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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

The Trap

Lead story in NYT on Obama’s state of the Union contains one very important word - JOBS

The Trap

Astute political assesment of Obama’s speech from the New Republic’s Ed Kilgore

And that’s the beauty of Obama’s address. He basically put together every modest, centrist, reasonable-sounding idea for public investment aimed at job creation and economic growth that anyone has ever uttered; and he did so at the exact moment that the GOP has abandoned the very concept of public investment altogether. He’s thrown into relief the fact that Republicans no longer seem interested in any government efforts to boost the economy, except where they offer an excuse to reduce the size and power of government.

Obama can close this trap by focusing on Jobs, jobs, jobs. Two significant reasons this works

• American’s by over 4 to 1 see Jobs and the Economy as the #1 priority
• Without tax income from jobs, we lack the revenue to to fix the deficit or any other problems.

A political victory that may lead to a “Sputnik” moment of  economic transformation.

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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

• We had a the bulls take charge into the close and an overall flat market in heavier volume
• Rachel Granby on Obama State of Union and today’s market (Seeking Alpha)
• Obviously, still endorsing the concept that the Fed [POMO [schedule] is and will be the key factor in keeping a long term rally going. (see Investors411 for past months).

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Reading The Tea Leaves

Wall Street publicly is catching up to what Investors411 has been telling you for many months. The Fed is manipulating stocks higher. The #1 factor behind the low volume rallies. It has been this way ever since quantitative easing  fist started a year and a half ago. There is 5 months more of QE 2 scheduled.

• Mega Investor Jeremy Grantham calls it – Pavlov’s Dog Reading his quarterly newsletter is a must for any serious investor. Pavlov’s Dog is that newsletter.
• Wall Street Journal’s Market Watch calls it Addicted to Crack

More from Grantham’s Quarterly newsleter – Investor411 has a very similar  assessment of the future See Positions section of blog -“Investors411 looks for a much better first 1/2 of 2011 than a second half especially in US stocks.”

From his Quarterly Outlook

• “the outperformance of everything risky”  on top of his looking forward list. “(they have been underperforming for a while)
• “But be aware that you are living on borrowed time as a bull; on our data, the market is worth about 910 on the S&P 500, substantially less than current levels, and most risky components are even more overpriced”
• “The speed with which you should pull back from the market as it advances into dangerously overpriced territory this year is more of an art than a science, but by October 1 you should probably be thinking much more conservatively.”

What to watch for today

UUP -The dollar tracking ETF. Two+ week bearish trend continues as rally falls apart. Dollar down = stocks up.

Dow Index - Dow stocks historically do about 1/2 what Small caps and techs do in a rally.  They have done better for for a month+.

AAPL –  Up a massive +3.28 two days ago. Confirmed rally with +1.17% rally yesterday. Very interesting that most of the smaller cap stocks in tech did NOT also have big gains. = Big cap stocks rule.

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Positions

• DDM - (2x Dow stocks)
• REMX - (rare earth metals)(1/2 position)

Under consideration - Looking to add more on dip. (see comments section of blog for inter day timing)

DDM - (2x DOW) The trend to big cap stocks is apparent.

UWM (2X small cap stocks) Will buy ASAP, hopefully on dip.

UCO -(2x oil prices) All commodities, are under pressure from inflation worries in emerging markets. UCO broke support level in big way. Waiting for it to settle.

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

FAS (3x financials) & UYG (ETF that does 2x 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.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

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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)

Obama’s Brain Freeze

Obama is seeking to Freeze many Domestic programs headlines the NYT today. Also check out Bob S’s & Mama Jama’s recent comment on right side of blog.  We have the answer as to what Obama would cut - domestic programs.

Here we are with a 10% jobless rate and well over 16% jobless rate if you count those no longer on the rolls. US Corporations from IBM to Apple  are growing because they are growing their investments (now well over 50%) overseas. Housing numbers still hurting, banking mess not fixed and the vast majority of US workers and unemployed believe we are in a recession and Obama freezes domestic spending.

It’s a huge flip flop – Stimulate the economy to create jobs – now a year later he cut domestic spending and guess what’s going to happen to jobs & the economy.  Job loss has decreased from -700,000 to about -50,000 per month. Not bad . However, we are still NOT anywhere close to creating the kinds or number of jobs (+250,000 a month) it takes to stimulate a jobs recovery. Take $300 billion of the stimulus away in domestic cuts and hopes of a recovery will evaporate.

When the jobs picture flattens or worsens and Obama asks for more $ to stimulate it you will have a flip flop flip

So maybe this will buy Obama a few points of popularity this week, but it is just what Herbert Hoover did and FDR did. They took away the stimulus too soon and in both cases the depression got a whole lot worse. Bob S first mentioned the FireDogLake site but it has an excellent compilation of criticism on Obama’s move

We the Corporation

Common Cause and Talking Point Memo are both reporting that the recent Supreme Court decision (see past few investors411) opens the way for Foreign Investors/governments who own chunks of US corporations or whose companies are registered in the USA to contribute to US campaigns.

Example  A Saudi Prince or wealthy Chinese investor (really their government) who owns say @ 5% of a US shadow bank will have a lot more power to intimidate or influence any candidate than.  Foreign investors have over the last decade bought huge hunks of American companies and are very influential in corporate board rooms. You the far less wealthy  taxpayer and voter will soon have even less power in YOUR democracy than rich Communists or Arab dictators

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.

Stocks rallied a bit in decreased volume. Volume,our #1 confirmation factor of price move, is still very Bearish. We’ve had at least 3 significant falls in BIG increased volume. This is enough distribution (major players moving to sidelines) to turn a market.

AAPL reported after markets close d. This is one of the stocks whose results can move markets. Last evening there was no change in price after its report. Lots of news surrounding a new Apple product Wednesday

Fed meets over next two days – expect little/NO change.

Bernanke reconfirmation vote – Looks like he will get reconfirmed and that should help stocks. But two problems –

1. he/the Fed will be weakened because the Fed chair usually almost unanimous
2. The Fed is like everything else from the Supreme Court on down an almost totally political organization. Any appearance of his independence was shattered by him lobbying senators for his appointment.

State of the Union – Markets are worried about what Obama will do about shadow banks. See Sunday’s and Monday’s Investors411 for more on this. We need to fix the too big to fail systemic problem – this will hurt stocks, especially financials in the short term – but stocks, our democracy and our country will be better off in the long term .

Significant indexes

• McClellan Index at -64.84 =  still significantly oversold.  (see Sunday’s Investors411 for more)

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends)

These are positions I actually own

SELLING & BUYING

Did not pull trigger on any longer term ETF investments. Waiting for state of the Union address to see what Obama does about Shadow banks.

YOUR Stock watch list

NB – I feel much more confident with ETF’s because they reflect global trends than individual stock. Too many things can go wrong with individual stocks.

• SEED – In a buy the dip position directly above 50 day moving average
  
• AAPL – obviously a market mover who again is sitting on its 50 day.
  
• AMZN – Lower highs lower lows on chart – removed from list
• HMIN - Failed breakout . China play. Will recover when  China does.  Will drop from list soon
  
• CAAS – CAAS hanging in there 50 day moving average.
  
• PCLN – Fell below 50 day moving average, but no big volume on downside move. A potential buy in any market reversal.
  
• F – Now less over extended.
• DRWI – New – Big exporter to China -  Was too overextended to buy, and now only a bit overextended. No big volume as stock dropped= good sign. Potential buy the dip.
  
• ENOC – New – Reduces costs for utilities – No big volume behind its recent fall. Potential but the dip when it hits 50 day.
• ATHN – New - Software reduces costs for health care - Broke its longer term bullish trend in big  volume – Will drop from list soon.
  
• IMAX – Great long term chart – falling back to its 50 day moving average. Still a buy the dip opportunity

All these are better buys in an oversold market. That condition exists NOW.

The problem is not knowing how aggressive Obama is going to be about shadow banks/too big to fail institutions.  We should have a good idea by state of the Union – Wednesday night.  You could gamble either way.

Caution – I have continually overestimated Obama when it comes to almost everything. He may be all talk about business accountability and the Paul Volker/Elizabeth Warren faction within his government will loose.

See POSITIONS (scroll down) for details on this and what’s under consideration for 2010. Sorry have not had a chance to work on this last weekend.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING