.( Remember we are the only country in the industrial world where striking workers can be permanently replaced).  

So  around 1970 avg. American workers wages began to level off and productivity continued to increase. Americans were working more hours and more people from a family were joining the workforce. More mothers and children of the family were joining the workforce. So Americans were working harder but real wages were stagnating.  The continued rise of productivity and stagnant wages created huge profits for the owners of capital. With more wealth led to a financialization of our economy where we started producing and making less stuff and instead designed ways to make money off of money.

The only problem was that the gains of the financialization of the economy only went to a small minority of people. Accroding to the World Bank it went to the top 5 %.  A massive redistribution of wealth began to emerge where more and more wealth became concentrated toward the top few.  This created a problem for the owners of production though.  Obviously if wages stagnate or decrease than the workers consumption slows. There needed to be new ways to maintain low wages and continue our consumer based economy.

The answer was credit. We became a nation of borrowers and new and ingenious ways to make money were designed.  This obviously is an oversimplified explanation. There are other policies and factors at play but what is stated is important to know. Can we continue this economic model of working more and more for less and less? Can we continue to borrow more than we can afford?  Can we continue using up massive amounts of resources to keep consuming and buying things that we don’t want or need? We use almost 30% of the worlds resources and have 5 % of the worlds population.

Our economic model is unsustainable. We do need change. Real change. Obama seems content on maintaining the institutions and players that got us into this mess. To be fare to Obama he really didn’t promise us a lot. During his campaign if you ignored the rehtoric and looked at his actual stances on policies than you know he is a centerest democrat which thirty or fourty years ago might even mean Republican. ( Nixon even pushed for nationalize health care.) He is a stark contrast to Bush and a rush back to the center feels very good after an administration that was so far to the far right.

Change and progress in American history has only come when people come together, organize, and fight for it. Power is never freely given to others. We can’t hope for change. We can’t be Obama’s army waiting for orders. We must give the orders after all he works for us.  We have to hold him and our elected officials to the fire. Throughout our nations history American workers have overcome far greater challenges in much worse circumstances. As a country we need to look back on the lessons of the past and create an economic model that works for all Americans and not just a few.

Scott is “addicted” to Investors411 blog and often post’s comments. He searching for anew teaching job in California. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Technicals & Fundamentals

Major market had a major meltdown yesterday. Volume again did not rise and therefore did NOT confirm the move lower. Third down day in a row. Often cumulative lower volume can become a factor over time.

 877 on the  benchmark S&P 500  is the support level to watch. The SPX closed at @ 884.

XLF - The ETF that tracks financials (mostly shadow banks ) fell big time -5.08 in average volume. Obviously, the shadow’s are still leading the markets.

If Shadow Banks go up – so will stocks. If Shadows go down so will stocks – The mantra of the markets for the past two months continues.

Reading The Tea Leaves – Why Markets Are Falling

Obviously, technically, bulls have come too far too fast. There another significant reason that involves our broken economic model (see Scott’s editorial above) and our over reliance on credit.

Many Shadow Banks need to raise cash because they are insolvent. So while the markets are high they are selling “secondaries” or issuing more stock to make $ and pay down debt. The other institutions need to raise the cash because the shadow banks are NOT lending. So they too are selling new shares.

All of this new stocks sucks up the limited amount of investors willing to buy. It’s a supply and demand problem. Now that markets have gone up 30 to 35% there’s a stampede of companies creating new shares. This is going to force stocks lower.

So far volume is NOT confirming the move lower and no major technical support levels have been broken. So too early to call a reversal in even the short term trend. This could all end today.

WTIC charts “Light Crude Oil”.(see chart). Oil prices again crested over $60. Prices fell -1.24% yesterday and are further deteriorating in pre US market trading.

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.

From Yesterday – There is at least a short term dip coming. Investors411 has already (Friday) dumped positions in financials and techs.   Yesterday we temporarily sold EWZ (Brazil)

NB change to CAUTIOUSLY BEARISH if S&P 500 closes below 877

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !