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SOTU

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George “Been Forgotten” Bush went over the top with his “your either with us or against us” proclamation.  A line he later regretted.

Remember, those of us who opposed the Iraq war were hated as un American and not Patriotic. Emotions ran high because of the terrible 911 tragedy, but now some healing  has occurred over a war that was a tragic mistake.

The heart of Obama’s speech

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We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right. Americans know it’s not right.

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Why are Romney’s Poll numbers Dropping?

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Romney provides the contrast to Obama SOTU and makes Bush’s “you’re either with us or against us”  milquetoast.

The following 20 second video is a perfect example of raging extremism. The kind of shouted hatred that twists the minds of so many of our fellow Americans into blind fear mongered emotionalist.  Romney -

“I’m going to Stuff it Down Obama’s Throat”

Click on photo for 20 second video

As far as timing goes Obama caught a huge break that his SOTU address came directly after Romney released just his 2012 tax returns (13.9% tax rate) that have opened a massive amount of new questions. (future editorials)

More on SOTU here and NYT here

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STOCKS

• From Last week – “We are in a low volume rally” In Paul’s Corner he points out the decrease in volume over the last five days. There have been lots of technicians who are calling for a pull back here. I tend to see 1350 1370 as the target on the S&P 500 before a significant retreat. (S&P now at 1314)

• Low volume rallies are a characteristic of Central Banks and friends manipulating stocks/bonds. They have become quite good at this and these rallies have tended to last.

• DAX (Germany) down this AM 0.67% at 7:00 AM EST. Italian bond’s two week long yield fall puts it well out of the 7% danger zone. But yields rose yesterday and this AM to  +6.23%. The Spanish and Italian bond reversal shows some economic stability returning to two of Europe’s largest economies and is bullish

• NFLX reports earnings after the bell. Watch comments section for details on possible combination Option Trade.

• Our government is simply overwhelmed by corporate lobbyist and money. For more Robert Reich

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• You can also go long AAPL and short AMZN

• Technically APPL’s chart is much better than AMZN. The later seems to be free fall.

• Exit strategy – Exit 1/2 the trade with  5+% gain. Let the rest ride.  5% loss is downside exit.  Larger profits if you are doing puts and calls.

Puts and calls are preferable because you risk a set amount of $.

Civil Rights Victory

Those that watched the Republican debate last night or read about it, know that a gay soldier who asked a question was booed  by the audience. Shameful. Gay rights is this generations civil rights issue like integration was ours back in the 60′s.

The repeal of “Don’t Ask Don’t Tell” was obviously a major step. Decade long poll numbers, especially among younger Americans, are increasing in support of gay rights. Excellent editorial from Huffington Post (Photo also from HP) by Aaron Belkin on “How We won.”

Ron Suskind

Disfunction Junction

Failure to Regulate Banking industry is coming back to haunt investors and again threaten the world economy. When you listen to shadow bank CEO cry and whine crocodile tears about too much regulation ask them to name one banker whose gone to jail over the Wall Street 2008 financial crisis (remember Madoff ran his own seperate ponzi scheme which he got away with for years)

Also give them Matt Taibbi research that shows how in bed the limited amount of investigators are with the industry.

Today

• Shadow Banks have their own special accounting system. The do not have to “mark to market” accounting.
• Shadow Banks operate on the unregulated $600 trillion dollar Credit Defaults Swaps Exchange. (no one knows who buys and sells)
• Shadow Banks are also invested in everything from home loans to Greek bonds to CDS’s on French Banks.

As an investor, do you want to invest in the shadows of an opaque banking system when all you have is some CEO saying – “We are not over leveraged?” No wonder Financials (XLF) are leading stocks lower.

Pulitzer Prize winner Ron Suskind has a new book, Confidence Men, that focuses on Obama’s failure to act on banking regulations.

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Investors411 Technical Forecasting Tools.

The McClellan Oscillator

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Reading The Tea Leaves

Short Term Outlook

days, week+

• Forecasting tools more Bullish than Neutral. This indicates risk on trading opportunity. If you can handle the risk the odds seem to be in your favor. Investors411 conservatively prefers to wait for a better situation – In this case a bigger dip that leads to more extreme reading on the MO & PCR.

• Best read of the tea leaves is HFT’s and pros can make more $$$ by breaking support levels and increasing panic. Also the lower the market goes the more pressure on Bernanke to do QE #3.

• Energy , Financials and Copper (proxy for global growth) all made significant new lows yesterday = Long Term Bearish.

• Yesterday’s lead editorial contained reasoning behind long term outlook – CAUTIOUSLY BEARISH.

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Current Positions

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

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

Yesterday Investors411, as stated, sold all positions. Now looking for more of a dip to buy.

Traders – We have a risk on opportunity that The Critic (see comment section of blog) took yesterday. Our two forecasting tools are with the bulls, but not yet at the more extreme levels where its even safer to buy.

Investors - Yesterday’s lead story is the Long Term Outlook for the Fall.

Positions

NLY - Annaly Capital Mgt. Ultra high dividend stock –a @14% dividend NLY was bought in mid May at 17.14

Sold at 17.70 for 3+ gain add to that a 3 to 4 % dividend check and total = almost +7%. Not bad when you consider the benchmark S&P 500 was down @-17% in the same period. Again Investors411 beats its benchmark S&P 500.

Mea Culpa – In retrospect this was a poor time to sell. NLY had done well through the meltdown. Unfortunately yesterday’s warning to sell covered all stocks. NLY is nearing the date you have to hold the stock to get the dividend. A period NLY usually rises. Will buy back on dip.

GLD – (Long Gold ETF) Bought at 167.05 - Sold 1/2 for 8% gain.

Sold remaining GLD at 167.05 for 0% gain. GLD hit the stop/loss order. Total for trade +4%

Looking to buy back into GLD – Gold fell yesterday because so many were liquidating positions from hedge funds and money managers, the managers sold GLD to cover those cash redemptions. This occurs often on major meltdown days.

Why gold? – Europe is going to try to join the USA in zero% interest rates sometime down the road and Bernanke will probably be forced to use printing press to help Europe and USA get out of economic problems. This will again be bullish for gold. So again - buy the dip.

Investors411 Portfolio gained @+11% while the S&P lost @-17%

Disclaimer - I buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

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Long Term Outlook

(for US stocks only – not our economy)

CAUTIOUSLY BEARISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Questions of the Day –

Can this man and his fellow Fed Governors keep the world out of depression/recession and  more worldwide stock markets falling to the bears – pictured below???

Fed meeting concludes this afternoon with an announcement.

How long can the Fed keep the Kabuki Dance going with a shadow unregulated financial system at its core???

It’s hard to answer these questions in the long term, but in the short term US equities have run up against technical resistance (this summers high) and one important predictor of worldwide economic growth [copper prices] is heading south big time.

Our two forecasting tools (MO & PCR) are still in Neutral. So best read of the tea leaves is HFT’s, that dominate trading, have no bias.

However, the drop in copper signals further slowdown in worldwide growth.  Advantage Bears.

An Endorsement

“The stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression.” – Frank Rich - New Yorker magazine - “Obama’s Original Sin”

The single most important and vocal person in the white house over the last three years who fought for this accountability is Elizabeth Warren. Phenomenal editorial Warren vs. The Banks

Warren is the ONLY candidate out there that this web site endorses for political office.

Another Hero

Dylan Ratigan

• 10 years financial reporter/editor Bloomberg LP
• 5 years with #1 financial network
• Creator and host of CNBC’s “Fast Money.”
• Co host “Closing Bell.”

He left that high paying job to fight for what he believes in – accountability. His new show is on MSNBC (4:00 to 5:00 EST)  Here’s a LINK to an August 9th on air Meltdown over the Meltdown.  The emotion is real, but its what he says that matters.

You have to love the title of his upcoming book – “Greedy Bastards.” Radio Free Dylan often carries some outstanding editorials like this one “Why No Handcuffs?” Some major points Dylan often hammer’s home and Investors411 shares.

• The $600 trillion swaps market is still an unregulated, hidden in shadows exchange. – It is the Credit Default Swaps that Warren Buffett termed financial WMD’s. The reason so many investment institutions were vulnerable/over leveraged in 2008

• How to you build a viable economic system when the backbone financial systems are hidden in the shadows and too big to fail?

• His four solutions to fixing the system LINK - Another LINK

[For Heroes Part 1 see November 10th Investors411]

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Investors411 Technical Forecasting Tools.

• Investors411 uses the PCR to measure the path of least resistance for HFT dominated stock market. HFT’s love leverage and if there are more puts then calls, there is simply a supply glut on one side that forces a move to the other. See above.

The McClellan Oscillator

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Reading The Tea Leaves

HFT pushed stocks 140 points higher than they closed at. What happened? – The algorithms HFT’s use all clicked in and recognized a rapid overbought position. If we had ended the day 140 points higher our MO would have been near +50 (many other indexes that measure oversold/overbought would have shown the same) They pumped the market higher and then dumped into the close and took their nano second and multi second trade profits.

HFT’s are going to pull your chain on any event/rumor as long as they exist - Get used to it - HFT’s are here to stay.

Today, we have bullish/Neutral PCR, and an almost somewhat oversold MO = Neutral. So we’re NEUTRAL right now with just a touch of bullish mixed in.

Translation - US Stocks have no major bias higher or lower. Just a wee bit of the bull. This doesn’t mean HFT’s can not do a mega roller coaster on stocks, especially if there is meaningful fundamentals.

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Paul’s Corner

Fortes Fortuna Adjuvant - this can be translated as “fortune favors the strong.”

The title borrowed from Dave Steckler’s Blog last evening and we will look at the semis by using Relative Strength to determine the best semi.

Before we get into the semis here is a comment from Dave’s blog last evening which explained the jump in the market Wednesday:

The S&P 500 Index gained 1.35% and the Nasdaq Composite rose 1.60%.  The rally came on hopes for progress in resolving the Greek debt crisis.  Oil and precious metals prices fell and the U.S. dollar retreated from its recent gains. It’s always nice to see a 100+ point up day but keep in mind the Dow was up 280 points a half-hour before the close.

So while a few YSL 5 stocks had a great day, let’s not hold our breath too long hoping this is the start of the big long awaited rally.

Dave Stecklers Blog is always worth reading and his latest blog has  a great discussion on Relative Strength and how it’s used to research the market and in this issue he also looks at the semis.

Dave Stecklers Blog  LINK

As we found out several days ago, the semis are starting to draw attention. YSL 4 member SPRD appeared several times last week on the “Best of Woodard and Brown” screen on HGSI. The semi group index jumped to the top of the HGSI Industry Group sort on Monday Sept 12.

Industry Group Sort  LINK

There are 112 semis in the Semiconductor Industry Group which is too many to follow. I made up a user group of the top 10 stocks in the group,  the reason these were the first out of the “gate” so at the moment we can assume these are the stocks to follow.

AMD, ARMH, CAVM, LLTC, MXIM, MCHP, NVDA, SMTC, SPRD, TXN

To determine the strongest stocks within this group, we used the “Ian Slow” Relative Strength chart on HGSI. It measures the 6 month RS  with the most emphasis on the closet 3 months. Here is the RS chart of these 10 stocks based on the Wednesday close Sept 14.

Relative Strength Chart LINK

As you can see SPRD is top dog with ARMH and MXIM not far behind. Briefly looking at the charts, these three look ok. SPRD has had a nice run and will probably give us a few buy the dip opportunities.

Some of  you may be wondering why Dave and I are posting on Semis and Relative Strength at the same time. Do I read Dave’s blog for my ideas? No, but I will admit he has some brilliant discussion at times and worth ripping off. Dave and I both use HGSI for our research and of late HGSI has shown the semis are on the move. HGSI  has a valuable Relative Strength function that let’s you dig out what’s going on and we both see a change in the semis worth investigating.

But but but, Cramer just came out suggesting the semis, so why do “I” need HGSI? I just need to follow Cramer! Well that Mad Money man does have some interesting ideas and he surely follows the market and presents it in an interesting way. But do you have the time to sit down and watch each evening to catch the latest trend? Do you even get home at 6 PM in time to see each show?   Using HGSI each evening one can fully evaluate the market moves of the day, see what’s coming on or going away and come up with a list of stocks worth spending your kids inheritance on all in a matter of minutes. So with HGSI you get time management and great stock research.

If you didn’t see it here is a link to Cramer’s video on semis, it‘s quite good. See which semis he recommends.

Cramers semi video link: LINK

So do we jump into the semis?  Your guess is as good as mine, probably yes, but when considering the PIIGS problem across the pond?

The usual worthless disclaimer applies.  You buy any of these dogs and lose your house don’t whine to me, whine to Barr.

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Current Positions

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

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

Our forecasting tool are Neutral (see above) - You rather enter oversold markets and exit overbought markets.

Positions

NLY - Annaly Capital Mgt. Ultra high dividend stock –a @14% dividend

GLD – (Long Gold ETF) Bought at 167.05 - Sold 1/2 for 180.4 Current price 177.21. Stop/sell order on GLD at 167.05. Now looking to buy small dip in price.

Disclaimer - I buy everything in the hypothetical Investors411 portfolio. If stock is mentioned and I own it you will know.

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Long Term Outlook

(for US stocks only – not our economy)

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day(s)

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Danger Will Robinson

Danger Danger!

Its time to bring out the old robot from the old Lost in Space TV series who would shout with all his bells and whistles going off that when was approaching danger - Danger Will Robinson Danger Danger. This is the highest alarm Investors 411 has of a possible impending meltdown

Stocks and more specifically our over leveraged, under regulated, “free market” shadow banking system is in big trouble.

The problem came out of Europe as the ECB (central bank) made a loan of  $500 million to one of its members. After markets closed our NY Fed made a loan of $200 million to a Swiss bank. Obviously some major banks in Europe are having insovlency problems and investors panic first and ask questions later.

Its a globalized banking world and everything is interconnected and hidden in the shadows. Remember after Lehmann went belly up so did Iceland’s entire financial system. Many US banks are deep into European debt.

The problem is the books are so shady, the regulators so few and the problems so large that PANIC is starting to unfold.  This is a libertarian and often alarmist web site, but I think its facts are correct. LINK Other stories CNBC LINK & CNBC LINK & WSJ LINK

Yesterday Investors warned that the German markets were down -3.47% at 8:45 EST. Today they are down another -3,68% at 7:00 AM this morning. German marks down  -25% this month. The US market futures down

Cramer and Hobbs from CNBC argue if this is like Lehmann’s

The major support level for the benchmark S&P 500 is 1101 It’s at 1125 in Futures trading at 7:20 EST. Down from 1141 closing. If 1100 falls you could see HFT’s accelerate the panic.

The one ray of sunshine is if the 1100 support level this holds, its bullish. But whose going to want to hold bank stocks over the weekend if the European banks are down another 5 to 10 % today?

Protect YOUR money – Downside risk is clearly much larger than any upside gain.

Barr

PS Just for fun, and we need a distraction today  - Almost 15 million viewer have watched this video about The Crazy Nastyass Honey Badgers by Randell

PPS – sending this out early as a head up.

When people make mistakes and do NOT pay for those mistakes, then keep profiting from those mistakes, they tend to make the same mistakes only bigger and bigger and bigger

The US is digging an ever deeper economic hole.

To compensate for the loss of revenue caused by globalization (Jobs and profits going abroad) greed and an over extended military empire  we created an over leveraged, under regulated, shadow banking system of too big to fail banks.  This resulted in the 2008 meltdown, the start of the Great Recession and the loss of trillions of dollars of revenue.

Virtually nothing has been done to punish any banksters or, even more important, reform our financial industry. Without a competent regulated banking system real long term economic growth is impossible.

The problem keeps getting bigger and bigger and bigger

Wisconsin

Wisconsin vote LINK. The Democrats won 2 of the 6 recall elections of Republicans yesterday. Unfortunately they fell one win shy of winning a majority in the Wisconsin legislature

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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

Index	Percentage	Volume
Dow	+3.98%	big
NASDQ	+5.29%	big
S&P 500	+4.74%	big
Russell 2000	+6.94%	-

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• Again a repeat – What stocks need is a fundamental catalyst, to give potential investors hope. The Fed is the strongest entity out there to halt the slide. The Fed gave us a promise of ultra low interest rates until mid 2013 (two years) This AM GS sees Fed resuming QE #3 The outline of the 15+% summer meltdown was forecasted on May 20th

• CAUTION - Even more mom and pop investors have left the markets in the latest meltdown. High Frequency Traders rule even more than before. This is what is creating the massive interday volatility (especially in options). Don’t be fooled into thinking these are normal investors getting back into the markets – its HFT’s taking a an ever bigger and bigger share of US equity trading.

• The McClellan Oscillator (MO) From yesterday – chart fell to to -142.58 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). This is the lowest the MO has ever been. = Bullish Yesterday the MO rose to -76.99 This is now an oversold market. Technically, we are not at record oversold levels, but more normal oversold levels Not as Bullish, but still = Bullish

• Reading The Tea Leaves – Best read of the Tea Leaves is for some more short covering early. This should send oversold  markets higher. There are a mountain of short positions still in place. Yesterday US equities had an enormous range. I’m sure the HFT’s will again pump and dump equities adding to volatility.

Bottom Line - When we get out of oversold territory (See MO) we will need another solid fundamental factor to move stocks in the short term. The low interest rates till mid 2013 can only go so far.

More often than not lows are retested before a rally.

Longer Term Outlook

weeks, month, months

• Repeat - May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this.

• Long Term Outlook Listed Below.

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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 – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide. Up  an irrational +9% yesterday along with AGNC the other high dividend stock listed in POSITIONS Section of blog. Many of you commented on this yesterday. You nailed the reasons for the advance, but remember HFT added to the gains.

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF) Obviously a mistake to sell and take profits. Like a millions of other people who see worldwide economic problems ahead – waiting to buy another dip.

Disclaimer - Personally I own  a group of dividend stocks including NLY. I have placed puts on all of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some SDS & TZA (ETF’s that double and triple short the market) as hedges.

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Long Term Outlook (for US Economy)

BEARISH

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

• What was the world’s largest bank sank 20.32% yesterday. The financial sector 8.95% and the stock market had a top ten bad day. Logic looks for an oversold bounce in stocks today. But you have to wonder if its going to be a dead cat bounce. Remember we NEVER fixed the problem in the shadow banking sector and now banks are even way bigger than before (too big to fail)

• Standard and Poor downgraded the USA’s bond rating. Investors bought both US bonds and the dollar (see below) in defiance of the downgrade.

• The stock market went into meltdown for two reasons.  High Frequency Traders (see below) and the realization that austerity measures (contracting the money supply endorsed by the right wing) instead of producing more jobs would hurt the economy and stocks.

• We already knew this but its now public information. Japan’s government withheld information about the nuclear disaster, putting refugees in peril.

• Syria continues a brutal crackdown on democracy demonstrators. It’s been condemned by the Arab League, USA and many others. Latest

• Riots in London, Europe having worse debt problems than the USA. So not a pretty picture out there.

Bottom Line – The USA is going to to use austerity instead of trying to grow out way out of economic crisis. Like Herbert Hoover we are going to leave the supposed “free markets” untouched.  The fears of the end result has been demonstrated by the fall in stock prices since the manufactured budget crisis passed.

NB - This was sent in by RF and its fun Aug. 8th Borowitz Report

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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

Index	Percentage	Volume
Dow	-5.55%	up
NASDQ	-6.90%	up
S&P 500	-6.66%	up
Russell 2000	-8.91%	-

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• What stocks need is a fundamental catalyst, to give potential investors hope. The Fed is the strongest entity out there to halt the slide. But something like QE#3 may soon become too little too late.

• This market is dominated by High Frequency Traders, that are pumping and dumping stocks in micro seconds. Jim Cramer opened his CNBC show with commentary on this. Here’s a video link

Cramer like anyone who is a traditional value and/or technical investor  realizes that the game is now rigged against you by HFT’s. – Why play when the deck is stacked.

• There is nothing you can do about this because the government for years  has blessed this as “free market” trading.  It has totally shattered real investing. It completely obliterates the kind of analysis that Cramer and technicians use.

• How does your understaffed, under paid government do anything about HFT’s? All the far right and many Democrats want to do is cut all regulations and regulators.

• For Traders - Fast Money (CNBC – 5 to 6 PM EST) show was listing examples of trades that happened yesterday where stocks dropped up to 10% in micro seconds. Then recovered in microseconds. This blows out a stop/sell order and makes a mockery of day and swing trading.

• The McClellan Oscillator (MO) chart fell to to -142.58 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). This is the lowest the MO has ever been. = Bullish

• $USD The Dollar rose again +0.36% yesterday (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) Technically we have moved higher for two weeks. Absolutely no impact from the S&P downgrade on the dollar. Overall = Neutral

• $TNX – The benchmark 10 year treasury bond actually went down in yield -8.59%

• Reading The Tea Leaves - Neither the massive bond or currency markets reacted negatively to the S&P downgrade. In fact they moved in the opposite direction as people bought both bonds and the dollar. Logic would say that the algorithms that the HFT’s use would recognize massively oversold markets and rally today. But what happens next is up to the HFT’s because most of what used to be your typical investors have left the building.

Today – Oversold markets bounce back, but is it another dead cat?

• Never Forget its is High Frequency Traders (This group is made up of high net worth individuals and entities) that now account for the vast majority of trading and manipulate trading

Longer Term Outlook

weeks, month, months

• Repeat - May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this.

• Long Term Outlook Listed Below.

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Paul’s Corner

Well well well, to sum up this market I give you the latest E-Trade ad:

LINK:

Taking a look at Ian Woodward’s newest tool, %B for market evaluation, we find a very over sold market. Just how bad has the market dropped? Take a look at where the stocks in the S&P 1500 are in relation to their Bollinger Band:

LINK:

The bar graph shows  92% of the stocks in the S&P 1500 are below the bottom of their Bollinger Band and the “Pie Chart” on the right shows 100% of the stocks are below the middle of their Bollinger Band. That’s really over sold and shows you how much damage has been done.  See Ian’s latest blog for %B discussion:

LINK:

The HGSI software is probably the best software  searching and ranking stocks.  You can create your own searches but if you are lazy it comes with searches from Charles Kirkpatrick,  Larry Conners,   Morales & Karcher (Pocket Pivots) and Woodward and Brown.

Woodward and Brown has one search that I check every evening and gives you an instant snap shot of the day, it’s called “Best of Woodward and Brown”. This search gives you the top 10 stocks found on all of the Woodward and Brown searches from the day.

Here are the top stocks found on a  nasty day:  AKRX, BVN, EFSC, EXLS, MFN, NGD, QCOR, GOLD, RIC, AUY As you can see it was a flight to gold and a few Parma thrown in.

At 7 AM this morning we find futures sharply up so it appears the carnage is over….sure…..I’ll wait a few days before I venture back out onto the dance floor.

So what’s the market going to do today, futures are up, is this a new morning in America or just another lousy craft show? 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 – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide.

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF) Obviously a mistake to sell and take profits. Every thing is way too volatile to buy now

Disclaimer - Personally I own  a group of dividend stocks including NLY. I have placed puts on all of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some SDS & TZA (ETF’s that double and triple short the market) as hedges.

Expect a bounce higher today

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Long Term Outlook (for US Economy)

BEARISH

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Rolling Stone Photo – Wall Street Wives

If you haven’t taken your blood pressure medication this AM – Please take an extra dose before reading below.

Wall Street Wives – Matt Taibbi from the Rolling Stone has come up with another jaw dropper. Remember Geithner and Bernanke’s Wall Street Bailout. Seems that the “wives of   JPMorgan bigwigs walked away with $220 million dollars.” Opening line of editorial – “Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy“

The Closing Government Soap Opera. – Remember all the media attention of the $38 billion the Republicans were supposedly cutting from the budget. Two days ago the press went bananas when they found out it was only $14 billion. Yesterday the non partisan CBO put the actual figure at $353 million. Yes, that’s million with an M.

Crony Capitalism - It’s simply not fair to put the blame on the real housewives of of Wall Street or JPM. Now that the Fed was forced to open its books we find out the real husbands at Goldman Sachs got (See Matt Taibbi’s piece) $800 billion from the Fed. Yes, that’s billion with a B.

Get out of Jail Free - The US Treasury Department actually used hash language toward shadow bankers in a sternly worded proclamation Remember the phony foreclosures, robocalls etc. reveled months ago. Billions evaporated thousands lost their homes. Bankers got a tender tap in their wrists. The NYT has finally caught on and its headline story is on No one from Wall Street goes to Jail

GE is to return $3.2 billion tax rebates!? The whole AP story turned out to be a hoax. YOU pay taxes, GE doesn’t. – Bummer

The Prestigious Pinocchio Award. The Japanese government has been less than than honest about the nuclear reactor situation. FYI – TEPCO has just confirmed reactor 4 is open air fussion. YANKEE BOB is back in the comments section (scroll down) with an editorial. Here’s a sample – “the gamble with public safety to use Nuclear energy to boil water has failed.”

Maybe we’re more than just a morsal for Wall Street sharks. EW in the comments sections saw Obama’s deficit speech as hopeful – Obama quotes “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires,” …. “There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.”

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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

Today a format change to focus more time on three investments for the 2nd quarter. But first here’s market news

• Fed’s ZIRP (Zero Interest Rate Policy) & QE 2 is sustaining stock rally and forces anyone who wants a high yield is forces into higher risk stocks,  or junk bonds.
• Yesterday’s action was no more than a pause (slight uptick) and we’re close, but haven’t reached oversold levels or a buy the dip level yet
• Paul often makes closing remarks in the comments section of the blog. From yesterday – “If any of you folks like to study the charts, you’ll see on many of the major indicies a clear “double top’ and that often signals coming hell fire and brimstone’s”

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Three Top Investment Areas

Rare Earth Metals - REMX (link to chart)

REMX is the ETF that tracks the major rare earth metal companies. Most data below is from Van Eck Global owner of REMX ETF.

This is a simple supply/demand story. The demand outstrips the supply. China currently provides 97% of rare earth metal production. InDec. of 2010 China announced it would cut exports of rare earth metals 35% because to keep some for their own use. REMX has only 17% exposure to china. It takes a long time to mine these metals so many of the companies REMX invest in have yet to become major producers. Obviously the companies/mines outside China are ramping up production as fast as possible.

Some applications for Rare earth metals include hybrid cars,steel alloys, wind turbines, flat screen TV’s, jet engines & cell phones. So you can understand the demand.

Downside risk – If we fall into a second recession or depression REMX will suffer. However it should outperform because of the supply/demand issue.

Gold - GLD & DGP (2x or ultra long gold)(both ticker symbols are links to charts)

GLD & DGP (2X) are the ETF’s that track gold prices. Obviously DGP carries twice the risk/reward.

Arguably the #1 source for gold information is GFMS Reuters last week featured their supply/demand analysis on both gold and silver. The fundamentals are relevant, but we all know, gold prices move higher on fear of the future.

I follow Jesse’s Cafe Americain on both gold and silver. The technical analysis and inside information is superb. In the future Investors411 will give updates from this site.

Silver – SLV & AGQ (2x silver) (both ticker symbols are links to charts)

SLV & AGQ are the ETF’s that track silver prices. Obviously AGQ carries twice the risk/reward.

Silver has more industrial uses. Links to important information on silver above.

If you are considering investing in this area or just want a good laugh you have to watch one of the two bears videos on silver. “You want me to buy more silver? Holy s–t man I’m going to s–t my pants.”

Paul would be a great source on individual gold, silver and rare earth companies if you are interested ask. MCP is the one company that I like in rare earth field. We almost put this on YOUR Stock List #4, but decided REMX would cover the sector.

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Positions

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.”

” it’s difficult to get a man to understand something when his salary [or portfolio or election] depends on his not understanding it.“ Upton Sinclair

Some Examples

• Shadow Banks – The largest financial meltdown in history in 2008 and more fraud revealed over phony mortgage documents – No one goes to Jail. No massive amounts of money go to fund regulators, no return to the rules that prevented the crisis. All the politicians from Obama on down look the other way because it is the Wall Street money that gets them elected.

• The Poor  The Children and The Elderly – Wall Street shows record profits and bonuses. GE and other corporate giants pay NO taxes. Taxes for the wealthiest in the USA have been slashed for decades and off shore accounts abound. Our Central Bank is flooding its members shadow institutions with money.  Who will Republican politicians sacrifice for financial gain? Not those who fund their elections.

• Climate Change – “So the joke begins like this: An economist, a lawyer and a professor of marketing walk into a room. What’s the punch line? They were three of the five “expert witnesses” Republicans called for last week’s Congressional hearing on climate science.” One scientist was funded by the billionaire industrialist Koch Brothers  (they also fund the Tea Party) but he reversed his position (Paul Krugman) and is now an outcast.

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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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Index	Percentage	Volume
Dow	+0.46%	down
NASDQ	+0.31%	up
S&P 500	+0.50%	flat
Russell 2000	+0.38%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• Yawn - Another low volume rally. Fed liquidity has a muzzle muzzle on the mouths of bears.
• Jobs numbers have improved dramatically -700,000 when Obama took office to +216,000 last month
• Now Bulls have two strong fundamentals – Jobs are recovering and Fed’s liquidity injections.-
• A jobs good number Friday started a rally that got hurt by rising oil prices (Libya and upcoming NIgeria elections) and falling APPL stock. So gains were tempered.
• New quarter and attention will turn to earnings.
• Emerging Markets are red hot right now and exploding higher – Rally leaders.
• Monday’s are often the best day of week for stocks.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar saw a huge rally collapse and ended  a wee bit lower -0.03. Chart pattern showing volatility/erratic so short term hard to call, but longer term bearish  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to +52.29. Over past three months The MO has had problems getting over +30. This is, therefore, the highest the MO has been since early September 2010 = Bearish

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Reading The Tea Leaves

• Technically, the MO is screaming oversold.
• Fundamentally Japan keeps getting worse ( more tons of radioactive water dumped into ocean -11500 tons today). Libya is a stalemate and looking like a quagmire. Great if your a weapons manufacturer, but bad if your the taxpayer funding them or worse if you’re getting killed.
• Europe still titters on the brink with the many PIIGS near default.
• Housing figures are deteriorating as is consumer confidence
• Our financial system is still corrupt and protected by the vast majority of politicians form both parties. – No one goes to jail
• Our markets are still manipulated by our Central Bank – by keeping dollar low, zero % interest rates, buying federal debt, and adding liquidity.

All the above would absolutely toast any other stock market. However we bubblisciously move higher.

When will the bubble pop?

The dollar is the key metric to watch. What’s holding the dollar up is that the other major currencies are also so bad – Europe and Japan.

What to watch today - Market movers – UUP still has most influential, unless others make some huge move.

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya not good.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows = Bearish
• Japan Rector Developments – This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting over extended.

Bottom Line – Fighting the Fed is a loosing strategy. They Rule.

Stocks are significantly oversold, but there are many in the wings waiting to buy the oversold dip. Now is not the time to buy most stocks wait for the dip

June 30th is the day POMO stops and this could pop the bubble. But, until then dramatic rises in energy or a fall in the dollar are the critical warning signs. Remember, A slowly falling dollar is good in the short term for stocks. A huge fall show lack of confidence in the USA.

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Positions

ETF’s currently Under Consideration.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. -

REMX (Rare Earth ETF) - Really believe this a good long term holding.  A risk, but, this area because of limited supply and big demand is going to outperform almost all other sectors. A buy.

DGP – (ETF is 2X gold) also SLV (silver). Breakout on worries of future inflation – Gold is moving inversely to the dollar - I’ve jaw boned this for way too long and waited for the right dip, but missed it.  This is a credible long term asset to have. I’d buy any dip. I do own both in other accounts.

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals -

RJA (Agriculture commodities Index)An ETN, not an ETF.

UWM (2x small cap stocks) TNA (3X small cap stocks)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.”