A Call to Action

Simon Johnson (Former IMF chief economist and MIT Prof.)

You make the difference – The folks at the Baseline Senerio have joined with others, after the President’s speech yesterday to support legislation offered by Sherrod Brown (D – OH) & Ted Kaufman (D- DE) to take stronger action against the shadow banks. (Obama did not endorse this bill) Nobel Prize winner Krugman’s view

I’ve signed their petition and hope you do too LINK

Bottom Line – Since Financial reform bill(s) wind their way through congress a most unusual phenomena is happening – They are getting TOUGHER. Republicans are caving (not a lot but  a significant handful) The harder you push the more protections for  Main Street – YOU, your taxes, your rights, your stock investments – will have.

Consensus on Shadow Banks is starting to move. Shadow’s have even hired and paid a phony front group that has already spent $2,000,000 to pose as a group that wants to break up banks, but actually promotes the opposite. Link to Video

Obviously the outright collapse of shadow banks would be devastating economically. However, what’s needed is legislation with some teeth that protects YOU.

Debate in comments Section

See J Sovjani latest reply – This debate has gone from GM to Dumpsters to Washington Square NYC. . A significant chunk of the folks who are on the private mail list of this blog are artists or craftsmen and you can follow the entire thread by scrolling down at this link

News Junkies

SHerwehe has sen in the following site that lists front pages  of newspapers across the world. I’ve used this site for months and it is really useful because it shows not only the different biases in the USA, but across the world. The US government has a post that actually translates foreign papers, but do not have time to track this down.

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!

Index	Percentage	Volume
Dow	+0.08%	up
NASDQ	+0.58%	up
S&P 500	-0.23%	up
Russell 2000	+1.12%	-

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

Answer -stocks so eat.

The NASDQ had fair sized gains gains in increased, above average volume. The Russell 2000 (small cps) out performed and the other two major indexes inched higher in increased above average volume.  Markets all rallied into the close = Bullish

US equities greeted Obama’s financial reform speech with a rally of almost 100 Dow points (Down @-80 to up +9.37 at close) Obama’s certainly no Teddy Roosevelt. = Bullish

Their is a giant cookie monster of ”programed traders” [ huge institutional investing] that comes at the same time and to the same place (Wall Street) each afternoon and devours all the cookies (stocks) it can eat. Every dip is getting bought no matter the cause. =Bullish

Stocks rallied despite a significant rally in the dollar. The Greek debt situation grows and the dollar is rallying because the Euro is falling. = Bullish

AMZN & MSFT Two tech giants both were down after reporting earnings in after the markets closed yesterday – drops of -5+% in in post market trading, still down but much better in pre market trading= Bearish

Analysis – If markets are down around noon expect the Cookie Monster to eat the cookies, vegetables and whatever is out there

Significant Indexes

• McClellan Oscillator rose slightly to +5.49 yesterday.  [Basically, 60 or above = Overbought = sell. -60 or below = Oversold = buy]. More sophisticated investors can use the 50 & 200 day MA’s and adjust from there. StockCharts has a better version of the McClellan chart ($NYMO) LINK. - This is almost right in the middle of NEUTRAL territory
• US Dollar – rose a significant+0.58% 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 upper end of a consolidating range between @$80.00 & @$82.20. Dollar at 81.65. 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

UWM – Investors – Our long position, ETF, that does basically 2X the Russell 2000 will continue to hold into the weekend. Considering a smaller position in TYH (ETF that does 3X NASDQ) on a dip.

Many of you are reporting excellent results in IMAX, VCI, SHOO, SNDK MSPD & VLTR and others. Do NOT chase these stocks, unless you really know how to day/swing trade – even then most are too overextended to risk a short term buy.  Traders should think more about selling as issues get over extended. Use the basic strategy – see top of blog.

Again McClellan Oscillator is NEUTRAL and a better time to buy (less risk) is when stocks are oversold.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Trust Buster president Teddy Roosevelt – Will Obama show us the same tonight?

Tea Party

“The tea party’s exaggerated importance” is the headline of the  major independent blog editorial blog Politico’s this AM on the “anti Obama rage group” .

Mea Culpa – I do respect the Tea Party because at Investor411 they have won. By focusing attention on their white (in the words of the old Ivory Snow commercial this group is 99 44/100% white)  rage I have taken it away time from facts on the deficit or Health Care.

The NYT’s lead editorial yesterday was on Massachusetts heath care system “which 1/2 of Scott Brown supporters and 2/3 of all Massachusetts residents like.”(paraphrase) according to a poll. 97% of MA residents are covered. For more see “Reform and Massachusetts.”

BRIC

The Economist has a  has an in depth look at the top emerging markets as a real alternative economic force to the European Union & America.  BRIC = Brazil, Russia, India, China whose leaders are or just finished meeting together in Brazil.  “The Trillion Dollar Club”

The Obama Speech

Tonight’s speech on financial reform is a defining moment. Will Obama be the next Teddy Roosevelt ? (A Republican Trust buster) The short answer is NO. Senate Democrat Ted Kaufman (Dem. DE) is our Teddy Roosevelt – Here’s part 2 of his speech on Wall Street and the Rule of Law

One piece of encouraging news is Senator Blanche Lincoln (Dem  AK) committee has a Republican onboard (Grassly- R IA) for her legislation on derivatives. Lincoln has come up with a stronger bill than other proposals.

NYTs headlines Obama Issues Sharp Call for Reforms on Wall Street If this is true you’ll see a 2 to 5% decline in shadow banks tomorrow. It Teddy Roosevelt or Ted Kaufman gave the speech you’ll see a 5 to 10%+ fall in shadow financials tomorrow.

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!

Index	Percentage	Volume
Dow	+0.07%	up
NASDQ	+0.17%	up
S&P 500	-0.10%	up
Russell 2000	+0.64%	-

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

Market went nowhere yesterday in increased above average volume. What Wall Street calls “churning.” Usually considered a reversal of trend = Bearish

Yesterday’s grand slam earnings reports by giants APPL & BAC (thank you taxpayer bailout, Fed 0% loans, & elimination of mark to market accounting) did little to move markets higher. US markets have reacted poorly to great news indicates  = Bearish

Seeking Alpha this AM has a big section on the problems  China has. Here’s one article . Investors411 has closed its entire China position (FXI).

Earnings reports continue to pour in.

Significant Indexes

• McClellan Oscillator rose slightly to -4.91 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. - This is almost right in the middle of NEUTRAL territory
• US Dollar – rose +0.19% 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 81.18. 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

Both Comments from The Critic & Paul R were incorporated in the strategy section of the blog. You can see them by linking here or at any time in the future going to the top of the blog and clicking on the word STRATEGY

Caution – I do on occasion day trade. None of this is part of Investors411. Almost all of you are looking for something to hold for a period of time.

When to Buy? – McClellan Index - Only 8 times in the last year did this index reach below -60 = oversold = a time to buy. Even then tow of those tomes were within a few days of each other. Therefore the total was only 6 times. The last time was back in early February. Its frustrating not to buy or sell, but Investors411 is going to wait till we are oversold to commit major amounts of capital.

UWM – [ETF that does 2x what small cap stocks do] UMW is back in the black and at a new high although only up a couple %. Almost closed this position. Going to sell at or near open today.

IMAX – imax hit a new high yesterday in a “pop and drop” (see yesterday’s Investors411) At one point in time it was up almost +9% and end the day at +2.94%. Volume was @ 3x normal.  Some entity perhaps more than one broke Imax out to a new high. All the day and swing traders jumped in after the break out. There was some China news,but this turned out to be not as big as its headline.  Then the dropping or profit taking came as IMAX fell up to 8%.

IMAX has had  some other pumps and dumps over the last few months. Investors411 called this pump and dump yesterday. This kind of trade is only for day/swing traders (not investors) who know what they are doing and can handle the risk. Not a recommend trade by Investors411 Yes I bought some Imax to day trade early yesterday and made a 5% profit on this.

Paul R on comments section recommends VCI,, that’s held onto its breakout from a consolidation period yesterday. Volume not strong,but it has possibilities for longer term investors

Monitor Likes SHOO – more a short term trade because it is too far extended from 50DMA (Day Moving Average – If you do not recognize what 50DMA was you should NOT be trading these stocks!)

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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Teddy Roosevelt

Back in the early 1900 Republican President  Teddy Roosevelt busted up the big monopoly shadow banks when they tried to take control of government.  Big Wall Street banks have increased their control over Washington for almost 3 decades. Is Barack Obama a Teddy Roosevelt?

Can financial reform end the too big to fail problem? “Big shadow Banks have become even more powerful since the 2008 meltdown.”  Worthy editorials & videos

• Baseline Senerio’s MIT prof Simon Johnson today on Paul Volker
• Again MIT’s Simon Johnson on Steven Colbert show. As always humorous, but informative video (Interview starts at 15.00 minute mark into show and last 6+ minutes)
• Bob Kuttner former Businessweek & Boston Glob reporter who has his own mag., American Prospect on banking reform and the need for a game change like Teddy Roosevelt

If Democrats want an issue to run on in November. This is it. But perhaps/probably too many  are owned by bank lobbyists.

Bottom Line – If the financial legislation ends the too big to fail problem its good. If not it stinks.

The Public Option Did WIN

The “inclusive, single payer, cost effective, money saving ($61 billion over 10 years – CBO) robust Public Option” was won in education. This overlooked  bill was passed along with Health Care reform and cut out the banks (middle men) and opens opportunities for anyone seeking help at the college level. Jeff Cohen editorial

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!

Index	Percentage	Volume
Dow	+0.11%	flat
NASDQ	+0.26%	up
S&P 500	+0.00%	down
Russell 2000	+0.25%	-

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 each weekend

Another day of weak volume.  US equities were basically flat. Flat prices in high volume indicates a shift in course. Flat prices in low volume indicates little.

Good news was consumer confidence rose last month. Seeking Alpha (one of the best financial sights out there) presents an interesting long term view that low consumer confidence has historically been a good time to buy stocks. Bad news was concern over sovereign debt (see below)

KING DOLLAR is the major index to watch. (see below)

Significant Indexes

• McClellan Oscillator fell slightly to -4.55 yesterday. [+60 or above = Overbought = sell. -60 or below = oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. -Same pattern continues - We right in the middle so NO clear signal. However we are still in bearish pattern of lower highs and lower lows.
• US Dollar -started back up +0.21% yesterday.

What the dollar does over the next few weeks is critical to stocks and economics around the world. The dollar has risen 10% since Dec.. This means that US & China (their money is pegged to ours) exports are 10% more expensive to the rest of the world. A higher dollar,therefore, puts real negative pressure on US/China stocks, what you pay, and an economic recovery.

This is why the sovereign debt crisis in Europe [PIIGS & former Russian satellite countries] has the potential to plunge us into round two of the recession. The dollar is rising because of the problems in Europe.

Positions

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

DWA (Dreamworks) Ended up selling all of DWA for 4% loss. Was stopped out of 1/2 and sold the rest. Selling the last 1/2 was probably a short term mistake because after three days of big volume selling it should bounce higher this AM. Loss -4% on 2% of portfolio

RGC & CNK – Opened a 1% of portfolio position (hopefully long term position) in each stock. RGC price = 17.68 & CNK = 17.98. Will add to these on dips. Caution if Easter weekend movies bomb, these two stocks will get hit. A safer entry point may  be Monday or Tuesday.

Waited for even a 2 to 3% dip in IMAX to buy a bit more, but it just not happening. IMAX is NOT having a climax buying spree (going elliptical) yet, because there is NO big volume behind the rally. IMAX now up 30 to 40%

Will try to add a 2% position in TEVA today. Hopefully at a slightly lower price.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Your Comments

Both Bob Sadinsky and sherwehe have echoed Jon Stewart and added to the Rape and Halliburton /KBR story in the comments section of the blog. The fact that this and other brutal rapes of American women are NOT publicized shows the vast power of American corporations especially those of the military industrial complex.

Obama is a huge disappointment in this. If he stood up and spoke out forcefully for rape victim Jamie Lee Jones you would see headlines behind this story/legislation.

Disaster for Democrats – Globalization

Teddy Roosevelt

Perhaps the headline here should be China Rising - Globalization. See OVERVIEW section of blog for more. Here again is the Good, Bad, and Ugly for globalization.

The Good – Globalization has brought a better standard of living to hundreds of million of people in emerging markets.  It has produced jobs and better paying jobs across emerging markets. Worldwide GDP has expanded

The Bad – If you are an American worker you are the first fired and the last hired. You cost too much to employ relative to cheaper costs abroad. Globalized companies also have to pay for your health care. Ross Perot was right – that giant sucking sound is job loss in America.

The Ugly – Globalization has helped concentrate power and puts wealth/power in the hands of fewer individuals at the top. This leads to corruption and less accountability.  From corporate power in globalized companies to one party rule in China, this trend has helped led to a class of ultra wealthy, powerful and potentially corrupt individuals who are increasingly above the law.

Why it’s disaster for Democrats – They’ve embraced globalized Wall Street instead of fixing the problems.  Jobs are going to be created over seas where markets are growing, labor is cheaper and health care is provided or absent.  Wall Street grows while Main Street suffers = disaster for Democrats in upcoming elections.

Solution – Globalization, like capitalism can work but it needs regulation or rules. Globalization, of course, is part of a world wide capitalist system. Yes it creates faster economic growth. But, it also creates imbalances, or cancers.

Teddy Roosevelt acted and took down growing concentrations of power (monopolies – like Standard Oil) when capitalism raged out of control. This capitalist problem is now far more globalized.  We’ve had many warnings – the last major one was last years financial meltdown.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.50%	up
NASDQ	-0,59%	up
S&P500	-0.62%	up
Russell2000	-1.43%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Mea Culpa – Lots of you sent personal emails that I forgot to change yesterday’s stock chart. It was Monday’s results. Sorry Today’s got changed.

Usually volume is the #1 confirmation factor or forecast tool. However, the dollar’s rise or fall is now dominating the US stock market. Since (as discussed in past Investors411) the longer term trend is for a lower dollar –  Stocks should move higher.

Stocks fell in increased, average volume. Technically a moderate short term bearish sign – But the dollar rules right now.

Reality – money is NOT coming into this market from the sidelines. This does not mean we can’t rally further. But it does mean you have to pay close attention as an investor.

After a breakout 8 day rally, oil prices LINK finally fell

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 37% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose +66 points Friday and closed at 2832. A higher high price on its chart pattern has been confirmed and it sure looks like a bullish run could be starting. =  Bullish for stocks & world trade right now

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The Dollar is currently the #1 forecasting tool.

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

US dollar rose +0.22 % The dollar closed at $75.53 . We have developed a support now resistance (it’s called support on the way down and resistance on the way up) level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB -

• Earnings will probably trump the dollar as the #1 influencing factor for the nest two weeks. But the falling dollar is the main driver of stocks right now and we have a long way to go till we hit last year’s $71 low.
• A slow decline in the dollar = good a rapid decline = bad .
  

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level.

Therefore, The dollar can drop much lower and stocks rise much higher till support levels are reached

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Review of Positions (Part 3) This section is really for traders who are comfortable owning a position for a day or two – Would sell on any 7 to 10% drop. NOT a Longer term Investment

Recommendation Buy the Dips till the dollar drops to near $72 . Have positions in NVS & CSCO. Waiting on other positions for dip.

NVS – Novartis is a major European drug company that continues to steadily move higher. +13% since bought .  In part this is a swine flu play whose technical chart looks good. Going to sell NVS when flu hits – perhaps a month or two.

AAPL- Apple (don’t own) Fundamentally a fabulous story. Beating on top and bottom line. Only 49% of profits or sales (sorry forgot which one 0 it was announced on CNBC) come from abroad. That means not only Apple exploding in the USA but it has room to grow in faster markets (faster growing GDP) like China/India

CSCO – Cisco. Has been moving into the “telecom revolution” (Apple’s and related products). One of the best internet “picks and shovels” maker. 0% gain/loss since bought. Consolidating right now.

MVIS, – Has best technology in its sector and a couple of huge moves higher. Recommended by one of you

GS , & JPM – Fundamentally the best two financial companies. Their competition is weak and they’ve used taxpayer funds to their advantage (see past Investors411)

CAT – Caterpillar – Best heavy equipment maker. Just had blowout top and bottom line earnings report. A major China/Emerging markets play.

EWZ – Brazil -Up way too far too fast.  Trader s should lighten up on this ETF

Sold 50% of position in EWZ yesterday for @ a +39% gain. Hope to buy back in on bigger dip. Also have sold all of EWY (South Korea) for +11% gain

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!