Compromise

American’s say they want compromise and legislators working together.

In fact 23 separate polls say the deficit should be reduced by raising taxes (this figure ranges from 76% to 59% vs 40% to 19% who say only spending cuts)

Yet we learned that greed and fear based Murdoch style journalism sells. Ideologues hate compromise and, as many of you are aware, almost all Republicans have made a pledge NEVER to compromise on taxes even for the wealthy. The path of No compromise.

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Historically,  countries have chosen the path of growing as their primary way out of recession. The Tea Party dominated congress has forced considerations of immediate cuts on a weak economy that will constrict spending.

We’ve come from loosing -720,000 a month to gaining +117,000 a month. Moving in the right direction, but still way too fragile a recovery to withstand the impact of a constricted economy. A few of many examples of making cuts sooner rather than later.

• You constrict the economy = less jobs. One major reason for the recent growing deficit is so many people out of jobs, or in under paid jobs paying almost no taxes.
• Cutting education and teachers – High tech is the future of jobs, slash them and there are fewer good paying jobs for Americans and deficits grows because fewer have decent jobs.
• Raise social security eligibility age. If you raise the age for ss people will work longer and young workers will not find jobs.

By not focusing on the clear and present danger – jobs and our economy - we have done significant damage to our hopes for the future. We’ve again chosen the wrong path.

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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

Index	Percentage	Volume
Dow	-4.62%	big
NASDQ	-4.09%	big
S&P 500	-4.42%	big
Russell 2000	-5.16%	-

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

• Outflows from mutual funds (see below) also indicate a climax sell off. However, everything gets exaggerated because over 60% of all trading is done by High Frequency Traders. I would imagine even more than the 60+ is now being done by HFT’s because of the huge volatility. New HFT’s rule – Technical aspects may be secondary to headline driven markets

• CAUTION – Even more mom and pop investors have left the markets in the latest meltdown. High Frequency Traders rule even more than before. This is what is creating the massive interday volatility (especially in options). Don’t be fooled into thinking these are normal investors getting back into the markets – its HFT’s taking a an ever bigger and bigger share of US equity trading. $16.94 billion in outflows from mutual funds last week almost equaled the record held by the week directly after the HFT induced “flash crash”

• The McClellan Oscillator (MO) fell to -87.80 (-30 somewhat oversold, -60 oversold, -90 OMG oversold). Were at almost OMG oversold levels.-88 is not as bullish as the -142 a couple days back.  But, technical outlook = Bullish

• Reading The Tea Leaves - Stocks are moving on headlines and that move is exaggerates by all the HFT trading. The macro headlines are worries over Europe’s banking system and a downgrade of France’s AAA credit rating.

From yesterday Bottom Line… More often than not lows are retested before a rally.

Bottom Line - Lows were certainly retested yesterday.

So the stage is technically set for some kind of oversold rally. However, fear dominates right now and fear is driven by headlines. (Example – S&P downgrades France from AAA credit or bond yields in Italy/Spain rocket higher again.) Sorry I’m just not fast enough on a short term basis to predict headlines and how markets will react. HFT’s do this in microseconds.

Longer Term Outlook

weeks, month, months

• Repeat - May 20th forecast still stands. The recent Washington debt crisis debacle has focused everyone on cutting the money supply.  Simple math – The less money that’s out there = less jobs = greater chance the “Great Recession” returns. European debt and emerging market’s inflation fears add to this.

• Long Term Outlook Listed Below. Some major Long (monthly charts that go back over a decade)term trend lines have been broken (will go into this tomorrow) = Bearish

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Paul’s Corner

I’ve mentioned HGSI quite a few times as the software I use to research and evaluate stocks. It’s  a powerful and easy to use program.  HGSI usually features a webinar every month demonstrating the program and giving trading tips.  Their next webinar is as follows:

Join HGSI Power User Ray Ebert on on Tuesday August 16th from 8:00 pm to 9:15 pm EDT.  Ray will present  ” Prospecting and Trading Within a Weekly Timeframe.”

Ray has been using HGSI since 2009 and earlier this year was selected to be a “Spiker,” an elite-level member of SpikeTrade, a trading community managed by Dr. Alexander Elder and Kerry Lovvorn.  In his first quarter as a Spiker, Ray distinguished himself by winning first place for equity and 2nd place for points in the weekly trading competitions.

For traders/investors who are challenged with finding the time to trade regularly or who want to incorporate more structure into their trading routine, Ray’s presentation should be of great benefit.  He will share his disciplined weekly trading methodology using HGSI and other software.  He will also give examples of how he manages his trades and provide technical analysis of stocks submitted by the audience.

Registration   www2.gotomeeting.com/register/382039138

I encourage you to join in for some good trading tips!

So on another 500 pt drop yesterday, where did the money go? My favorite top 100 high demand search shows gold stocks  led the way with 25%, Oil & Gas Transporation 7%, Prec. Metals 7%,

Gold (25.00%, 25 securities)

• Agnico-Eagle Mines (AEM)
• Allied Nevada Gold Corp (ANV)
• AngloGold Ashanti Limited (AU)
• Aurizon Mines  Ltd. (AZK)
• Barrick Gold Corporation (ABX)
• Buenaventura Mining Company (BVN)
• Coeur D’Alene Mines Corporat (CDE)
• Eldorado Gold Corp (EGO)
• Gold Fields Limited (GFI)
• Gold Resource Corp (GORO)
• Goldcorp  Inc. (GG)
• Harmony Gold Mining Co.  Ltd (HMY)
• IAMGold Corporation (IAG)
• International Tower Hill Min (THM)
• Jaguar Mining  Inc. (JAG)
• Kinross Gold Corporation (KGC)
• Minefinders  Ltd. (MFN)
• Nevsun Resources  Ltd. (NSU)
• New Gold  Inc. (NGD)
• Newmont Mining Corporation (NEM)
• Novagold Resources  Inc. (NG)
• Randgold Resources  Ltd. (GOLD)
• Richmont Mines  Inc. (RIC)
• Royal Gold  Inc. (RGLD)
• Yamana Gold  Inc. (AUY)

Oil & Gas Storage & Transportation (7.00%, 7 securities)

• El Paso Pipeline Partners LP (EPB)
• Enterprise Products Partners (EPD)
• Magellan Midstream Partners (MMP)
• ONEOK Partners  L.P. (OKS)
• Plains All American Pipeline (PAA)
• Southern Union Co (SUG)
• Williams Partners L.P. (WPZ)

Precious Metals & Minerals (7.00%, 7 securities)

• Endeavour Silver Corporation (EXK)
• First Majestic Silver Corp (AG)
• Hecla Mining Company (HL)
• Pan American Silver Corporat (PAAS)
• Silver Standard Resources  I (SSRI)
• Silver Wheaton Corporation (SLW)
• Silvercorp Metals Inc. (SVM)

Careful with the gold and related stocks, the CME raised margin requirements on gold

So what’s the market going to do today, is this a new morning in America? Let’s load up ThinkOrSwim………here we go folks another day of fun!

Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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Current Positions

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

NLY - Annaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide.

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) Obviously a mistake to sell and take meager +3% profits. Like a millions of other people who see worldwide economic problems ahead – waiting to buy another dip.

Disclaimer - Personally I own  a group of dividend stocks including NLY.  I have placed puts on all of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also own some SDS & TZA (ETF’s that double and triple short the market) as hedges.

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Long Term Outlook (for US Economy)

BEARISH

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH*

*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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

The Bad News

Obama to give major Jobs speech today.

Continuing from yesterday – So there is a lot of good economic news out there . We moved back from a financial meltdown cliff and and the improvement in the last jobs report is sunshine breaking through the clouds.  Obama does deserve some credit, but so do other factors like globalization – The emerging markets, like China are leading this recovery and pulling us along.

There are four major factors that are holding us back .

The HUGE hole – As stated many times since the fall of 2008 – this" financial crisis is far far far bigger" than most people though. We had both a housing & financial bubble’s burst. Many, but not all foreign countries bought into the American concept of "unregulated free markets." The phrase sound good, but countries from the Ukraine to Iceland have been crushed by adopting the American view of unregulated capitalism. This is a deep global hole.

The Consumer – Common sense has made the American consumer save more. This is justifiable. However the American consumer makes up over 70% of GDP growth. If she/he is saving they are not spending & money is not flowing.

Hoarding Banks – To paraphrase a nursery rhyme "All the president’s horses and all the president’s men can’t get banks to start loaning again." Shadow banks are hoarding money, because their balance sheets are so bad – they were caught holding on to too many unsecured assets (credit default swaps) Like consumers, a little hoarding is relatively good when compared too cascading debt.

There are, in partial defense of banks, a lot of potentially unworthy people to loan to. But, unless banks make the loans – money does not flow and the economy does not grow.

Debt – The USA entered this crisis already with a HUGE federal and trade deficit. Wars and nation building (Afghanistan) abroad significantly add to this deficit. We, like all other G20 countries, have used some form of government stimulation to help the economy recover. Our problem is the big debt hole we were already in .

Another big debt, not often mentioned is the debt each state has. As jobs and foreclosures grew & people save more  state revenue consequently fell. What’s happened in CA, MI & some other states will spread. Obama’s stimulus is back end loaded. Only @ 30% has been spent – so some of the remaining 70% will help will help troubled states. The question is – is the remainder of the stimulus and any new jobs program enough to tide us over until the jobs/financial and picture brightens?

The one argument that is impossible to stomach is the right wing mantra that big government can’t solve problems and/or is bad. Obama was handed an economic world that was on fire and he’s created some fire engines and used water (money) to put out the fire  You can disagree with with the methods, but a world left up unregulated capitalist greed is doomed. Without government/Fed intervention (the fire engines and water) we simply would NOT have put out the fire.

Tomorrow – the Ugly.

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage percentage	Volume
Dow	+0.01%	down
NASDQ	-0.22%	down
S&P500	-0.46%	down
Russell2000-	+0.13%	-

Investors411 record – 5 years of beating benchmark S&P 500

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

Technicals, Fundamentals & Analysis

The dollar held onto its enormous Friday gains. It looks like it is at an inflection point.  The fact that the dollar went no where and stocks went nowhere means the dollar’s inverse relationship to US stocks is back on.  The dollar is still the #1 forecasting tool.

Fearless Forecast-. From Monday – This week we should be all over the place, but some solid economic fundamentals are coming into the light. This should help stocks in the long run. Once the dollar calms down (expect it to rise and gold to fall) we should improve. Flat to up week .

Now going to get a bit more technical

If you don’t understand a term look in up at Investopedia.com dictionary LINK

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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 a fell -71 points yesterday and closed at 4036. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1800 points since late September. After 16 up days in a row, 9 down days in a row & now up 3 days in a row. Multi day moves in one direction are common and the decline in rate of change usually signals a reversal.

What it means – Long term we created a higher high on the chart = Bullish. The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. After, what looks like a technical correction we are agin moving higher.

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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 was flat -0 Friday . Anything close to or over +/- 0.50 is significant  The dollar closed at $75.77 .

The dollar’s rise did temper the rally, but the whole dynamic or fundamentals have changed. See Positions below.

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$NYMO The NY Stock Exchange McClellan (EOD) Index measures how much the NYSE is oversold or overbought .

The index closed at +22.38 This is a Slightly Overbought Position . This chart is showing we seemed to have reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  There has been no clear buy or sell signal for over a month.  Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

The closer we get to +/- 60 the better our chances of making money with a shorter term buy/sell signal

Positions

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

(again a little behind on latest moves)

We’ve had, and volume has confirmed, a quantum shift in markets. This may be temporary and it may be long term, but it necessitates major changes in positions.

Today is a confirmation day for Friday’s move.  More than anything else – looking for dollar to hold or add to gains .  Will buy some ETF’s and stocks until McClellan says we are overbought (@+60)

Recommended ETF’s and Trades

SELLING

GLD – Sold all GLD for major profit.  (will compute this later)  Gold is still something to hold for the long term and its fundamentals are still credible. Will buy back in on dips.

Gold will rise again, but for now there is just too much downside momentum. Will be back with larger position in GLD & GDP on a dip

NVS -Sold for 21+%

AMZN – Sold for 16+ % profit. This looks like a mistake. Fed Ex had a surprise upgrade in earning. Most of their good news was from abroad, but they ship and AMZN products are shipped.

BUYING

FXI – Adding more to this positions. If Main Street is recovering faster than expected, so will China. Their currency & exports is tied to the dollar. So in one major sense, their recovery is tied, in part, to the USA. They have under performed major USA indexes recently.

IWM or UWM (an ultra fund that does basically 2x IWM) These ETF’s both track small cap stocks (Russell 2000) IF , Main Street is recovering faster than expected they should outperform the other indexes. They have under performed so far and should, like China, make up some lost ground relative to other major US indexes. Waiting for more of  a dip.

BAC - Bank of America. They’re paying back TARP shows solid fundamental strength. (I know they are a shadow bank bad guys) Bought  a small amount of BAC Friday.

Start small & Build your position – Buy the dip.

Again any stock investment or ETF that doubles or triples what a normal ETF does is a short term play for traders and short term investors – NOT long term Investors .

Long Term Outlook = CAUTIOUSLY BULLISH