Simon Johnson

The Christmas Can Can

Great Fun Video, Unfortunately when there is usually a 20 second add when over a million people see a You Tube video. (Thanks to MW for the video)

Chest Thumping – Koreas

North Korea says its ready for a nuclear “Holy War.” and South Korea vows “merciless counterattack” if attacked again. South Korea launched a “major land and sea exercise” today. Reuters Story

Obama and 2011

In the comments section of the blog both JS (who predicted START would pass) & EW have been supporting Obama as a realist and pointing to his accomplishments in the lame duck congress. Here’s part of EW’s comment yesterday -

“Let’s look at Obama’s results beyond the Tax Compromise.

1) After 17 years DADT legislation passed
2) 19 judges just put on bench (some held up for over 6 months)
3) Republicans withered and First Responders Act passed
4) START just passed 71 to 26

Now tell me you’re not happy voting for Obama instead of McCain/Palin.”

Its hard to argue with their logic, but a different, not  opposing, point of view from Simon Johnson in Bloomberg – “Tax Cutters Set Up Tomorrow’s Fiscal Crisis.” Johnson argues

“At this point, we will have only two choices: Raise taxes or cut spending…. But there’s a problem. The U.S. government doesn’t take in much tax revenue — at least 10 percentage points of GDP less than comparable developed economies –and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference.”

So, since we’ve announced no tax cuts for the next 2 years -

To avoid the impending fiscal crisis we cut grandma and/or the military.

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

• Typical melt up in light/abysmal volume. Nothing out of ordinary, especially in holiday week
• Everyone’s bullish. You can’t help but come across article saying the sky is falling because there are too many bulls out there.
• As Investors411 has repeatedly stated a whole lot of money has come out of Treasury Bonds recently (10 year T bill), but the abysmal shows its NOT going into stocks.
• There are some, (I think a bit better case) who think the strong bullish sentiment is nothing to worry about.
• And the bulls that think the NASDQ will run to 3000 next year
• All major indexes again at new highs for the year.

Reading The Tea Leaves -

Dark Clouds

Admittedly there is a good chance that we will go on marching ahead with the slow melt up. Investors411 has repeatedly descried the conditions that have set this in motion. They still exist. Old Wall Street Phrase – “Markets can remain irrational” longer than you can stay solvent”

But no one went broke taking profits and there are some short and perhaps long term dark clouds on horizon

• BDI is falling too rapidly
• MO is at a 6 week high (short term drop possible)
• Rising yields on the T Bill or Treasury bonds (not critical yet, but going in wrong direction)
• Rising oil prices. (not critical yet, but going in wrong direction)
• Koreas (see above)
• Too many bulls out there (see above)

——

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

Selling the rest of EEM this AM (about a 3+% gain) and 1/2 of the first UWM position. (about a 9+% gain) No one went broke taking profits. UWM is just too over extended, so taking some off the table and EEM is under performing US markets & the BDI sinking too fast. Investors411 did hold onto this position for over a month, sorry about it not being longer.

TYH - (3x techs) is a position that is not as over bought as UWM right now. Would consider it on a larger dip.

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)-

What if Cuba got $6.6 billion in weapons?

Imagine This

What if China gave/sold $6.6 billion dollars worth of weapons to a country 90 miles off our shore  – CUBA. What would the reaction in the USA be? Chest thumbing 24/7 outrage and our military would move into position. As Popeye (see comments section) point out we just sold $6.6 billions in weapons to Taiwan 90 miles off the China cost.

We want China’s help in sanctions against IRAN growing nuclear threat. How is China going to act now to the American threat of $6.6 billion of new weapons off its shore? How would we react?

Bottom line, – this is feeding the military industrial complex need for profits/wars.

Wanting America and Obama to Fail

Part 2

Nobel Prize winner Paul Krugman editorial today echoed the problems Investor411 brought up Friday when Senator Shelby held up held up 70 top government appointments over two pet pork projects. In fact, other Senators are doing the same.

Obama’s, Press Secretary, called Shelby’s individual filibuster “silly.”  Silly? – The whole White House need to drink a quart of testosterone – Where is he fight that dominated the Obama campaign?

Falling Euro’s Threat to America.

Many, smaller European companies are on the verge of default. Obviously, Credit Default Swaps are traded on their bonds. So nobody knows just how mush of the debt they have and probably more importantly taking bets on there success and failures.

Simon Johnson , MIT prof and former Chief Economist of the World Bank has an editorial on this.  Basically the Euro will get weaker relative to the USA and this will help European socks, but also push American stocks higher.  Mantra for months has been stronger dollar = weaker US markets. Compare a chart of the Dollar ($USD) and the SPX (S&P 500)

Here’s the problem nobody knows how bad or over leveraged things exactly are because there was little regulation. – just like the theUSAUSA.

Who is Killing Financial Reform?

Robert Reich has a must read editorial on Democrats, lobbyist, and others who are involved in killing financial reform. It’s been over a year since Lehmann crash and nothings been done to fix shadow banks.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend.

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Significant indexes – Forecasting tools for market direction

• McClellan Index fell to -69.02 = Still Oversold. How low or oversold can markets get before rebounding. We did reach @-93 about 3 days ago, about @-115 last November & @ -130 back in the fall of 2008 .Since +60 is overbought & a sell signal – we are 130 points away from that and only 60 away from the HUGE Nov 2008 crash (see chart) Bad numbers are Bullish

• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 .  Yesterday the BDI rose +30 at 2715. This is the second day of a rebound that will have to get above 3000 to be meaningful.
• $USD -The USD moved up dramatically as stocks fell lasst week.  As discussed many times before a rising dollar hurts US stocks because our goods cost more to export Rising Dollar = Bearish for Stocks

Fearless Forecast – We’re in for a buppy ride – Hard to value the extent of the European Debt problem – So when you don’t knoe investors almost always paly it safe and that means sell – Down Week – Buying the dips

Positions

The  Positions Section (also at top of blog) has the latest buys and sells – Revised positions over weekend) – These are positions I actually own

SELLING & BUYING

Here’s stocks YOU suggested  to add to the Watch List. – Will try to analyze stocks over weekend.
GS, JPM, CSCO, SHOO, ICON, SOA, ALF, VSEC, BIDU VPRT (tomorrow)

Still adding to positions. The more the McClellan dips the more you should add

The strategy .  Buy a position in an oversold market and sell 1/2 of it when it gains 5 to 10% and let the rest ride.  The position should take into account major trends that you understand. For me China, Emerging Markets and Brazil still fit the bill. However there are concerns about a long term US/China trade war. Also any of the ETF’s that do 2 & 3 X what the major US indexes do.

Bottom Line – We are oversold and ready for at least a short term run – Investors 411 opened a 5% position in TYH (3x financials) Friday at 117.14 A short term trade with a tight stop at 177.14.  Will take 1/2 profits at 5%+ rise

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING