” 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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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.”

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The Winter Democracy Bloomed

The desire for self government, jobs and bread has exploded across the Arab world. In over a dozen countries people are demonstrating for basic human rights. Perhaps the biggest looser in all of this is Islamic fundamentalism and al Qaeda, because the cries of the people are not for religious fundamentalism, but for the common human dignity that we all share. Demonstrators are putting their lives on the line for democracy.

Libya and Iraq are the latest to have demonstrations. Today the NYT focuses on American reaction to Egypt, Bahrain and Iran’s demonstrations

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Shadow Banks Rule

The Chamber of Commerce and Shadow Banks were caught with their hands in the cookie jar,  just as a congressional committee was to convene to amend rules on “casino capitalism.”  How ironic it is that over a 1000 bankers were issued jail terms in the Savings and Loans crisis decades ago and NONE have over the 2008 meltdown.  That’s how powerful the shadows and their lobbyists have become.

Andrew Ross Sorkin from NYT story and MIT prof Simon Johnson. – Derivatives Industry Report Collapses.

But that’s just for openers – The Chamber of Commerce & their shadow allies are not beyond investigating the families of critics and printing false accusations. If you support Wikileaks or speak out against The Chamber, BAC or those who want to run capitalism in the shadows this could happen to you. Glenn Greenwald reports.

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 Analysis

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

Nothing’s change much in overall outlook since Monday. Short term because yesterday’s moderate loss the McClellan Index is at a  more buyable level of  +6.97. But not yet near levels bulls would like. The bubble-icious stock market continues.

So today were going to focus on technical analysis. I call technical analysis looking at the pretty pictures/charts of  a stock’s price and volume and being able to make a forecast of future directions from those charts.

Stockcharts.com, the best free site on technical analysis on the web has a school/tutorial that will help you learn more about it.

Technical analysis works best when the markets, the sector and then the individual stock are in alignment or moving in the same direction.  The sum is greater than the parts, but in most cases it the individual stocks that matters most.

So here’s a list compiled by Paul R who has oodles of experience in technical analysis and uses a powerful HSGI program to augment his technical analysis skills.

Below is Your Stock List #3 and Paul’s recommendations. Most importantly use this a a learning  tool it technical analysis. He published it in the comments section of the blog a day ago, so its a bit dated and I’m sure he wants you to read his mea culpa. You can look up each chart pattern by inserting appropriate ticker symbol at Stockcharts.com. (link above) - His comments in Green and technical analysis below.

“In no way am I recommending a buy or sell of any of these stocks. These comments are for education only. (Understand?)

BIDU – getting extended, a hold and not a buy at the moment.

NFLX – getting extended, a hold and not a buy at the moment.

BEXP – went through a buy the dip correction in late January. Broken out, buy if it dips.

JNPR – leader in it’s group, broken out from a strong base, extended now, buy if it dips.

SKWS - Good chart, extended, buy the future dip.

KSU - Good chart, extended, buy the future dip.

DECK – Gone through a correction as has it’s group, buy the future dip.

PCLN - good chart, buy any dip

COH – Gone through a correction as has it’s group, buy the future dip

IMAX – basing, buy any dip if you want as long as if it’s above the 50.

SOHU – broken out, way too extended for my stomach. Not a good chart, it needs to tighten up.

IVN – basing, buy at any time at current chart position

ALV – basing along with it’s group at the moment. NOT buyable at the moment.

SAM – basing, sitting on the 50, buyable at any time

SPRD – Good chart, wee bit extended, wait until it touches the 17 dma again.

FFIV – NOT buyable at the moment, chart needs some serious work.

These observations are just that, observations. My observations are usually worthless. If you buy any of these dogs…blah blah blah. Did I mention these comments are for education only? Pay attention for crying out loud!”

An additional comment from Paul on how to Buy the Dip

Always watch the comments section for different ideas and comments on stocks, economics, trends and politics.

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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.” (YSL#4 is under construction.)

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Obama’s Speech

Barak Obama’s major addresses are almost always grand slams.

Unfortunately, actions speak louder than words.

Speaking about the 9 year old who died in the Arizona terrorist massacre – “I Want America To Be As Good As She Thought It Would Be.” This is a link to both speech and comments on Huffington Post.

The Maestro

The following is a description of an interview. It’s from the Atlantic magazine, author - CHRYSTIA FREELAND

Title -The Rise of The New Global Elite

Here’s an excerpt.

[He]…was interviewing a guest who made a forceful case that the U.S. economy had become “very distorted.” In the wake of the recession, this guest explained, high-income individuals, large banks, and major corporations had experienced a “significant recovery”; the rest of the economy, by contrast—including small businesses and “a very significant amount of the labor force”—was stuck and still struggling. What we were seeing, he argued, was not a single economy at all, but rather “fundamentally two separate types of economy,” increasingly distinct and divergent…

What made the argument striking in this instance was that it was being offered by none other than the former five-term Federal Reserve Chairman Alan Greenspan: iconic libertarian, preeminent defender of the free market, and (at least until recently) the nation’s foremost devotee of Ayn Rand. When the high priest of capitalism himself is declaring the growth in economic inequality a national crisis, something has gone very, very wrong.”

(highlights mine)

Just Like President Eisenhower who had spent his who life in the military and warned in his farewell address of the rise of the military industrial complex. Alan Greenspan, THE MAESTRO, has, so to speak, found religion or the truth.

The New Global Elite is a long but worthwhile editorial. Investors411 will bring you more on how globalization and politics has created

a worldwide plutocracy of privileged wealthy elites who have far more in common with each other than any country.

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Check out a new Yankee Bob’s always passionate editorial, the stock advise and other remarks in the the comments section of blog.

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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

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

For longer term investors - A more complete explanation of why US stocks are moving higher and will continue to do  lead by the opaque shadow banking sector in coming soon.

If you’ve been paying attention it is a compilation of past Investors411 of the lat few months. Greater detail in following updates.

Essentially the pattern is the same as when Obama first took office. Low interest rates combined with quantitative easing (Fed buys bonds from opaque shadow banks that have few rules/regulations governing them) This trillion+ in liquidity drives stocks higher. Add to this that many emerging markets are still economically growing at 3 to 5 times the rate of the USA. This is both where the jobs are and the new consumers for products are being created.

This market manipulation has another 6 months left of quantitative easing and if housing and jobs do not recover it will probably be extended.

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Reading The Tea Leaves

Mea Culpa – I was wrong about the BDI. (See comments section of blog on Tuesday) It seems an oversupply of ships being built is what’s causing its fall.  When you erase this factor, fundamentals are more bullish. The high price of commodities shows the rapid expansion of emerging markets and export dominated countries. Bottom Line –  the BDI has been dropped as a forecasting tool.

The MO looks like its back on its way to establish a higher high (see above) Momentum with bulls.

What to watch

AAPL -Today will mark the 9th day since Apple turned higher. Over the last couple months Investors411 introduced the DeMark 9 day timing as a tool to use when stocks get over extended.  Another way to look at this is to see how far AAPL is above its 50 day moving average on chart – Far, but not as far as in the past. Our stock market general if it has a good day today is probably in for at least short term consolidation.

UUP – (tracking ETF for Dollar) Gapped lower and continued to fall throughout day within consolidation pattern. Dollar down = stocks higher

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Positions

• UWM – (2x small cap stocks) UWM still outperforming other US indexes. (I have a 4% trailing stop loss on 1/2 this position)
• REMX – (rare earth metals) Hopefully a long term holding was bought  again at 23.55. Tuesday (see comments section of blog)

Under consideration

UCO -(2x oil prices) Very erratic, waiting till correction settles in

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

EWZ (Brazil) & LBJ ( 3x Latin America – majority Brazil) Obviously the later is more risky because its leveraged 3X. Waiting for larger pull back on both.

UYG (ETF that does 2x Dow financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions. Those with no ethic problems with shadow banks could consider a buy.

DGP – Will buy back into this 2x gold ETF on dip. Consolidating at support level. Those that can tolerate the risk – now’s the time to buy.

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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 for lists of potential stocks & ETF’s including “YOUR Stock List.” (YSL#3)

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Liar Liar Pants on Fire

The #1 Political Lie of the Year

From PolitiFacts, an organization that that takes shots at ALL politicians and groups, the #1 lie of the year. A drum role please…

The LIE

“A Government Takeover of Health Care”

LINK to Story Once the Tea Party, Fox News, Business lobbyists and right wing political bomb throwers got finished destroying any rational debate on Health Care THE LIE that it was a government takeover still being used today won out over other political fabrications.

What really happened was a “free market” (giveaway to the big insurance companies) takeover instead of the compromise public option -The approach favored by almost all other Western Democracies.  But who could tell because American media focus is on who screams the loudest.

In American Society if you REPEAT THE LIE ENOUGH TIMES IT BECOMES THE TRUTH.

Does Conrgess Serve You or the Banks?

Quote from incoming Republican House Financial Services Committee chair and Tea Party favorite Spencer Bachus

“in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

I’m not joking this is a real quote - LINK here for full story. You may not like him, but at least former chair Democrat Barney Frank often stood up for taxpayers and wasn’t 100% in the back pocket of Shadow Banks.

Shadow Banking Bonuses

Irony is this AM CNBC’s (By far the largest stock market cheerleading outlet) is headlining that Bankers in Europe are having their bonuses cut. Now that Republican/Tea Party people are coming to power how about those Wall Street shadow banks bonus and compensation packages for the six biggest shadow banks. Care to guess how much they get?

Here’s the SEIU (a labor union) on what the Shadow bankers make.

We are about to endure a right wing feeding freenzy over the next few years of asking cops, firefighters, teachers, municipal workers, government employees to cut, freeze (freeze part done by Obama with Federal workers) their salaries and/or loose their jobs.  How about considering the shadow bankers????

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

Technicals, Fundamentals & Analysis

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

• Significantly higher volume Friday due to option’s expiration. Major indexes still somewhat over extended
• Hitting a rabid hornets nest with a stick – South Korea conducts live amo exercises near disputed Island. Latest – Surprise – N Korea backs down
• CNBC lead story Bankers in Europe get bonuses cut
• The week ahead & From Jeff Miller ‘Tis the Season for Investors to Choose What to Worry About Next Year”
• Bloomberg/Businessweek on Challenges ahead for Emerging Markets

Reading The Tea Leaves -

Friday’s blog made a clear Bulls and bears case. The outlook for the bulls seemed stronger till the end of the year. Outside events like a North vs. South Korea escalation would negatively impact stocks.

• The BDI has fallen 700 points in the last two months. Its at 1999 and has a major support at around 1700. That’s the line in the sand bad news support level. If the BDI falls below this big bad bears should rile. Even the 700 point drop is significant. In late spring/early summer the benchmark S&P fell about 10%. Correspondingly the BDI fell a huge 2400 points to 1700. Therefore relatively a 700 point drop is not that bad, but it happening while stocks are RISING. This is a divergence to keep an eye on.
• The dollar is also pushing out to the upside of a short consolidation range. Another bearish grow that’s worth watching.

Markets obviously change due to outside events. So while the case for the bulls remains stronger the case for the bear is growing.

Positions

• EEM - (Emerging Markets ETF) -1/2 positions sold
• #1 UWM - (2x small cap stocks ETF) -
• #2 UWM
• EUO - (double short the EURO currency) Bought Friday at 20.76

UWM - Note that even though major US indexes makes small gains that the Russell 2000 (small caps stocks) usually does better than its other three sisters (see box above) UWM is an ETF that does 2x what small caps do.

EEM – Even though we are still in the green with this this ETF it is under performing US stocks. The BDI is a good forecast tool for emerging markets that rely on trade more so than more developed countries. The whole world, of course, relies on trade. So considering selling the remainder.

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.” -

Investors 411 begins it POSITION section with the same statement it had in 2009 – The problem in the financial sector is far far far far far bigger than first imagined. Mea Culpa – I was WRONG!

Fed Chair Ben Bernanke

The 2008 financial shadow bank crisis was far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far far farfar far far far far far far far far far far far far far far far far far far worse than expected.

Bernie Sanders (D – Senator) & Ron Paul (R Congressmen) manage to put into the financial reform bill a section that called for a more transparent Fed. Well some of those transparencies have been reveled. Here Bernie Sanders editorial. Jaw Dropper At Federal Reserve

We all know about the $700 billion in TARP funds, almost all of which has been paid back That was chump change. Here’s some Secret “Jaw Droppers – Some of the near zero % interest loans with no strings attached the “Fed made to every major financial institution in the country.”

• $600 billion to Goldman Sachs
• $2 trillion to Morgan Stanley
• $1.8 trillion to Citigroup
• $1 trillion to Bear Sterns
• $1.5 trillion to Merrill Lynch

But wait there’s more. Not only were big banks given loans, but the big companies were lavished massive near zero % loans too.

• General Electric
• Verizon
• McDonalds
• Caterpillar
• Harley Davidson
• Toyota
• Verizon

Still more bailout dollars went to  - Foreign Banks

• $290 billion to Deutsche Bank
• $287 billion to Credit Suisse

Imagine getting $ 2 trillion for nothing and earning a ultra conservative  3% interest for a couple years – That’s $120 billion in your back pocket with no strings attached.. Life is good, bonuses big if your part of  big business oligarchy throughout the world. But How’s life going for the Average working American?

Imagine if, as a condition for those trillions, some money went to the taxpayer or working homeowners whose mortgage were foreclosed. If many of them stayed in their houses, property values for everyone would be far higher than they are now.

Imagine if some of that money went to reduce the cost of your mortgage as a condition for the loan.

Imagine the phenomenal profits bankers make off credit cards and all types of loans transactions and all the tinme they’re getting )% loans.

Imagine how catastrophically far in over leveraged debt our unfixed casino capitalist system was and is.

Yours truly is totally shell shocked by these revelation that were posted this weekend in the Huffington Post. Right now my brian is totally frozen by the size and scope of what happened - (the Fed even massively and secretly bailed out foreign companies and banks – yet dare extend unemployment for working Americans and you get toasted)

Bottom Line – This story will NOT reach major News outlets in any significant fashion – Far too damaging for those elite members of the  oligarchy that hide in the shadows and run the USA.

Here’s Senator Bernie Sanders on the War Against the collapsing working class by many billionaires (the oligarchy) in our country.  Many thanks to HG for sending in the Video. Too bad it isn’t a right winger making these accusations because it would be promoted by FOX and Headlines across the USA.

Please Please Please watch the following and send it on

The crooks on Wall Street vs the collapsing middle class

Bernie Sanders

STOCKS

Investors411 tries to keep it basic.

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

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

Sorry, I have limited time this AM and have yet to really comprehend what has been revealed as the size and scope of the 2008 bailout.

100% stand by Fridays piece “The Fix Is In.”

Paul R has come up with a chart that shows the dates the The Fed will Print and Dump money into the market this week. Tuesday and Thursday are the biggest days and those are the days stocks should do better on those days. I expect the rally to continue because its being manipulated by the Fed, Treasury, Shadow Banks & HFT’s.

The working class is in shambles. However, from the Obama administration to the Federal Reserve system its important to keep investors feeling wealthy so they buy over the holiday season and beyond. Several other investment blogs have all come to this conclusion including HGSI (see comments section)

• The benchmark S& P right at breakout to yearly high levels.
• The MO is at +14.59 so there is still room to move higher before becoming oversold

Economically, the working class in America can be devastated and American stocks increase in valuation because millions of new middle class buyers are created in emerging markets each week.

Positions

• EEM - (Emerging Markets ETF)
• UWM – (2x small cap stocks ETF)
• UCO – (2X oil ETF)
• UWM – small cap stocks – bought more Friday at 38.75 (see comments section for announcements on buying)

Still view any dip as a buying opportunity because of the Fed’s market manipulations. When the MO gets closer to overbought I’ll stop buying.

Life is pretty good if your name is Snidely “Big Taxpayer Bonus” Whiplash right now.

Dudley Doright (below)

Emerging markets are doing well, but the US & Europe are running along an economic cliff with blindfolds on. Long term we do need to make some serious decisions about our economic future. See NYT editorial – Some Fiscal Reality – that Popeye suggest in comments section of blog.

Fiscal reality while running along an economic cliff.  Yikes.

When you add CSCO to the dollar’s rise & the BDI’s fall its three strikes. Perhaps a silver lining here is the falling 50 day moving average for the dollar (another significant resistance level) is just $0.56 higher. The dollar is rising like a rocket, but taking out two signicant resistance levels may be hard.

Short term traders – TYH was bought because the BB/HFT traders keep supporting stocks. The dollar’s gains were significantly for the 5th day in a row so I sold 1/2.  Probably should have sold it all – but greed won.

Not entering any positions on dip today, but watching UUP (tracking ETF for dollar closely).

Traders & Investors with tolerance for high risk.-  Any significant drop in equities should bring the MO down to -25 (see above) support level and an opportunity to buy. Today is very significant, if we end up with the Dow down 100+ points it will mean the MO has broken support and is probably on its way to -60 or beyond. That would be a point we could start to nibble again.

Investors - I know its been a long wait for the MO to agin get close to -60/oversold/ safer to buy area. Be patient and also remember when we cross -60 everyone going to be saying the sky is falling. MO at -20.02 and today some major bearish signals came into play. So we should reach oversold soon. Today is very significant, if we close with the Dow down 100+ points it will mean the MO has broken support and is probably on its way to -60 or beyond. That would be a point we could start to nibble again.

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Remember we are revising YOUR Stock List so send in your choices to me or post them in the comments section of blog. YOUR Stock List works because YOU send in stock ideas. Here the guidelines for entries.

• The 50 day moving average must be moving up. That’s the blue line if you are using Stockcharts
• No thinly traded stocks. Absolute minimum $2.5 million dollars worth of this stocks traded each day.  (example over 500,000 shares traded and worth $5) Over $5 million is preferable. Smaller stocks are too easy manipulated by major players.
• Maximum 2 entries.

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.”

$20,000,000,000,000.00

$20 trillions = a stack of $5.00 bills that would extend beyond the moon or almost three round trips of dollar bills to the moon and back. That’s the guesstimated cost that cumulated in the 2008 financial meltdown to homeowners, investors, taxpayers, job seekers, and so many others.

Inside Job, a docudrama by Charles Ferguson

• “thunderstruck and boiling with rage” (LA Times)
• What can we believe in? There’s nothing to trust anymore? ( Editor Financial Times)
• What happened to Change we can believe in? (Frank Rich NYT)

The 2008 financial meltdown cost “tens of millions of people their savings, their jobs and their homes” throughout the world. This film chronicles how and why it happened.

Warning – This movie paints president from Reagan through Obama as little more than bag men for a dishonest shadow financial industry that has systematically looted, defrauded, & swindled,  - depositors, investors, home owners, job seekers, tax payers and so many more.

I’m sorry, seeing Inside Job has left me too shell shocked to write more.

Let me leave you with this

Why do you think there’s not a systematic investigation of what happened? The answer from one of the half dozen experts in the docudrama who predicted and tried to stop the crisis - Because then you’d find the culprits.

Barr

Lets do some math. To jump star the USA economy. (Compare with a country like China that’s trying to slow down their economy) the US has $700 TARP (almost all paid back with interest), $787 Obama Stimulus, $1.7 trillion of QE #1, other billions/trillions the unaudited Fed loaned out at almost zero% interest and now QE2. (guesstimate $500,000 billion & more later.

Most of this funding has gone to the shadow banks and to help consumers impacted by the 2008 meltdown.

The most remarkable part of all this is the huge amount of money that’s had to be used to just stabilize the US economy at a 9.6% unemployment rate and a 2% GDP. GDP would easily be below zero without it. Yet there are those on the far right who would allow shadow financials and all Americans to become over leveraged again.

Jon Stewart Rally

Politico said there were 250,000 (impressive) at the Rally to Restore Sanity in DC this weekend. Here’s one voice on the rally His closing speech at the above link. Well worth the read.

Mantra - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors. “Looks like next Wednesday Fed meeting is the big event.”

Managing Risk - Lots of YOUR questions in the comments section are on Managing risk (When to invest)

• Ideally we’d like the Long Term Outlook to be Bullish, the market over sold (MO at or below -60) and the dollar’s long term trend – bearish & the BDI to be bullish.
• It seems highly unlikely we are going to get all three at the same time. If we do I’d jump.
• What you do depends on YOUR level of risk
• Right now the dollar rules and which way it breaks will probably have a lot to do with the future of stocks.
• The Long term Trend is – CAUTIOUSLY BULLISH.
• The MO is below zero.

So its not a perfect set up, but it is slightly favorable . The dollar is the key factor & it has NOT broken out of its range. I’d say the Tea Leaves right now are slightly bullish. If you can handle the risk invest. A dollar dropping below its support level and an/or an MO nearing oversold (-60) would be better.

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.”

The Problem/The Sky is Falling/The bailout

In 2008 it became apparent to many that shadow financial institutions had become over leveraged by placing bets on mortgages (credit default swaps).

• Our unaudited Fed engineers a deal to save mortgage giant Bear Sterns and it merges with JP Morgan. No one knows what $ the Fed promised to make this happen. JPM later gets big chunk of TARP funds. Other smaller mergers happen.
• Lehman Brothers goes Bankrupt in Sept. 2008. Lehman claims lots of assets, but by the time they fell apart they had $613 billion in Debt and could only raise $1 billion in cash.
• Lehman debt spreads throughout the world, people realize how over leveraged all the other shadow financials must be, housing prices plummet, and stocks begin to fall. SPX goes from 1500 to 666.
• Treasury proposes TARP. Treasury/US government (the only entity in the world with power to stop fall) proposes to buy up bad debt and sell it later.. Paulson/Treasury later changes this to loaning shadow financials money $700 billion. ($50 billion or less has not yet been repaid)
• Stocks keep falling and QE1 introduced. Fed prints and dumps a trillion plus more dollars into economy. Finally stocks stabilize and start to move up There’s more but lets take a look at what happens if these actions do not take place

What If Absolutely Nothing Was Done?

You lived through the panic after the Lehman collapse. Now add this – What if the second largest mortgage company Bear Sterns collapsed on top of that? Add perhaps 3 time larger insurance giant AIG collapsing. It’s debt all owned to other shadow financials who themselves were up to their eyeballs in over leveraged debt. They too collapse like Lehman.

• The weekend before TARP, a run on AIG had started across the world. AIG who insured the shadow banks goes down then one bank collapsing after another because their collateral is no longer solvent. People panic and media adds to the frenzy. Everyone realizes. Lehman was just the tip of a giant iceberg of debt.
• Belly up goes AIG, BAC, Citi, Major European banks, GE, Fannie and  hundreds/thousands other major/minor financial institutions. No one knows which bank has how much debt, so people take their $ out of all banks. Fear grows hyped by the media.
• Stock market goes far lower than SPX 666
• Bonds of these banks collapse. Even with just Lehman’s collapse BAC bonds went from 100 to 82 before recovering. (An institution I am treasurer for owned these bonds)
• Financials, Fannie & Freddie bonds were the backbone of many money market funds (Think Fidelity, Vanguard etc) They or their insurance agent go belly up as the bonds become more worthless. You may have received a negative return on your money market fund depending on how are the panic had spread.
• Home prices plummet way way way way down.
• Not knowing which banks are shadow banks panicked investors pull their money from all banks. You know how suseptable your fellow Americans are to fear and fear mongering. Worldwide run on banking results. – a financial armageddon.

So a worldwide financial meltdown was averted.

That’s the good news now for the bad.

• How deep is the shadow financial hole? Fed engineered Mergers, TARP, QE1 now QE2, POMC and an UNAUDITED Fed who can had loans money at their discount window and/or use some other opaque means to fill the over leveraged gap of the opaque shadow financials.
• All of this cash used to fix the problem creates imbalances in the economic system that magnify the trillions gone into filing the shadow bank hole. Beyond my understanding, but nobel prize economists like Joe Stiglets and others get it.
• By 2008 we had already created a huge debt by going to war, cutting taxes, pork spending etc. So this new debt was built on more debt.

The UGLY

• There is no regulated financial derivatives exchange.
• We did not return to the old laws that prevented over leveraging in the past or end too big to fail. Congress passed are weaker measures.
• Dopamine When you get high the dopamine centers of your brain are activated. You get addicted to this pleasurable feeling. Sometimes like running its a heathy addiction. But with drugs or greed you keep needing bigger doses to obtain the same high. Physiologically those that run the shadow banks are not going to change their ways unless there is enforcement.

I left out stuff and will be back to Obama’s negatives next week

Mantra - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors.” Looks like next Wednesday Fed meeting is the big event.

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.”

Now, because of the Supreme Court we have unlimited corporate spending This vastly increases the power of the wealthy, big corporations and Wahington lobbyists

If you think this has no impact on YOU.

• Look at what the lobbyists did to deregulate the financial industry. The result was the 2008 financial meltdown – Even with Bernanke, Bush & Obama massive influx of YOUR tax dollars and printed money keeping us from a total worldwide economic collapse – Look what happened to employment, your houses value and your stock portfolio. You pay and pay and pay. Like you are saying in the comments section of the blog – Wake Up and Smell the Coffee.
• The Big Financial Services bill to regulate the shadow banks - 40% more money went to those who opposed Wall Street reform. Even those who voted against it received mountains of cash.

You’re simply the sheep being led to the slaughter in what you think is a transparent democracy. There is an growing oligarch that owns/buys more of your democracy each day.

Sources -

• Dylan Ratigan Show especially this clip which is far more powerful than the above editorial.
• MapLight.org gives you legislators, their donors and ties it to specific bills. You can see how much an industry and/or individuals paid to get a specific bill passed.

More on elections tomorrow – facts and solutions.

Again from previous days – “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors.”

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.”