3:45 AM

This morning at 3:45 AM I dropped my wife off for the 3 day 60 mile Susan G Komen the Cancer  Cure. Thousands will be joining her. At least once a year Investors411 encourages its friends to donate to a worth cause.  Ours has been Cancer research.

So far Joyce as raised  $1,699 & her goal is $2,300. Outside of having children she feels this is this most important thing she has ever done. Some of you have already donated and if you’d like to donate see JOYCE’s Page On the right you’ll find the box to click on to donate.

“The Stupid Cancer Show”

My daughter Katie, a breast cancer survivor, has been raising funds and crusading for cancer survivors for years. Listen to her speak on the The Stupid Cancer Show this Monday 7/26 LIVE 9PM ET/6 PM PT to share her story and talk about cancer!http://bit.ly/99fJRu

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!

Technicals, Fundamentals & Analysis

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

The Black Box/High Frequency Traders took US equities significantly higher in average volume. Typical rally day for stocks dominated by BB/HFT.

Yesterday UPS (+5.23%) announced results and many analysts saw the giant package delivery company as a catalyst for the rally. The CEO was bubbling over about growth in emerging markets and hiring lots of new employees – you guess where – in CHINA.

MSFT was up 2.87% yesterday & 0.23%

Big news – European stress test (“whitewash”) on banks is due out today.

Proosta (see comments section) has come up with 20 of the top 100 high demand stocks yesterday.

Significant Indexes-

• McClellan Oscillator (MO) rose dramatically to +58.08 [+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. = Almost Overbought or bearish
• US Dollar –  The dollar  fell a significant -0.94% [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – 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. Despite big fall yesterday still within trading range = Neutral
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This is a huge-60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a 5 day rally and is at 1801 = bullish

Reading Tea Leaves-

All it took was a day and we are back on the cusp of the MO being overbought. Since the BDI has turned positive I’d be just a little more cautious about using short ETF’s too early. But, its clearly time to think about using those ETF’s that short major indexes. Click on POSITION at top of blog for more info.

The MO has not been above 80 since the big spring rally in April of 2009 – then it reached @ 105. In early Jan. of 2009 it did reach 120.

Positions

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

Updated over weekends Investors411 holds ONE position in SH at this time

Strategy – From yesterday - The same as before - If/as US major indexes become more overbought the more ETF’s that sort the market will be purchased. Starting out with SH. Then the higher above 60 the MO goes, the more SDS (200% short the S&P 500) and other even 300% short ETF’s will be used the higher the MO goes.  See POSITIONS section at top of blog for more.

Usually about a 100 point rally on the Dow translates into @ a 15+ points higher in the MO.  That would get us to about +73 on the MO today. A good place to do a little stock fishing.

Personally, this time will probably start with SDS (200% short the S&P 500)  Will add even more short ETF’s if/when MO goes above 75/80

When you buy any position its important you know when you are going to sell. In the case of SDS there will be a 5% stop/loss. If I make $ – 50% of SDS will be sold for a 5% gain and the stop loss will be moved lower as gains progress.

N.B - The following will seem contrarian to the investment strategy, but if the benchmark S&P 500 breaks out and closes above resistance level of 1100 & 1106 (109.44 high of early last week & 1105.67 an earlier high) the Long Term Outlook will change to NEUTRAL There are two more resistance levels above that, so bulls are going to have to make quite a charge to break out.

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Financial Reform

From high Frequency trading to opaque credit derivatives our financial system is broken. If we go forward with this over leveraged opaque system it would be like never fixing BP’s gusher in the Gulf. We have the Tea Party members who want virtually no government oversight to the Obama administration who keeps saying, “go softly, go softly.”

Dallas Fed Chair Richard Fisher is another whose is standing for reform.

Turkey/Israel/Gaza = Crisis

Turkey, has called for Israel to join all kinds of international inquiries into what happened. Ranging from a joint US/Israel/Turkey group to one set up by the UN. The Turkish foreign minister said, unless they accept “it shows, they have something to hide.”

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

The Bears Growled Friday. Major meltdown Friday in above average increased volume. (NASDQ volume less of an increase) = Bearish

Fundamentals behind meltdown-

• Less than expected in over hyped (by Obama administration) jobs report
• Hungary announces economic troubles
• The Big News is France“

Troubles in Europe again causing major currency shift – Euro falls and dollar to rises. = Bearish

Market Leader -AAPL - still haing in at 258 = Bullish

Technically – The area around 1040 on SPX (S&P 500) is the line in the sand. SPX now at 1065 – Beyond 1040 the Limbo Line breaks down.

Fearless Forecast Last Week – “Down Week“ Unhappily right

Fearless Forecast This Week - Down Week – See Tea Leaves section below – Basically investors fearful of more problems in Europe will have traders selling into rallies.  Partial success with Gulf spill, Central Banks propping up Euro, Government officials saying things aren’t so bad in Europe could give us an up week. But, traders will probably sell into rallies. Eventually, the Euro, China’s problems & casino capitalism will take its toll.

Significant Indexes

• McClellan Oscillator fell dramatically Friday to -30.48 [+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. Momentum down/Bearish, but in not yet oversold = NEUTRAL
• US Dollar –  The dollar rose a massive +1.20% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for stocks = Bearish

Reading the Tea Leaves All those former communist countries of Eastern Europe who bought into the American capitalist “free market” over leveraged, shadow system starting with Hungary are in economic trouble. France has problems and together the Western and Eastern countries of Europe have a bigger GDP than the USA. More shoes will drop before this gets better.

Its no longer a question of if but when will these shoes drop. This week, next week, next month.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Bought SDS (2x Short S&P 500) at 34.52 Friday. Will sell 1/2 for hopefully 5% profit. Have stop/loss at 34.52. Its contradictory, but willing to buy more in any large stock rally. (S&P rallies, this stock goes down)

Small remaining 1% positions in VCI & ESRX – Also considering selling into rally

Invetors411 main strategy remains wait for the McClellen Oscillator to fall below – 60 before going long.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Quantum Economic Shift

Both Jim J & JAB sent in a Simon Johnson & Peter Boone article on how bad the European/American situation-

Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialized countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.

Investors, still have what happened in 2008 fresh in their minds. Now the European debt crisis is upon us. It doesn’t take a behavioral economist to predict what will happen. Fear is twice as powerful as greed according to behavioral economics.

Casino capitalism advocates (Tea Party followers & others) are going to blame European socialism. They are in part right. Patronage, corruption and socialism that went too far exacerbated their debt problem. (see yesterday’s Investor’s411 and Fridays for additional warnings about what’s happening)

Bottom Line – Wolves have wormed their way into the henhouse of capitalism, the US congress, and the Obama administration. Debtor nations, with over leveraged, non transparent shadow financials are privatizing gains and socializing risk. The worst is yet to come.

Why trust these two? Because they have been right again and again. Here’s Johnson and Boone on May 8th questioning the stock market at its hight. Unfortunately as Johnson and Boone warn its not the wolves (shadow institutions and free market capitalists) who are going to pay – it you, me and now Europeans.

Our ship is sinking and the captain that steered it into an iceberg in broad daylight is getting rescued and given another ship.

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

US markets fell into the close as dollar soared. =  Bearish

Significantly Lighter Volume indicates things have settled down for a while.= Bullish

Markets still way oversold (see McClellan Oscillator) = Bullish

Dollar’s massive rise = Bearish

Fear over Europe and North Korea (war drums) has futures way way down.

Analysis – Investors411 has been too slow in exiting positions despite making repeated warnings and changing long term outlook to CAUTIOUSLY BEARISH

Mistake not to invest more in SDS as mentioned yesterday

The only silver lining to the up coming storm, is McClellan is oversold and when we get down below -135 we could have another oversold bounce. A 2 to 3% Dow fall in big volume could put us in -120 to -135 territory.

Significant Indexes

• McClellan Oscillator rose slightly to -89.94 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish. Repeat -Hate to say this, but once the trend broke this index has become less effective.
• US Dollar – Friday the dollar rose again to $86.36 Up a massive +1.16% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important .  = Bearish..

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

The whole positions section has been refurbished. Many thanks to one of you who helped and wants to be anonymous.

One of the cardinal rules of investing is don’t loose large amounts of $

Yesterday Sold

• 1/4 IMAX at 17.88
• 1/2 IMAX at 17.52
• 1/2 FAS at 24.45
• 1/2 of FAS at stop loss of 23.75
• 1/3 of ESRX at 101.25
• 2% position bought in SDS at 35.25

Remaining long positions 1% IMAX 2% VCI & 2% ESRX. 2% position in SDS is short.  While all these are out preforming major indexes – They haven’t fallen past their 200 DMA – I’ll be looking to cut back more long positions in any in rally today. Still very interested in owning these companies, but overall bearish trend is established.

New Stock/ETF List

Tomorrow our old “YOUR Stock List will return

Bottom Line - Now is NOT the time to think about going long but  to start to think about using SDS and similar ETF’s that short the market (2X short S&P 500) in a rally.

All the following will go up when stocks go down (TLT is exception but a flight to safe investments and generally moves opposite US stocks)  If we fall to a major correction (Dow now down 10% and falls to 20% – these ETF will make YOU $)

• EUO – Ultra short’s the Euro (ultra = 2x)
• EPV – Ultra short the big companies of Europe (new – very thinly traded)
• SDS – Ultra Short S&P 500
• QID - Ultra short QQQQ(tech stocks)
• TZA - 3X short small cap stocks
• TLT – 20 year treasury Bond fund

Investors411 will open a position EUO on first dip and add to ultra shorts on rally.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING