More people working = more tax revenues = lower deficits.

You have to spend money to make money

This should have been Obama focus in his 2010 state of the Union – Not the deficit and government reduction. My only concern is too little and too late.

Investors411 Technical Forecasting Tools.

The McClellan Oscillator

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Reading The Tea Leaves

Our forecasting tools give no advantage to bulls or bears. There is some slight momentum with bulls because of the double bottom and series of higher  highs. NEUTRAL is the key word. Perhaps the calm before the storm. DAX – German stock market (already in bear market territory) down over 1% at 7:30 EST. – Bearish

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by JS

CALLS

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Buying calls are a way of taking more upside risk while limiting your downside.

SDS is a contrarian ETF that goes up 2x when the S&P goes down. It’s a decent stock to buy during this “fear” market, as protection.

The price this week was $24.56. To buy 100 shares costs $2456 + comm.

Buying this option:

-SDS111022C25 ( Oct 22,2011 @$25 ) costs $2.10 per share = $210 + com per contract. Your downside is $210.  This option is a bet that the S&P will go down dramatically by Oct 22.  SDS at the market bottom of last year July 2010, SDS was $38; at bottom of market in ’08, SDS reached $120.

Projected profit if S&P reaches these lows again:

You will start making a profit on this call if the S&P falls 4.5%. If it doesn’t fall 4.5% from the current price by Oct. 22, you will lose your

investment.

$38 – $25 (the strike price) = $13 – cost of call option  $2.10 + comm = @$11 per share or $1,100 profit per contract.

If SDS reaches highs of 2008, $120, you’ll profit $120-25 (strike price) = 95- 2.10 (cost of option) = 92.99 per share x 100 sh =  $9,299 per contract.

So on $210 bet,  one can profit $1100, up to $9299  if market reaches the recent past lows.  I use these options  as a hedge against stock I’m holding, as insurance. My loss is limited to the $210, my “insurance” premium. Let’s me sleep at night.

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Current Positions

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

LONGER TERM POSITIONS

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

Until the Fed makes a commitment to more liquidity, its hard to add any unprotected long term position other than buying GLD on dip.

Strategy Outlined – A rough outline – The basic strategy is to buy the dip. Most crucial to this is our MO chart. Start buying when the MO dips to @-60 and add to positions if the MO goes lower. If the MO reaches +60 you either sell if still holding a position or short stocks (use puts or ETF’s that short stocks) This situation (@+/- 60) has occurred a bit less than once a month over last two years

Depending on what you invest in and if your an investor or trader you hold or sell. Examples –

• Shorter term traders – Sell 1/2 after 5 to 10% gain and can let the rest ride and become a longer term investment or until the MO approaches +60
• Shorter term traders – YSL#5 – Is more suitable for your investment style
• Shorter term Investors – Should use Puts and calls to leverage risk. Also a “protection” option for longer term investors in bad markets.
• Longer term Investors – Should only invest if the long term outlook is NEUTRAL. Your chances of success are better with a CAUTIOUSLY BULLISH outlook.
• Longer Term Investors – More likely to use Dividend stocks/ETF, but can use YSL’s.

Investors411 has just started using the PCR as an investment tool and will advise on how it mixes with the MO.

• For now extremes in the PCR (+1.50 & – 0.60) are sell and buy point.
• Remember how these charts (MO & PCR) mix and the Long Term Outlook is NOT and exact science, but Reading Tea Leaves.
• If you backtest results over the last two years you will find this a very successful method. But markets change and to will strategy.

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

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)  Bought at 167.05 last week – a half position. GLD closed yesterday at 181.81. (I owe readers a column on this – hopefully Monday)  There are simply too many calls out there on GLD. Ripe for a bear raid by HFT’s. On other side – I believe it is likely that China is secretly buying tons of gold. If you have big position here I might take some profits.

Disclaimer - Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, ABV & AGNC and a few other smaller positions I have puts on over half of dividend stocks I own. I also use leveraged ETF’s TZA & SDS to minimize downside risk I buy everything in the hypothetical Investors411 portfolio. I will be purchasing additional YSL #5 stocks when we have a lower MO.*

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Long Term Outlook

(for US stocks only – not our economy)

*The most important foreseeable fundamental factor in determining the log term stock outlook is what The Fed (Bernanke) does to impact money supply (example – a new QE#3)

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

Drove my chevy to the levee
But the levee was dry
And them good old boys were drinkin’ whiskey and rye
Singin’ this’ll be the day that I die

American Pie lyrics by Don McLean

General Motors is Back

Today GM announced its paying back $5.8 billion in loans and interest to American & Canadian governments – just nine months after government supported bankruptcy and promises to pay the rest back by June.

Remember all those Republicans, especially Senator Richard Shelby (from SC who had Toyota plants), fighting to keep GM from being bailed out even though it could have cost millions more American job losses related to the car industry.

Obviously GM and other car companies still have problems to overcome, but GM, and my wife’s favorite – the Great 57 Chevy (photo above) – is back in less than a year  Thank You Barak Obama – for a Main Street bailout that kept American jobs and taxpayers off the unemployment lines.

Investors, GM news =Bullish

Goldman Sachs

Remember the 3 Monkeys covering their eyes ears and mouths- See no evil, speak no evil, hear no evil. They control Wall Street right now. The gargantuan shadow banks are simply too big & lawyered up to obey the law or fail.

We all know that virtually all Republicans (the secret meeting with 25 shadow financials big wigs on Wall Street) and many Democrats are owned by Wall St. not Main St.

Popeye in the comments section finds it amazing that the SEC is going after Shadow Giant GS because they are such a huge “cash cow” for the Democrats and Obama

From your credit card to your home loan to your stock market trading to your taxes -YOU get crunched by the huge shadow financials. No web site explains it better than the one from MIT The Baseline Senerio – “Break Up the Banks”

Obama BIG Speech

Thursday Obama will address the Nation on Financial reform. Who will he be?

MR MILQUETOAST - The Obama who wanted to compromise and turned to mush on Health Care. He got answered by Tea Party screamers disrupting Town Meetings and any rational debate with accusations of armageddon, socialism and death panels. Never, never, never underestimate those who want to (Tea Party members etc.) who keep the fact from coming forward by screaming, fear mongering & threatening.

MR CHANGE WE CAN BELIEVE IN – The Obama who campaigned  in 2008.  Again the Baseline Senerio sets what should be Obama’s message and tone. If Obama simply endorses the inadequate Dodd Financial Reform Bill the same thing will happen again and financial reform is over.

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 for changes made each weekend

Wall Street went back to what had ben the standard weak volume stocks move higher pattern. Although volume is historically the #1 confirmation factor behind a price move, the old trend continues = Bullish.

Earning report have overshadowed too big to obey the law, too big to fail, too big to worry about huge bonuses, shadow financial institutions. The profits and bonuses keep coming. Even the Greek debacle which has some of the same root causes is being ignored = Bullish

AAPL – Earnings report was a grand slam home run. Like so many other huge corporations the majority of jobs will go to faster growing emerging markets (more customers – less distance to transport product) where construction and labor is cheaper. Up another 5% in after hours trading. = Bullish

YHOO – Down over 3% after earnings. Not as important as AAPL= Bearish

McClellan Index is below zero and this gives building bullish momentum room to run = Bullish

GM – Repaying

Significant Indexes

• McClellan Oscillator rose  to -6.78 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is still in NEUTRAL territory
• US Dollar – rose +0.08% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Is very important. Remember, dollar down almost always = stocks up and visa versa. The positive earnings reports are overshadowing the dollar which is in the middle of a consolidating range between @$80.00 & @$82.20. Dollar at 81.03. If it moves to either side of that range it will impact stocks.

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

Why you should always check out out the comment section of the blog.

YOUR STOCK LIST is now closed. This does not mean you can’t trade any of the stocks on it or the whole group.

Yesterday, Both The Critic and Paul R put into simple clear term the most used trading strategy of Investors411 for stocks. I can do no better than repeat them below. Also D. on IMAX

The Critic:

“#1 The Lower the McClellan goes the better time it is to buy stocks.
#2 YOUR Stock List has stocks moving higher – The 50 day moving average is going up. This is the blue line on the chart.
#3 the time to buy is when these stock dip back down closer to their 50 day moving average.
#4 A time to sell is when the stock gets too high above that moving average?
#5 AS ALWAYS DO YOUR…”

Paul R

“When a good quality stock pauses to refresh and hangs out on the 50 day moving average (DMA) it can be a good time to buy, this point is known as “Free Parking”. If you are watching a stock in this situation and it starts moving up on higher than normal volume go for it!

When a stock is extended 30% from the 50 DMA be light on your toes. When the stock is extended 50% from the 50 DMA have your finger on the trigger. When a stock is extended 100% from the 200 DMA many institutional buyers (mutual funds etc) will lighten up on their position.”

D

“:):):):):):)”over IMAX up +6.37% yesterday in increased above average volume

There is a play for short term traders here. IMAX is again just below or at an all time high. This is a technical breakout point. What could happen at the open to IMAX is a “pump and dump.” – (See Sunday’s Investors411) A major player(s) will try to break out this stock and the greed will flow as IMAX gets pumped up by other day traders who want to make fast money on the breakout.  You could see another big gain Then those who pumped it will dump  all their shares (the ones they owned form the past and the shares used to pump IMAX.

Obviously you have to buy early. The big question is how high will it go before it gets dumped.  For longer term investors, just be happy when a higher high is created on the chart because that = bullish

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING