Iran Day 11

Iranian protestors – Photo from Andrw Sullivan blog

Neda Agha-Soltan has become the hero of the Iranian revolution from American media (LA Times here ) to Arab media here In fact al Jazeera has a whole section devoted to "Iran in Crisis" here Al Jazeera is an outlet for mostly Arab Sunni’s and Iran is Persian Shia’s. No love lost between these two groups. You heard and saw Neda’s story at Investors 411 3 days ago.

More of the same in Iran. Less on street demonstrators and more violence. Previously listed best  sources are still telling the story to the world. Some predictions from BBC – What’s next for Iran here

One issue that many on the far left are not going to like to hear. Israe l has certainly made mistakes in its two recent wars with Iran and her proxies (Hamas & Hezbollah). But seeing how the Iran’s "Supreme Leader" treats his own people you can see how hard it is to make some peace with him or his clients. Of course, the first the recognize and lavishly praise Ahmadinejad’s & "Supreme Leader’s" victory was Hamas (here) and Hezbollah (here )

Barack "Hoover" Obama?

Yesterday Abby posted an article by Kevin Baker on Obama from Harper’s magazine. Unfortunately you have to be a subscriber to reference the article. You can view some excerpts here The focus is that Obama has not and may not be able to change the strong intrenched interest that created the economic mess we are now in. President Hoover (his picture above) did nothing and the Great Depression grew.

Context We tore down the regulations on "free" markets and developed a massive credit debt over the last decade that has exploded. Yes, Paulson, Bernanke (more the previous Fed chair Greenspan) and Bush were leaders in creating this mess, but late last year when we stood on the edge of economic catastrophe they (PB & B) instituted a plan and prevented world economies from falling off a cliff. Bernanke, Geithner & Obama have followed through and added to that plan

Remember Lehman Brothers cause over $400+ billion dollars of debt to spread throughout the world when it went bankrupt. People were lined up in panic at insurance companies and banks. What if AIG, CitiBank, Merrill Lynch Fannie, Freddie. AIG and so many others had followed Lehman. The end result would have rippled through out the system and economic catastrophe would have been the result.

How Obama handles the economy is priority #1. Because it is the world’s economy and he is easily the most important/influencial figure. Unlike Hoover whose inaction significantly added to the Great Depression Obama has acted. But its those entrench interests that have dug in. Time will tell.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

US markets took a major hit on a bad economic forecast from the World Bank.

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool – volume – gives no indication of which way prices will flow.

Major event – Fed Meets today and issues statement on Wednesday

Yesterday’s major event was The World’s Bank lowered its outlook for the world’s economy this year from -1.7% to -2.9% .  This is some truly bad new s for long term investors.

Since volume is out as a forecasting tool right now, today’s price move will act as a confirmation of yesterday’s move. Do we fall further (bearish) or rebound (bullish)?

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD -  The dollar is the index to watch. Dollar went up +0.57% yesterday. Any move over 0.50 is significant.  It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows. Still to early to tell.

All together now -  our mantra – when the dollar goes up stocks go down . This strong inverse correlation has existed for many moons.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and the BDI fell minimally on Friday and significantly yesterday. This is a very important chart that has just rolled over. It usually moves in one direction for an extended period of time.  If it moves past and creates a lower low than it had eight days ago it would be a serious sign of trouble Right now, the momentum is with the bears.

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

You can play with the chart and create different settings to get a better idea of what’s happening, (the same with all other links to different charts)

Reading the Tea Leaves

Still think this market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. The benchmark S%P 500 has already broken through support and fallen 6 to 7% from its high to  893. Next significant support level is 875 to 880. As stated above volume is NOT confirming (or has yet to confirm) the downside move. So far this still is a technical correction of a market that went too high too fast.

Both the dollar and the BDI have started to trend in the wrong direction (If you’re a bull on stocks) Add the World’s Bank prediction and you have lots of reason to hear the bear’s growl.

Got burned with this the last time I did this, but buying a little protection on any minor rally. Adding small position in SDS (ETF that does 2X the opposite of the S&P 500)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Iran Day 7 – Kissinger, Kerry, Kahameni, Moussavi, Ahmadinejad, Obama Effect – Some conclusions – The “Supreme Leader” Reading the Stock Tea Leaves – low volume – The dollar & the Baltic Dry Index – plus more

IRAN Day 7

Friday demonstration -Photo Getty

• Perhaps biggest rally yet as “Day of Mourning” brings million+ to street yesterday. Story Link
  
• “Supreme Leader” Ayatollah Kahameni today called the elections fair Story Link
• The “Supreme Leader,” this is the name they use for their dictator, accused US, Britian, and Zionists of compicity incasting doub on the elections.
• Henry Kissinger endorses Obama’s hands off strategy “Anything he [Obama] says would handicap Mousavi “(opposition leader) This echo’s Senator Kerry “Think Before You Speak” editorial

Some Conclusions the Far Left and Far Right are NOT going to like to Hear.

• The focus has shifted. It’s no longer The American’s against he Muslim world (you’re either with us or against us) but between the conservatives and modernist in Islam.
  
• Ahmadinejad was created under the hard line Cheney/Bush approach to the Muslim world. The “Green Revolution” under the “Obama Effect”
• Lesson learned – All Muslim’s are not the same – Just like American there are there many different sides
• If the Ahmadinejad/Kahameni militant temporarilly win – remember they are the main supporters who encourage and support other violent terrorist groups like Hamas and Hezbolah.
  
• Look at what the Ahmadinejad/Kahameni militants do to their own people and think what they would do to you, Sunni Muslims, Israel, or any who do not follow their orthodoxy.
  
• These militants in Iran are more dangerous than “Supreme Leader” Kim in North Korea because they are religious miitants.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

Mea Culpa – Like many others I’ve been caught up in the events in Iran and not been doing due diligence on stocks and other issues. But still believe in basic conclusions listed this week. However,  the conclusions/forecasts have been pretty accurate starting Monday. See reading the tea leaves below.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD – The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went up +0.45%.   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows.  Too early to tell difinitively. However if you get another 1 to 2% rise inthe dollar the mantra of the last few months will probably reapear. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. +2.41% in low volume. Financials are in danger of breaking down through a major support level. (see chart) They got a reprieve yesterday. Any breakdown would be bearish.

WTIC – Oil prices closed up +0.29% yesterday.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 6 day rally. But again yesterday the move higher was minimal and we have NOT reached the highs of 6 days ago.

We could be putting in a double top or a slightly lower high. This would be a longer term bearish sign if it occured.

Reading the Tea Leaves

The conclusions/forecasts have been pretty accurate starting Monday.

• Monday’s lead statement - Expect a tired low volume market to retreat this week .
• Low volume means indicates no bias toward bulls or bears.
• The low volume breakout has failed and we are back in the old consolidation area and, therefore back to NEUTRAL outlook.
• Strong support at @ 900 on the S&P 500. This has held for a couple days.
• The low volume indicates a technical correction of a market that went too high too fast.
• The possibility of this 4% correction turning into a 10% correction exists – still with low volume

The key two words are low volume . This shows little commitment my major players one way or the other.

The BDI and especially the Dollar are the indexes to watch. This is a technical correction, but volume is the key. Some unexpected bad economic news could turn volume around and put the bears and fundamentals in control.

In the Long term its hard to see the dollar move higher because fundamentally we are printing so much money and injecting a lot of stimulus intothe markets.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING