“Where books are burned in the end people will burn.” – Jewish Poet Heinrich Heine

Book Burning Zealots

Muqtedar Kahn an associate Professor of Social Policy at Univ. of Del. had an excellent editorial in yesterday’s WaPo. The above quote was from his article.

The 9/11 Koran burnings scheduled by a “Christian” pastor in the USA and promoted by American media and growing US Islamaphobia has become international news.

• VFW commander Richard Euwbank has said “it would endanger US troops overseas.”
• Vatican & top NATO officials are condemning it.
• Our State Department has called it un-American, the attorney general “idiotic” as well as the National Council of Churches
• Catholic cardinal in India
• Muslims and Christian religious leaders in Indonesia have banned together
• Of course in countries like Afghanistan, Iraq, Pakistan etc. there has been widespread protest.

Islamaphobia is expanding throughout the USA and this Koran book burning  is like throwing gasoline on a fire. “Evil triumphs when good men do nothing.”

Wealth Inequality

Remember all those “banana republics ” and other countries that never got anywhere economically because all the wealth was held by a rich oligarchy. Slate has come up with some enlightening documentation that demonstrates the growing rise in income inequality in the USA. A visual guide to Income Inequality

More tomorrow

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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!

Technicals, Fundamentals & Analysis

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

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

From Yesterday – “Its natural for volume to rise after Labor Day weekend.” – Volume fell, yet another further indication of just how many retail investors no longer invest. BB/HFT’s rule.

Investors411 strives to give you many different ways to invest depending on your level of risk.

• YOUR stock list (made up of stocks you send in are listed in the Position Section at the blog and reviewed by Paul R periodically in the comments section. – For higher risk investors latest update yesterday by Paul R
• Investors411 has a long history with ETF’s that benefit from major economic megatrends. These can also be found in positions section of blog. It’s interesting to note that while overall volume is flowing out of ETF’s this year, its growing in foreign ETF’s
• Investors411 also offerer a resource to a more conservative approach to stocks investing that provide a dual stream of income – dividends. High yielding dividend plays or the Dow’s top 10 dividend stocks
• Investors411 lists various “significant” indexes that can be used as a forecast tools on when to buy and sell.
• Check out the comments sections for further ideas from active traders.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, exploded  a +0.95% higher yesterday. This is the single most important factor behind why the BB/HFT’s sold & stocks fell yesterday. = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.46% Friday. A 5 week rally the BDI had flattened out. Now starting to rise again. This acts as a confirmation of the economic health of emerging markets. = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell dramatically  to +15.34 yesterday.= Neutral

Reading Tea Leaves

The sharp reversal higher in the dollar is especially noteworthy. The chart shows we broke above the 50 DMA resistance level, but we are still in the trading range developed over the last 4 weeks. Today will act as a confirmation (or not) of yesterday’s big dollar move. Another massive move higher would be very bad for stocks. holding onto yesterday’s rally – mildly bad for US stocks and the bigger the fall the more bullish for stocks.

Again UUP the dollar ETF is what to focus on for stock market direction if you are an active trader.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions –  EWS (Singapore)

Sold 1/2 of EWS for +5% profit.

Since MO is back near zero or its 50 & 200 day Moving averages – It’s neither overbought or oversold. Therefore NOT willing to risk investing. Traders who know what they are doing and are willing to take risks may want to check out latest update yesterday by Paul R of YOUR Stock List

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Koch Brothers

Buy/Rent Calculator

The NYT has an interactive Buy/Rent calculator for those making this decision. Of course the hard part is adjusting what future housing and rental costs will be.

Follow the Money

Every Sunday Frank Rich has a column in the NYT and more often than not its a home run. You know the front people behind the Tea Party and other right wing groups but the billionaires (Murdoch and the Koch Brothers & more) that fund or run the show are the real power brokers. Follow the Money

Here’s a quote from Rich of just what the Koch Brothers believe - “They haven’t changed.” David Koch ran against Ronald Reagan on this platform in 1980 -

“his campaign called for the abolition not just of Social Security, federal regulatory agencies and welfare but also of the F.B.I., the C.I.A., and public schools — in other words, any government enterprise that would either inhibit his business profits or increase his taxes.”

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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!

Technicals, Fundamentals & Analysis

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

I realize that the vast majority of you want to know just if its safer to buy now and what areas to buy. A lot of the below material just makes your eyes glaze over and is techno speak. On the Positions Section of blog there are a list of potential ETF’s that should outperform the benchmark S&P 500. Generally,  The time to buy is on dips when the MO (see below) gets to -60 or below.

Investors411 want YOU to be a better trader or investor. The primary goal is to educate YOU. If you skim the below, you’ll see the major empahasis is on the massive currency/dollar market that, right now,  is walking stocks like you walk your dog on a leash.

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Popular financial channel host Jim Cramer said last Friday – “BB/HFT make up 80% of trades.”

We had volume behind Friday’s big rally. Don’t have the faith in volume as an indicator for major indexes because of BB/HFT’s. Volume does have some more credibility when it comes to individual smaller stocks.

More importantly we had a falling dollar that has had trouble breaking through the falling resistance level (see $USO below). That’s where the action is. Dollar falls = stocks go up and visa versa. From  the BB/HFT’s to Central Banks to worldwide oil barons all play the massive currency markets and try to manipulate it to their advantage.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar fell a marginal -0.02%. Chart show falling 50DMA is a strong resistance level. Breaking down or up through it is the key for US stocks. = Neutral
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose a marginal +o.33% Friday. This gives some stability to the 5 week long rally after two down days in a row. 5 week rally trend is still in place, but not entirely back on track = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose  to -15.64 . This was a massive, almost +45 point move. If this move continues it could flame out real fast. Nevertheless, our #1 Buy sell Indicator is back at = NEUTRAL

Reading Tea Leaves

From Friday – “When fear is at its greatest – that’s the time to buy. Have we reached that point…Personally, I’m torn. There’s so much investment fear out there – Am I letting it cloud the facts?”  Answer – YES – We had an oversold bounce Friday that could continue for a few day or longer.

Friday I gave you all the reasons for an oversold rally, yet failed to take full advantage of it. That’s me in the doghouse with traders.

INVESTORS – The conditions were marginal, but still NOT good enough to nibble. If you like you can always do “in the money” coverd calls or invest in high dividend stocks to mitigate risk. A good time to buy these is when stocks are oversold instead of overbought.

CAUTION – This is a NEUTRAL market and ideally you’d like oversold conditions to exist in a BULLISH market. That’s why Investors411 is being cautious.

Still think there is a better than 50/50 chance of markets falling to/or testing this year’s lows - SPX 1020

UUP remains the ETF to watch because it tracks the dollar.  Yes, we had an oversold bounce and it could continue. But if the dollar breaks through its resistance & moves higher (see above on $USD) stocks will roast and toast.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions - Small positions in EWS (Singapore) USO (commodity-Oil) & TYH

Traders - Bought TYH (3X technology ETF) again at 24.98 Friday. A smaller position than last time (5% of portfolio) because the conditions were not as good.

Reasoning – I should have bought it at the open when stocks dropped @70 points, but I was waiting for a 100+ point drop. When stocks moved higher than their open in basically oversold conditions (see MO for Friday) I bought the first dip. I did Not buy as much as before because the conditions were not as oversold. (also UUP was flat)

Holding TYH overnight is always a risk & other factors.

• The rebalance the TYH to more accurately reflect its positions & I do not have a super computer(s) to figure out if its out of whack like the BB/HFT’s do
• A single event can cause the TYH to more dramatically by the next open. We are talking about an ETF that does 3X what the tech stocks do.
• One reason I have the ability to trade this, is that I have the one of the financial channels on in the background as I work and can watch the market move.

Same philosophy applies. Have moved stops up to 1 below what it was bought for & and will take 3% to 5%% profits on 1/2 of TYH, hopefully today. Conditions not appropriate for any other buys.

INVESTORS - I know you’re frustrated & would like something to buy and hold. The good news is USO & EWS are both in the black, but haven’t reached the @5% profit level  where you can sell 1/2 and let the rest ride.

Long Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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Crunch Time/Elizabeth Warren

Perhaps the best result of the Financial Reform Legislation could be  a strong Consumer Protection Agency. Over the past few years Investors411 has beat the drums for the stand and policies of Elizabeth Warren. She would be an ideal choice for the agency, but has strong opposition from influential Senators like Democrat Chris Dodd (He approved the big financial bonuses for bailout TARP shadow banks) WaPo thinks there is good shot she will get the job.

Matt Taibbi

The Rolling Stone’s Matt Taibbi has an excellent editorial on “Wall Street’s Big Win.” The win, of course, is the new financial reform package that became law. Taibbi nails Republicans and Democrats (including Dodd) who gutted financial reform legislation.

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!

Technicals, Fundamentals & Analysis

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

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Individual companies may be doing well, but earnings season is basically over. The focus now turns to economic news and from China to the USA (talk of GDP growth being revised down in USA from 2.4 to 0.2 in 2nd quarter) the news has not made investors happy.  We’re not falling over the cliff, but even the BB/HFT traders need some series of economic fundamentals to hang their hats on.

Therefore, don’t see bulls getting out of the corral until the market becomes more oversold.

Same story of bigger volume on down days that has been the hallmark of US indexes for many moons.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar rose 0.42% yesterday. This confirmed a massive +1.84% move the day before. Very bullish for the dollar but for stocks = Bearish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +2.48% yesterday. Has broken up through 50 day moving average & upside momentum slowing. Overall trend  = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell to -38.98 Approaching oversold, but still = Neutral

Reading Tea Leaves

The dollar is the key index to watch. The larger currency market is almost  dictating what happens to US stocks. You can follow (or invest) in it by watching the dollar bull ETF – ticker symbol UUP. If UUP goes up, stocks go down and visa versa.

The dollar closed at $82.64 and the first significant resistance level is the 50 day moving average at $84.06 ( 50 dma is falling each day). So there is a ways to go before we reach this point.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions - NONE

From earlier this week - “The Bulls seem to be loosing control.” The MO has fallen to -39 & we are approaching the -60 oversold level.  The lower the MO goes the better the chances whatever long position you take has of making at least short term gains.

A number of you have asked or are investing in stocks with high dividends.  This gives you a second revenue stream – the dividend that is in some cases higher than what you can get in CD’s. The problem of course is will the stock go up or down. Here a list of top ten dividend stocks from an author in at Seeking Alpha.

FXI, EWZ, EEM, EWY, & EWS are the courty ETF’s recommened for consideration when conditions are appropriate. Also GLD on dips.

Also considered are ETF’s that mirror or do 2 or 3 times what major indexes do.

YOUR Stock List last generated on this date (scroll down) Have not gone over these recently.

More agressive traders could start to buy the dip. Longer term investors may want to wait for stocks to move lower.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Iraq

The USA is pulling combat troop out of Iraq by end of August & only 50,000 to remain. “No combat troops will remain.”

So without the bells, whistles, victory celebrations we’re kind of  leaving Iraq. Like Osama Been Forgotten, Iraq Been Forgotten. Here’s what remains.

• The Sunni’s got toasted in the civil war and there are still probably millions of refugees in Jordan, Syria, & Iraq
• There has been NO resolution of an elected government in Iraq for 5 months. Two leading sides each have @ 90 members of a @350 member parliament.
• American’s & Saudi’s back Allawi faction. Iran backs Maliki (current PM) faction.
• Kingmaker seems to be Sadr (actively courted by all) who fought Americans and hid out in Iran. Sadr likes Maliki’s side but hates him because he imprisoned his followers.
• All that oil, everyone own a gun, religious hatred/killings and huge amounts of corruption. Not a good mix.
• July was deadliest month in two years according to Iraq government. But this is still down from 2008 levels.

Reasonable to assume as US withdraws and no or a weak governing majority formed - violence will grow. If the Allawi faction gains power the Iraqi dinar could pop higher.  Obviously great risk here. But where there is great risk there is great gain.

Best place to go for more is Informed Comment blog.(scroll down)

For the US this obviously was an oil war (the peak oil mega trend). It is in the US interest, and that of all the corrupt officials no matter what side they are on, to keep the oil/money flowing. However the hatred is very very deep and religious between Sunni’s & Shia. The other major group – Kurds want the same oil that the Sunni’s claim. This is all very very confusing and I could go on & on.

Bottom Line – Dinar pops on Allawi taking over (most likely winner because Saudi’s & Americans will fix it for him) Then you have a power vacuum with US leaving and all those guns, hatred, and money/oil. Violence already growing and the kingmaker is the most radical Shia religious leader (Sadr) in Iraq. Not a pretty picture.

So if you love great risk buy now on the hope of Allawi forming a government. But I’d sell into Allawi taking power because American’s don’t want to go back.

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!

Technicals, Fundamentals & Analysis

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

Same Mantra for this week -The Black Box/High Frequency Traders BB/HFT control the vast majority of trades.

Last big week for earnings reports.

Significant Indexes-

• McClellan Oscillator (MO) fell  to +42.72 over the last few days [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. A minor price fall ( yesterday’s -38 Dow points) creates a major 24 point move on the MO vs. a major gain (Monday’s +200 Dow points) creating almost the same move higher. When the MO falls 24 points on such a small loss its usually bullish. Again “wiggle room” has opened up for the MO to go higher – High two weeks ago 90 minus 42,.72 = @ 47 points or wiggle room for bulls. NEUTRAL
• US Dollar –  The dollar  fell  -0.43% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar  is in a two month long fall and is divectly above a major support level.(its 200 Day Moving Average – see chart) The fall for stocks = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a two week rally and is up +17% rally and is at 1977 Monday. Yesterday the BDI fell slightly to 1964. We’d have to break support at 1700 to turn really bearish or go back up above 1977 to turn bullish = Neutral

Reading Tea Leaves-

Investors purposefully chooses the three indexes that have perhaps the most significant impact on the market. They all measure different areas. Here’s the BASICS

The McCellan Oscillator -MO BASICS (see above)

• The MO measures if the market is oversold or overbought.
• It does NOT use volume to caluculate this (see above)
• The BB/HFT traders are making day and swing tardes that almost ignor old technical rules like volume as a confirmation of a market move.

The BDI – BASICS (see above)

• Measure costs to ship goods worldwide.
• Transparent figure – Unlike many economic figures – think shadow banks.
• Without exports/inports our globalized economic structure collapses.
• Lower prices = less goods shipped. Higher prices = more goods shipped & good for stocks.

The Dollar – BASICS (see above)

• The BB/HFT pay close attention to what the dollar does.
• Currency markets dwarf stock markets.
• When the dollar falls it means all those companies that export US goods will make more profits and markets will move higher. (& visa versa)

Analysis –

The US Dollar is in a two month free fall. (see below) . Today’s a big day because the dollar’s price is right on its 200 Day Moving Average. It certainly looks like the 200DMA support level is going to fall and therefore stocks will move higher. If you want to track (or invest) in dollar daily see UUP (Dollar Bullish index) This is where the action is.

Bulls are still in charge of mid term trend and we have more “wiggle room.”

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

EWZ is the only long position at this time. Will sell 50% at 5% gain or if it returns to the price it was bought for.

Interested in buying more (ETF’s based on major US indexes) on any further dip. Especially a dip in stock prices as the dollar rises like yesterday.

YOUR Stock List

BIDU, AAPL, SNDK, PCLN , F, CREE (8/10), SAM , GMCR, HMIN (8/10), SWKS, RADS (8/5), SKX, VCI, UFS, IMAX, UPS.

Paul R has posted some information on some of these stocks – see comments section of blog. Will get to in depth analysis next week.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Killing Ants With

Republican Leadership

Popeye in Comments section of blog states – John Boehner Republican and next [possible] speaker of the house called the pitifully weak shadow bank fat cat financial reform bill “KILLING AN ANT WITH A NUCLEAR WEAPON.” What plant is he on?

If the Tea Party Patriots and Republicans win the next election John Boehner will be Speaker of the House – This guy thinks, that financial crisis/reform is just an “ant” John McCain made light of the financial crisis before the election and it handed Obama the election. Boehner had the benefit of hindsight.

There is still at least one Republican who has not drunk the Tea Party Kool Aid – Senator Lindsey Grahram -To Tea Partiers in a meeting: “‘What do you want to do? You take back your country — and do what with it?’…Everybody went from being kind of hostile to just dead silent.”…you [TPP's] have no vision…you will die out.”

Bottom Line – As much as you and I disagree with what Obama is doing, the Republican alternative is far worse

Cheney/Bush Won

For years Investors411 has demonstrated US media bias. Latest proof of how Cheney/Bush fear mongering patriotism to a gullible supposedly liberal media (New Your Times & LA Times)working . This Harvard study on terminology proves it – Is water boarding torture?

• NYT -If other countries waterboarded it was called torture 85.5% of the time.
• NYT – If US waterboarded after 2004 it was called torture 1.6% of the time
• NYT – Before 2004 water boarding was called torture 81.5% of the time.

YOU are manipulated daily not only by content, but choice of words and stories the media uses. Even in the NYT

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

Mantra for week - “ Any analysis of stocks has become an analysis of what the ”Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.” They make up 80% of trading and right now the huge currency markets are dictating their moves.”

Clash of the Titans

Gravity/Fundamentals.

The Black Boxes got overwhelmed by gravity or market fundamentals. So has the month long inverse relationship between the dollar and US stocks. We’ve seen a lot of non black box investors panic and take their $ out of stocks this week. Bad fundamental economic news finally is trumping everything else (see yesterday’s Investors 411 for reasons)

The BDI going over a cliff (-44% see below) is further indications of economic meltdown.

Technicals – Two times in the last two days the Dow has dipped 100+ points (-152 yesterday) only to recover most of those losses. S&P down 8 of last 9 days is certainly another indication that stocks are oversold. Another is obviously the MO. It went below -60 interday (oversold territory) in the 100+ point declines – then recovered.

This is the kind of day investors hate, but short term traders love = VOLATILITY

The bulls titan has a meltdown in the dollar, an oversold market, and knowledge that large dips are getting bought.

The bears titan has a week of horrible fundamentals worldwide & the BDI. Also, Bond traders are running wild. (sorry for lack of explanation here – takes too long – but its bad for stocks)

Icing on the Cake – The Monthly Jobs Report.

The jobs report comes out this AM and anything unexpected could create wild fluctuations. Remember the jobs report is very significant to the long term economic well being of the USA, but it matters far less to the US stock market.

The JUNE Jobs Report Headlines - -9.5% Unemployed vs -9.7 in May = +0.2%, Private sector jobs up +83,000 vs +33,000 in May.

Basicaly in line or a slight positive surprise. This data does not say armegeddon, but you need +200,000 a month to ofset population growth and lower unemployment long term. Stock futures initially moved higher, but are now flat.

Significant Indexes

• McClellan Oscillator (MO) fell a we bit to -52.19 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. In May the MO reached two lows – one at -120 and the other close to -130. Therefore, potential for more downside risk. = Still NEUTRAL, but almost oversold
• US Dollar –  The dollar fell an unheard of -1.75% yesterday [Anything over +/- @0.50 is significant.] This is the single largest move in the dollar in the last 6 months probably a lot longer. The support level was more than broken it was devastated Mantra - right now is very important Dollar up = stocks down and visa versa. Yesterday stocks and dollar going down together. – A Total Disconnect - Stocks indexes should have soared – up 2 to 4% on this news.  = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  2351 yesterday.( This is a huge -44% drop in 6 weeks.  Often a leading indicator for stocks. Here’s a week+ old chart of BDI showing broken support levels. The BDI fell -2.29% Rate of decline increasing as it nears support level =Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekends

Have not yet had a chance to Update over last 2 weekend but there are NO positions held at this time.

Short term Traders - Would buy into any big move to downside, especially if dollar is falling. Use ETF’s that go long 2 & 3 times indexes.

Investors willing to take big risks – Remember The long term outlook is still Cautiously BEARISH.

A significant fall near the end of the session could be a chance for a small nibble. Technically what’s setting up is probably a bear market rally. Realize this may only be a short term trade that you sell 1/2 on only a 5% gains and you should set a stop/loss on trade.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

The Dynamic Duo – Petraeus & Bush or is that Obama?

The Afghanistan Quicksand

Please tell Tea Party Patriots the three single largest reasons the deficit has grown over the last decade are

• The 2008 meltdown and consequential bailout/stimulus.
• The Bush tax cuts
• The Iraq/Afghanistan war spending and consequences.

General McChrystal yesterday became the fall guy for the failed surge stratagey in Afghanistan. In effect his insubordination was like taking a hit for the military industrial complex. The new chief in Afghanistan is General Petraeus. Petraeus/Bush planned the first troop surge in Afghanistan. Petraeus/Obama surges two and three.  All have failed But American media is dares not state this reality.

Remember when American media was falling all over itself because American caualties were down due to a surge in Iraq? Now that casualties are up with the 3rd Afghan surge you hear almost nothing. Interesting!?

OK Obama looks tougher because McChrystal got canned. Big deal. Has this changed anything? Pehaps - Petraeus and Obama get to dump blame for their failed Afghan policy on McChrystal. The military Industrial complex grows stronger as does the call for more violence (deficit spending) as the solution.

Informed Comment blog by Professor Cole paint a picture of today’s Iraq (where less American’s are dying) as a failed state with @ 4 million refugee’s, a hung government,(elections were last winter) and an ongoing Shia/Sunni civil war killing at least 300 people per month.

Your deficit dollars continued to be poured into both sink holes.

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

Repeat – ” Any analysis of stocks has become an analysis of what the “Black Boxes” of  huge institutions with their high frequency trades & computer algorithms are doing.”

The new homes data for last month was much worse than expected. Worst fall in 4 decades - 33% Everyone expected bad numbers because stimulus was withdrawn, but the news drove the Dow over 100 points near the open. The fact that stocks recovered to slight losses in , of course light volume, is Bullish

Technically the fact that stocks held onto Tuesday’s more significant losses is Bearish

The Fed announcement was nothing new – Interest rates are going to stay between o & o.25% for a long time & Europe has hurt things here.

The dollar started out the day higher and fell. This is what the Black Boxes saw and the reason stocks moved higher throughout the day. Right now, the Black Boxes have focued with lazar like intensity on currency fluctuations.

Significant Indexes

• McClellan Oscillator (MO) fell a smidge to -2.25 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works.NEUTRAL
• US Dollar –  The dollar fell yesterday -0.30% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. The one day the trend = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped. BDI is in free fall from @4200 to  2515 yesterday. This is a huge -39% drop in 5+ weeks.  Often a leading indicator for stocks. Now at/just above a major support level. Rate of fall declined again yesterday. This index often makes slow changes, so diminished decline (@40% less) could be the start of a reversal. However, clearly long term  = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend

Have not yet had a chance to Update over last weekend but there are NO positions held at this time

From Yesterday – “DGP is ETF that is double long gold. Investors411 plans to buy the dip in this ETF.”

Big Black Storm Clouds - Every major stock indexes 50 day moving average is heading lower. Right now it would take a pretty massive rally to change that direction. Every “Old School” technical interpretation of this is  Bearish.

However, Currency markets are the dog that’s wagging the stock market tail. If the dollar falls stocks will rise. Black Box traders control what’s happening not “old school” analysis, so for now the long term outlook for US stocks is still NEUTRAL

CAUTION – At some point the Black Boxes are going to stop looking at the economic relativity between Europe and the USA. Unfortunately, when this happens the realization they come to may be the USA is growing weaker too, just not as fast as Europe.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

The list of photos above on financial reform was from Dylan Ratigan’s MSNBC show. Obviously you can add to list.

Financial Reform DOA

Simon Johnson and the folks at the Baseline Senerio have thrown in the towel on financial reform. Virtually every Republican caved into the shadow banks lobbyist, but the real disappointment - so did Obama, Geithner and Summers and many Democrats. It’s disheartening to read that the Obama administration helped kill Kaufmann/Brown legislation and other substantive reforms.

There may be a few crumbs that the shadow financials have lost, but opaque casino capitalism where your FDIC dollar in banks insures their trading of highly leveraged derivatives will thrive – Privatizing gains and  socalizing losses continues. Shadow financials, obviously would rather trade derivatives than make less lucrative transparent loans to homeowners and buisnesses.

The shadows of over leveraged, opaque, Casino capitalism will thrive in the coutry that is/was the leader of the free world. For the future, let’s borrow a line from Shakespeare’s Macbeth- Something wicked this way comes

Tea Party Patriots and Deficits

Deficits are bad. No question. Building a future on growing debt if you own 50% of the worlds weapons leads to one of 2 things – You bankrupt the future, or you kill your debtors. I suppose you could find a third way where you hold a gun to the head of a debtor, but after a while somebody’s going to kill somebody. – Again – Something wicked this way comes

However,  Before you worry about your debt you have to worry about the soundness of your financial system and keep it from collapsing.

• Fixing financial problems and giving us a fundamental transparent capitalism would enable real transparent, democratic, economic, growth.(see above)
• Increasing debt to keep our financial system (even though it was/is a shadow system) from collapsing and creating a second great worldwide depression was more critical

This is what TPP’s can’t understand. We’ve prevented a worldwide economic meltdown, but we haven’t fixed the system. These two priorities are the foundation of economic growth and therefore supersede deficits.

You want to cut military spending, put a means test on social security/medicare, raise taxes to what they were under Reagan – great. It will cut deficits.

However cutting the National Endowment for the Arts, cutting funding for some pork project, screaming drill baby drill is NOT going to decrease the $13 trillion deficit in any substantive way.

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

The news that China was devaluing its currency announced over the weekend got sharply tempered. As uncertainty over the China move grew, so did the dollar and the algorithms used by the “black boxes” that control 80% of stock trading kicked in and sold stocks. A triple digit Dow gain faded into a loss = Bearish

This is hardly the first time the Chinese and economists have sharply tempered a government statement about devaluing currency. Let’s take that feather (for now) from Obama’s/Geithners cap and wait to see what happens as the G 20 nations meet.  This also toasts the Fearless Forecast for this weeks trading.

The reversal in the dollar (See below) could mean an overall change in market outlook, especially if the dollar moves higher again today. Today would be confirmation day of the dollars move higher yesterday.. Right now the major institutions  that run the markets have set their stock market algorithms to currency fluctuations.

FXE – The ETF that tracks the Euro sure looks like its starting to turn and head lower.

Bottom Line – The one way to put the odds in YOUR favor that has a reasonable chance at success in stocstoks/ETF’s is to use the MO. The higher it goes the more you sell, the lower it goes the more you buy. Obviously NOT a hard an fast rule, but a good general guide. Currently, as explained above, currency fluctuations are dominating trading.

Significant Indexes

• McClellan Oscillator (MO)fell to +35.08 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Clearly more overbought than oversold, but has pulled back from overbought levels.
• US Dollar –  The dollar rose yesterday +0.43% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar up = stocks down and visa versa. Yesterday – “The dollar seems destine to fall to its 50 day moving average which is $1.06 lower and rising.” The dollar fell to within 0.39 of its 50DMA to $85.01 then rallied a significant +0.94%..  This was the largest gain in the dollar in 11 trading session. For stocks = Bearish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped is in free fall from @4200 to @ 2600 yesterday. This is a huge -38% drop in  Often a leading indicator for stocks. Now at/ just above a support level. Clearly long term  = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend

Have not yet had a chance to Update over last weekend.

ETF to watch today is the China ETF - FXI – up +3.48% yesterday. The stock from Your Sock List is China’s BIDU

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

-

Regulating the Casino’s

This is the week some sort of financial regulation begins to emerge from congress. Baseline Senerio has the best stuff on this here and here and here

It’s truly unfortunate that Obama is NOT leading the charge to regulate shadow banks or even substantively backing Volker.

Casino Capitalism

It’s critically  important if you are an investor or trader in stocks  to recognize stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers.

Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged. They’re staying out of investing.

They trade 24/7 worldwide in currency/bond and stock and are in and out of a company like SNDK often in a matter of minutes.

The best we can do is to follow the footprints (perhaps a better analogy would be is to follow the elephant droppings) of “masters of the stock universe.”

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

Another low volume rally occurred in the last 45 minutes of trading.  The key technical that’s showing the most correlation with the US stock market – The Dollar – dropped a bit less than -0.50% (see below) in this 45 minute period and this sent stocks on late day rally.

Some auction of Spanish bonds went well. Spain is the S in PIIGS + H (Hungary) – those countries we know are NOT doing well across the pond. Spain EWP (US ETF) gapped higher at the open for the second day in a row, fell, then consolidated mid – day and rallied into the close. At the end of the day Spain’s ETF shot back led all world markets higher up +3.45%

Spain, because of its size and seriousness of its debt is key factor in Europe’s debt problem. Good news here = Bullish

A double gap higher off a low is certainly bullish (even in long term), but a triple gap higher often means a stock is over extended and will correct. = Bullish

UUP is the ETF that tracks the dollar. EWP (Spain’s ETF) is now the cutting edge to focus on. It goes up, the dollar goes down and stocks rally. France and Germany are more important than Spain (bigger stronger economies). But if Spain tanks its big enough to take a lot of  Europe then the world down with it.

Right now we’re still in the discovery stage,  of which countries in Europe are in what size trouble. This extends from Russian satellite countries on the East to Spain in the West.= Bearish

The most important thing to recognize are stock prices are being dominated by massive institutions and hedge funds with ultra huge high speed computers. Mutual funds and your average investors and you day/swing traders etc. make up only @20% of the market. Many average investors have realized that opaque US casino capitalism and stock markets are rigged.

Fearless Forecast for Week – Rally Ho on European Sovereign Bonds & Spain at the end of the week. Should continue this week. Another successful sovereign debt auction in Europe could really move the dollar lower and US equities higher.  I haven’t the knowlege to to understand how deep the European debt problem is. Like the USA it’s hidden in the shadows of unregulated derivatives.

#2 reason for arally is regulatory mandates on shadow banks and casino capitalism seems to be loosing.

The low volume gives the Huge institutions and hedge funds even greater advantage in manipulating markets.

The area on the benchmark S&P 500 around 1105 to 1110 is the next resistance level. SPX at 1091.

Here’s the problem – The MO is starting to reach overbought territory (see below) and this could limit stocks up side (see below) The last time the SPX got up above 60 (high of 75) the SPX was at 1220. We could be at 60/75 well before the SPX reaches 1120 (one hundred points lower)

Nevertheless, those algorithms created by the super computers are spitting out buy signals.

Significant Indexes

• McClellan Oscillator rose to +43.30 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We moving close to overbought, but still basically = NEUTRAL
• US Dollar –  The dollar rose Friday +0.33% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ +0.50% higher and fell into the close.

Reading the Tea Leaves -

Currency markets>Bond Markets>Stock markets. Stock investors are the tail and the tail does not wag the dog. The action is in Europe. If European debt is bought at a reasonable rate, US stocks will improve. Right now EWP (Spain) is the ETF to watch. Of course, there will be more European shoes to drop. But none did over the weekend.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

All the stocks on YOUR stock list as well as ETF’s like FXI (China) EWZ (Brazil) and those that mirror the US indexes (long or better) should do well until ovebough conditions exist.

Expect some sort of dip when the MO gets into the 60/75 range. Perhaps tomorrow.

CAUTION – I don’t have the inside knowledge to predict what will happen in Europe. What I can tell you there is a strong bounce off the bottom in Spain that’s leading the charge. Those huge institutions with their super computers have recognized this and are buying dips in US stocks.  The real question is who is buying European debt?

Best guess – Institutions/govenments that can hide their books and would get hurt by a collapsing Euro.

Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but framnkly, fundamentally I sure don’t see the light at the end of the tunnel.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Disaster Capitalism

The major news this AM is that the BP spill is twice as large as originally thought.

Giant financial/economic and in this case also environmental catastrophes are opportunities for great change. The bottom line in the BP disaster is just like the bottom line in the 2008 financial debacle. In great disaster comes great opportunity.

• For the 2008 over leveraged casino capitalism disaster – We can change to a system where taxpayers no longer subsidize the risk and the giant shadow banks no longer have privatized gains
• For the 2010 (another free market/casino capitalism) BP catastrophe we can make a significant change toward alternative fuels.

Disaster Capitalism is referenced in Naomi Klein’s The Shock Doctrine One example she uses is how Cheney/Bush used the 911 disaster to invade oil rich Iraq. This war had nothing to do with 911, but shows how far you can move American opinion when a disaster happens.

Quite simply Wall Street is taking over our democracy. We have members of congress who are willing to challenge this. (example the 3 Republicans & 30 Democrats who voted in Senate to break up the shadow banks), but we lack a Teddy Roosevelt in the White House who is willing to lead the charge.

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

Yesterday stocks stopped dancing on the edge of the cliff. We had one of those, now typical, decreased volume mega rallies. = Bullish

Volume has lost its significance, and The Dollar has taken over as the single most important factor moving stocks. (see below) The dollar moved significantly lower and crossed a major resistance level. The trend higher has not changed, but a technical analyst will tell you its 5 day breakout to a new high has failed. (see chart) and the dollar has moved back into its consolidation pattern.

Fundamentally – Some auctions of treasury bonds in the European (PIIGS) countries turned out OK. Translation, like the USA the interest rates were not too high = there were buyers. A couple reasonable  auctions in the PIIGS’s  bond market [bond market is bigger than stocks, but not as big as currency] does not end the crisis, but it is a positive sign. = Bullish

Yep, as a couple of you mentioned in comments section there was short covering and some other decent fundamentals, but none significant enough to cause a huge rally

BP did recover @ 2/3 of yesterday’s loss. This indicates that traders have changed their mind about the solvency of BP. The roller coaster here is still in play. Good news reported is that BP is considering not giving part of its $10 billion dollar dividend. = Bullish

Futures are Flat = Moderately Bullish

Holding stocks over weekend = Moderately Bearish

Significant Indexes

• McClellan Oscillator soared to +20.49 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a smidge oversold, but basically = NEUTRAL
• US Dollar –  The dollar fell a Significant -0.91% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Dollar falling significantly = Stocks rise significantly= Bullish

Reading the Tea Leaves -  The more time an Index, Sector, or Stock keeps testing a support/resistance level the stronger it gets.  Each test pulls back a slingshot. We had 4 tests of the 1040 level on the benchmark SPX , so we pulled back that slingshot 4 times. What happens to arm the slingshot is traders buy more puts and calls each time we test a support/resistance. This is why we saw such a HUGE gain aided by the afterburners of the dollar’s fall.

Obviously, if you’ve been reading Investors411, today is the confirmation day of yesterday’s rally - Therefore important.

Longer term – right now we have a short term counter rally in a bearish mid term trend. The dollar is key to market direction and those moderately successful treasury bond auctions in Europe have stopped panic (for now). There are other debt shoes to drop, but its impossible to call where and when.

The chart to follow is the UUP [ETF for the dollar]

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Still holding very minor positions in VCI, ESRX & now UUP.  Was stopped out of SDS at 34.53 for 0% gain. 1/2 this position made +8% & 1/2 made +0%

Traders - High frequency traders and hedge funds dominate this market. Be careful.

China (its GDP, import, & export numbers) is the country to watch. BIDU is their AAPL [Both on YOUR Stock List] BIDU exploded +7.76% higher yesterday while AAPL was in line with major indexes – up +3.01%. BIDU, on a dip, seems like a decent but risky play.

The Beta play is back for now. If you do not understand “beta play” look it up in Investopedia & you should NOT be trading short term till you understand more. At the point you realize how much more everyone else knows than you/me, then think about short term trades.

Investors – We’ve had the first signs of the EURO stabilizing – Good treasury bond auctions abroad. The FXI EWZ(China & Brazil ETF’s) are still the best plays.  You could nibble a little on dip. However MO is +20 and it would be better to nibble at -20 and much better at -60 and best below -60.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Admiral Sestak (above) beats 30 year incubate Specter in PA Senate Democrat race

Incumbents Get Toasted

From TalkingPointsMemo.com a rundown of last night’s election across the USA. In almost every case incumbetes lost or did far worse than expected (D – AR.). The only exception is in PA – 12 John Murtha’s old seat where Democrats had a bigger than expected victory over Republicans for the congressional seat. Ron Paul’s son won Republican primary in KY.

Both the far left and far right (Ron Paul) are supporting Teddy Roosevelt like changes to Wall Street.  Libertarian, Ron Paul on the far right wants us out of the MidEast (and other areas our troops occupy) far more than any other Republican and most Democrats.

Republican’s Blocking Financial Reform

The following comes from Left wing Huffington Post. Republicans blocking Three Major Financial Reforms

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

Its all about the Dollar. The dollar rose a HUGE +1.07 % and consequently stocks took it on the chin. Dollar is at 87.11 and close to major resistance at just above $88.  The McClellan Oscillator is in oversold territory at ironically the same -88. We sent a record at -123 a week back.  This probably means we could fall another 2 to 4% at on the major indexes before technically a turn becomes almost inevitable.

At some point in time this year stocks will reach +60 on the McClellan like they did almost 10 times last year.

Germany made a solo move and banned naked short selling (a good move , but a lack of coordination with Euro bad) Story = Bearish

All of this is about the European stability and survivability. If this EU falls so does the worlds largest economic zone. (yes its slightly bigger than the USA) The good news for Europe is the lower the Euro goes the better it is for their exports

Significant Indexes

• McClellan Oscillator fell to -88.08 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. The lower this oscillator go the more oversold markets become. -123 was the multi year low over a week ago.  Bullish
• US Dollar – Yesterday the dollar rose to $87.11. (sorry for misprint yesterday,dollar started the day near 86) Up +1.07 [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important . The area around $88 is a major resistance area/ multi year high for the dollar.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have not had a chance to update the positions section of blog.  No buying & selling yesterday.

We are deeper into OVERSOLD territory, McClellan at -88.08 = The momentum on the downside is strong. It looks like we will reach or approach -123 again.

Our top two stock positions IMAX & ESTX are holding up quite well. Others are at or approaching the prices they were bought at.

Still own 5% position in UWM. Stopped out for 2% loss on other 5% Still looking at situation as an upcoming drops as buy the dips.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING