Investors 411 Blog

by Barr Jozwicki
May 18, 2009

Market Updates – World’s Biggest Democracy

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , ,

WHAT’S UP? - A Standing O at Notre Dame; India/Democracy’s big win; Jim Cramer on who brought our nation to its knees. Soaring stock market – after9 weeks in a row takes a breather; Of course more on Shadow banks; Reading the Tea Leaves.

President Barack Obama is hooded as he receives an...

Photo – Charles Rex Arbogast/AP

Obama’s Sanding Ovation at Notre Dame

The contrast between Obama and the previous administration is like night and day.  Where Cheney Bush projected fear and confrontation, Obama, who inherited two wars and and the greatest economic meltdown since the great depression, worked on ways finding common ground. You can listen to his compelling 30 minute address at this link

Those who tuned in to see Barack the pro choice “baby killer” were soarley  disappointed.

PM Manmohan Singh

photo BBC

Big Victory in the World’s Largest Democracy

The Congress Party in India surprised the pundents and came close to winning a majority in parliament. The party that saw the biggest drop was (Hindu Nationalist Party) who, as the name implies, fosters nationalism and fear of those who are different.  Also shrinking in size were the many independent parties including the Communist. (Congress will be less dependent on the Communists who were their allies in last government)

Its hard to say how big or small a role Obama’s election in the USA played in the victory of the more moderate Congress party. But the bottom line – a more moderate, less confrontational, and pro business victory in India benefits the world. Congress did reach out and gained more votes from the lower classes in India. Stocks in India have surge 17% – BBC

Jim Cramer

photo – Time mag.

Cramer’s Interview 

Money quote from CNBC’s most popular stock analyst Jim Cramer, in Time magazine  on the financial innovations of last several decades -

They almost brought our country down. The only guy who really called this right was Carl Marx. Marx understood what would happen if you let the markets run amok. Of course, it was done by right-wing Republicans. They brought our nation to its knees, and we’re not going to end up being a great power because of what happened.

Cramer did take it on the chin in a Jon Stewart interview. Stewart’s  attack was directed rightly at the financial channels concept of cheerleading unregulated markets. Cramer obviously took the attack personally.(See past Investors411 for more)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.75% down
NASDQ -0.54% down
S&P500 -1.14% down
Russell2000 -1.01% -

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Technicals & Fundamentals

Let’s stick with the same prediction, for this week as last. More consolidation with a downside bias. After 9 up weeks in a row a consolidation is good for bulls. Going to far too fast creates bubbles. 

From Friday -Volume has dried up to a trickle. Looks like an ocean with no breeze. No breeze means no direction. Declining volume as the market retreats is also  bullish sign. If you’re long equities what you want right now is consolidation or a pull back in light volume.

@ 877 on the benchmark S&P 500 is still an important support level. We closed just above it at 883. When support levels break is often means many  investors start looking at the next support level (@ 832 – see chart at side of blog – both old high and the 50 day moving ave.) as the next area to buy or halt the fall.

XLF - The ETF that tracks financials (mostly shadow banks ) ended the week much lower. Friday they closed down -2.04% in below average declining volume. Volume is NOT confirming the price move.

Market’s Major Mantra - Again - If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks 

WTIC - Oil prices fell from the $60+ high last week and have established a range between $54 and $60. Down Friday -4.07% to $57.00. Oil prices are often an indicator of which way stocks are moving. This is a bearish number for stocks.

BDIThe Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. While 2544 is a long way from the 11,793 high a year ago its a move in the right direction.  World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed.

Reading this weeks tea leaves - Lets hope and predict a consolidation with a downside bias this week in weak volume. BDI and India are both long term  positives. If 877 support holds on (Mon, Tues. & Wed.) the S&P 500, we could see  the nine week stampede of bulls continue later this week. 877 is the number to watch.

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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March 16, 2009

Market Updates- Pakistan Wins One for Democracy

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , ,

Pakistan the epicenter of terrorism – Wins one for Democracy.  Are stocks on a bull run or a dead cat bounce?; AIG – Follow the money.  Are We All Socialists Now? The financial channel ducks and covers. An uplifting  comment/story by Stewart E. – about hanging together in tough economic times.

 

Pakistan Wins One for Democracy

The lawyers and opposition leaders “Long March” to have the Supreme Court Chief who was ousted under the former dictator seems to have won a major victory. It was bloody, but the  government caved in as police/army refused to keep beating the demonstrators and Mr Chaundhry (former chief justice) was reinstated. For more see NYT or Times of India

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AIG – Follow The Money

We’ve shoveled $180 billion into AIG to keep he worlds entire financial system from going under. Yet we still can’t find out exactly where the money has gone. No one talked – For five months everyone’s lips have been wired shut. – the company, the Bush administration, the Obama administration  & the Fed. See NYT Saturday editorial

The icing on this toxic cake is the crooks at AIG are being given $165 million dollar bonuses (a “contractual obligation”) including the small division that traded credit default swaps and sunk the company. More from Financial Post

AIG caved yesterday to all the pressure and listed most of the companies who it owed $ to. Hint – the trading of toxic, over leveraged debt with these other mega crooks. Opps, my mistake they are called financial companies. Check out the list or crooks here 

They haven’t caved on the bonuses yet.

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CNBC Ducks and Covers 

After heavily promoting the Jon Stewart/Jim Cramer smackdown. Not a word could be found about it  on CNBC financial channels or blog. Further indication of just how badly Cramer did and how mad  common folks are at the”Fast Money” financial news network. Here’s the LINK to the original Stewart shot across the bow. 

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Are we All Socialist’s Now?

Over the last 4 decades the far right has hammered Americans with how poor our government does thing vs. the wonders unregulated capitalism.

The answer to them is take a look at the socialist systems of public eduction, police departments, fire departments post offices, and libraries. Do you really think AIG, GM Citigroup, Merrill Lynch and Lehman Brothers would have done a better job?

What would have happened if Social Security had been tied to the stock market?

We’re not socialists, but Americans are waking up to the fact that unregulated capitalism is a huge rip off, and government is the only institution strong enough to regulate it.

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Solutions

In the comments section (on right side of blog) you’ll find a comment and a story  submitted by Stewart E. who notes “we are all in this together” The story about Beth Israel hospital and how they are handling the recession. It’s author or a “A Head with a Heart.” is Boston Globe columnist Kevin Cullin

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AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

 

Stocks

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Index Percentage % Volume
Dow +0.75% flat
NASDQ +0.38% down
S&P500 +0.77% down
Russell2000 +0.76% -

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Technicals & Fundamentals

Four straight rally days. Actually two rally days and two consolidation days. Friday was the later. What started as a technically oversold bear market rally has picked up up some steam because it seems that financial companies may be given some favorable treatment by the government. (see last Friday’s updates)

XLF (ETF) the beaten up financial sector is leading this rally – up over 30% last week.

Consolidation days are critical for any rally. If you go straight up the end result is almost always crash and burn.

Technically we have broken back up through the mother of all resistance levels (SPX area around 741- see past updates) and moved higher even on bad news. Add to this the volume behind the move and the bulls have regained control of short term momentum.  Reading the tea leaves –  the 10% rally should move higher – Ride the wave

The Caution - We’ve had a 20% and a 28% rally since last October and in April of 1930 we had a 45% rally before the markets crashed again.  Long term fundamentals have not changed.  It’s way to early to call a bottom.

Bernake did a good job on 60 Minutes

Obama on Jay Leno tonight.

Note - Every weekend the Strategy, Positions and Overview sections get updated and filled in.

 

Long Term Outlook = BEARS RULE

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog 

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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March 13, 2009

Market Updates – Opened a Can of Whup Ass

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , ,

The Bulls retake the mother of all support/resistance levels. Are the Bailout Banks lying? Why Pakistan’s lawyers matter to you. Obama’s gets earmarked. Why you should date and not marry stocks and who got clobbered last night in the Jim Cramer (CNBC/financial channel) vs. Jon Stewart (comedy central) Showdown.

Jim Cramer, Jon Stewart
CNBC Photo/Giovanni Rufino; Kevin Fitzsimons/Comedy Central
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Opening a Can of Whup Ass


Jim Cramer and the financial channel got roasted, toasted and devoured last night by Jon Stewart.  Even Cramer on his 6:00 PM EST Mad Money show fessed up to the whuping that eviscerated financial reporting on CNBC.  The #1 financial channel has for years been little more than the head cheerleader of the unregulated capitalism and debt.   For more see E news story or video at Comedy Central
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Are Bailout Banks Lying? 

(See comment section comments by Robert H)

The old joke applies – How do you know a banker’s lying? -His/Her lips are moving
Answer – Yes and No.  It all depends on the accounting method. These bailout banks are borrowing money from the taxpayers and Fed for nothing and making a killing every time they loan the money out.  However, most have huge amounts of growing over leverage toxic assets that they do not want counted on the books. By standard mark to market accounting most major banks, like Lehman Brother, and AIG are insolvent.
 Looks like Congress (major hearing yesterday on this) will “relax” mark to market accounting. Full story from Financial Times
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Pakistan’s Lawyers March

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Afghan/Pakistan is the center of Islamic terrorism. It has been that way for over a decade. Many brave lawyers are marching from all over Pakistan to protest the government not reinstating the Supreme Court that was dismissed under the dictatorship. Aljazeera reports on the long march for justice.
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Obama get Earmarked

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Barack blew it when he approved a budget that contained almost 2% earmarks.  OK some of these earmarks are relevant, but the focus was suppose to be on creating jobs jobs, jobs then energy, health care and education, not congressional members pet projects. Story from MN Star Tribune.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Stocks

-

Index Percentage % Volume
Dow +3.46% down
NASDQ +3.97% up
S&P500 +4.07% down
Russell2000 +6.50% -

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Technicals & Fundamentals

US and many world markets rallied again.  This time volume did NOT confirm the rally.

The Mother of All Resistance/Support Levels Falls Again -

Benchmark S&P 500 area @ 741 was retaken by the bulls. SPX closed at 752. (see Investos411 posts for end of Feb for more on this critical  technical support level) Remember its called support on the way down and resistance on the way up.

This is very significant , especially in the long term.  We broke down through the 2003 support level for about two weeks. When you think in terms of months or years the last two weeks is just a crack.

The longer we can trade above 741 the better it is for the bulls. If we can hold above this level for a week, the long term Outlook will be upgraded to Cautiously Bearish

Why You Should Date and Not Marry Stock Markets

One word – Voilitilaty.  

What’s happened is an oversold market rally. We’ve had two rallies that have gone up @20% since October. This one is a little over 1/2 way to that 20%.  The falling volume yesterday is a technical reason to worry.

But short term bullish signs are abundant -

  1. GE’s bond rating was cut yet GE was up 12%. Major companies and markets moving higher on bad news is very bullish. 
  2. Even more important is the willingness of congress to drop Mark to Market rules (see above). XLF the financial sector ETF (up 10+% yesterday) is on fire because banks will NOT have to show or mark to market their toxic assets. 
  3. The breaking of the benchmark S&P 500 – 741 resistance/support level

CAUTION: All the old problems still exist.  Technically ,retesting the bottom (an ominous 666 on the SPX) is more likely than not.

But right now ride the wave. Two days ago Investors411 suggested it was time to “nibble” again (for investors with large cash positions)  

Best Guess – flat day and rally continues next week. But, if volume continues to fall duck and cover.

Ben Bernanke will be on TV show 60 Minutes this weekend

 

Long Term Outlook = BEARS RULE

See STRATEGY, POSITIONS, OVERVIEW  & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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