Greece

The Greek debt crisis has impacted the world. Just what are the austerity measures imposed by European Banks on Greece. Here’s the top 5  from CNBC. (CNBC is an ultra pro bank/Wall Street network.) More details at link.

NB all prices are in EUROs not dollars

• Raise Taxes – 7 trillion over next 3/4 years. Includes a 23% value added tax.
• Wage cuts – 15% public sector (huge 25% of Greece is public sector workers.)
• Military Cuts – about .5 trillion
• Social Security costs – about  5 trillion – means test and retirement age moves from 61 to 65.
• Luxury Tax – All they said was thy were going to soak the rich too.

Lets compare this with what the US is doing to balance it budget.  Obviously both parties are to blame and they are far more interested in ideology than solutions. However, one sides total lack of willingness to compromise was pointed out in Obama’s press conference.

Republican’s are not willing even to compromise on

“limiting tax deductions for corporate jets.”

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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

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

• Chart of the Day – Shows HFT trading over 15 major exchanges (not dark pools)  - “The image below reflects high frequency trading (HFT) operations with quotes in milliseconds. The sharp increases in the chart are what’s termed “quote stuffing” as the machines try to engineer some action over the four minute span.”

Thanks to Dave Fry. The quote and chart are his

• At the end of he quarter managers of stock funds “window dress” their stocks. Part of this rally is “window dressing” or stock managers buying the “hot” stocks to impress their clients so that they stay invested. The major factor is the HFT are buying. Both the quarter and QE2 end today.

• The McClellan Oscillator (MO) chart rose to +52.72 (above +30 somewhat overbought , above +60 overbought, above +90 OMG overbought) Repeat -The MO has been unable to get above the +50 range for 6 months. It sure looks like the +50 high of the last 6 months is about to fall = long term bullish. Short term almost overbought = Bearish

• $USD The Dollar fell  again significantly -0.55% yesterday. (+/- 0.50 is a significant move and the dollar is usually a contrarian indicator) The trend since May 1 is bullish for dollar and bearish for stocks. Big reversal down in last 3 days. Most of this movement is based on Greece. Short term tend for stocks now = Bullish/Neutral

• Reading The Tea Leaves - Shorter term – Repeat-  A raging bull is stampeding and right now it looks like the only barrier is that markets are almost oversold and what earnings season might have next month.  MO is at +53 almost oversold

Long Term

• Fed tells Wall Street and Banks - it has your back. The Fed with its surprise announcement favoring banks (swipe fees)  over consumers has sent a message to the markets that it will do whatever it takes takes. MC & Visa up 10+% and banks rallied on $8.5 billion BAC settlement. This $ went to big hedge funds etc. not to middle class.

• It certainly looks like the HFT’s can sustain a low volume rally without Fed liquidity (QE2 which ends today). Earnings season, Chinese inflation, or something else may trump this, but for now bulls have regained momentum and the only barrier is overbought markets.

• Obviously, people who buy/sell stocks think the Greek crisis is bullish.

• Reading Tea Leaves - Changing back to NEUTRAL for the summer.

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Your Stock List

Here’s the LINK to a spreadsheet of YSL #4.

YSL #4 beat the benchmark S&P 500. So did YSL 1 & 2 & 3

Remember t0 send in by emails or post in the comment section any choices YOU have for YSL # 5

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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

Short term strategy is to short overbought stocks. –  Stocks did not rally from their earlier highs so I did NOT “nibble on” the TZA trade. Will do so if the Dow goes up 60+ points and I’m watching.

NB – The long term strategy is no longer to short rallies since outlook has turned to NEUTRAL

Disclosure - I own NLY &  a group of dividend stocks which I have used some short ETF’s to protect. – I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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Look for an enlightened Paul’s Corner every Tuesday & Thursday and the always informative comments section every day.

Paul is on break for a couple weeks.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative/neutral on the USA unless the Fed and/or congress return to more pro growth policies and/or Euro defaults are resolved.

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

Nobel Laureate Michael Spence has a workable solution for the Jobs crisis.

His book – The Next Convergence

The great illusion in the USA is somehow the private sector will bail us out. Baloney!

American Companies are doing GREAT. They are flush with $1.68 trillion in profits from last quarter. But as you all know (see past Investors411) they take that money and invest it overseas. Spence work looks into just that the loss of jobs here from 1980 to 2008. The money quote from Time Magazine

“The companies that did business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contributed almost nothing to overall American job growth. The firms that did contribute were those operating mostly in the U.S. market, immune to global competition — health care companies, government agencies, retailers and hotels. Sadly, jobs in these sectors are lower paid and lower skilled than those that were outsourced.”

Spence offers a concrete formula for what the USA has to do to create jobs.

Solving The Job Problem

Germany in 2000 was faced with a huge economic problem of incorporating the much economically weaker East Germany with the far more weaalthy West Germany.

Government, labor leaders and CEO’s sat down together. Government offered companies temporary tax breaks if they would NOT outsource. Company leaders worked with educators to find the right skills they needed.

It worked!

( last page of the Time Magazine article referenced above has  more)

The solution is simple and obvious, yet the political polarization and the lobbyists in the USA keep tearing us apart.

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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

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Technicals, Fundamentals & Analysis

• Congratulations to both Paul & The Critic for taking profits at the close on Friday – Nobody ever went broke taking profits. (see comments section of blog) A good short term move.

• The McClellan Oscillator (MO) chart fell  to -67.93. US Stocks are oversold. (anything below -60 = oversold) Just like last week,  another “snapback” oversold rally is possible today. This is the most US stocks have been oversold since mid March

• How the week sets up from Jeff Miller in Seeking Alpha – A more bullish view.

• A debate on IMAX (An Investors411 favorite that is under pressure now) from Seeking Alpha - Bulls and Bears

• Reading The Tea Leaves – Repeat from Friday – “this looks like what they call a dead cat bounce.“ Obviously this happened Friday.

• Reading The Tea Leaves - Longer Term - Repeat from last week –  ”See May 20th blog for forecast for this summer.” Fundamentals in the end will trump technical analysis and fear/greed. But right now we are running on fear and that’s bearish.

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Fed Conspiracy Theories

There is no end to conspiracy theories since our financial system is run in the shadows. It a globalized world out there. Our Fed Bank will have purchased $600 billion by June 30th from the following “Primary” (that’s their term) Dealers.

Obviously the world’s globalized banking system is interconnected. The international banking cartel rules the world (If you define controlling the flow of money as ruling) Our Fed is the Big Kahuna in this system. But you may find it interesting that 12 of the 20 Primary Dealers are Foreign Banks. Foreign Banks are bolded and all 20 Primary Dealers listed below.

• NP Paribas Securities Corp.
• Barclays Capital Inc.
• Cantor Fitzgerald & Co.
• Citigroup Global Markets Inc.
• Credit Suisse Securities (USA) LLC
• Daiwa Capital Markets America Inc.
• Deutsche Bank Securities Inc.
• Goldman, Sachs & Co.
• HSBC Securities (USA) Inc.
• Jefferies & Company, Inc.
• J.P. Morgan Securities LLC
• MF Global Inc.
• Merrill Lynch, Pierce, Fenner & Smith Incorporated
• Mizuho Securities USA Inc.
• Morgan Stanley & Co. LLC
• Nomura Securities International, Inc.
• RBC Capital Markets, LLC
• RBS Securities Inc.
• SG Americas Securities, LLC
• UBS Securities LLC.

You know how oceanographers tag a shark to see where it goes. I’d love to be able to tag the printed $ coming out of our US Treasury and see where it goes.

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Positions

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

SLV/AGQ (later is very roughly 2x silver and another possibility)  SLV Sold 1/2 for +3% profit. Last part was stopped out at just above what it was bought for. Total Profit +2%

NLY - Annaly Capital Mgt. Ultra high dividend stock. (I realize most of you do not know how to do this or perhaps understand the following, but like The Critic I have bought insurance on NLY - a July put at $18. This cost me  a bit less than 2% of NLY’s value)

Caution - “Owners of NLY should look at it chart. A 3 year history show that almost every time this stock and others like it get over extended there is a sharp one day high volume significant fall. Two major declines in the last six months and we are long overdue for the pattern to repeat itself. For prospective buyers after the dip is the time to buy.”

As predicted NLY has had a big drop(for NLY a @2% drop os two days is big)  I expect this drop will continue at least for today and perhaps break though its 50 day moving average.  Investors411 looks at NLY & AGNC as potential Buy the dip stocks because of big dividends. History (chart pattern shows that NLY can easily fall below its 50 day moving average, and that’s a potential buy point.

TZA - (3 times short small cap stocks) Bought 1/2 position in TZA (3x short small cap stocks) at 38.65 on Tuesday   Added another 1/2 position to TZA at 39.75 at/near open Wednesday.  Bought another 1/2 TZA position at 39.75 Thursday.

Investors411 has recommended using TZA or SDS as a hedge/insurance against losses in NLY or other dividend stocks (see past month blogs on dividend stocks.)  stocks) Although stocks may rally today the fundamentals behind the call are still solid and if you are using these short ETF’s I’d keep them in play.

Will add another full or 1/2 TZA positions on any modest market rally.

Repeat from last week - Therefore Strategy remains

• Short any rally - Investors411 will use TZA (3X short small cap stocks) and SDS (2x short S&P 500 more conservative) .
• Sell long positions into any rally -

Taking Profits –  Nobody goes broke taking profits. If you ate net short the market take the profits (I like anything above 5%) and short the next rally.

Disclosure - I own NLY, & TZA - I buy all stocks mentioned in the hypothetical Investors411 portfolio.

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The Fed has moved from an expanding money supply to a neutral – No QE #3. Congress is threatening to contract the money supply. “We [the USA] need to grow at this point more than anything else.” Investors411 outlook will remain negative on the USA unless the Fed and/or congress return to more pro growth policies.

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Longer Term Outlook

Neutral/CAUTIOUSLY BEARISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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Global Roundup

• UK - Slowest recovery in 180 years (Financial Times headline) The right wing in the USA desperately wants us to take the same measures the UK has.

• Syria – The dictator continues to massacre pro democracy advocates – 41 yesterday. Latest

• Yemen - Civil war intensifies, Part of Arab spring/democracy movement Latest

• Best source for Arab Spring Revolutions. LINK

• US – Effective Corporate Tax rate Lowest for US as a % of GDP among 30 industrialized nations in survey NYT LINK Wall Street’s propaganda machine cries about taxes, but the reality is they are among the lowest in the world.

• World News – Global Commission – “Global war on Drugs has Failed.” BBC LINK This is not really news, just a statement of the obvious. We should  legalize/tax marijuana sales.

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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

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Technicals, Fundamentals & Analysis

Reading The Tea Leaves

Bottom Line - All this will gets played out this summer.

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar rose yesterday +0.33%. This halted a A five day decline. We’re at an inflection point and today’s move will give a clearer picture of momentum.  Still trading below 50 DMA .  For US Stocks = NEUTRAL/bearish
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] From Yesterday “Very reasonable to assume rally will soon become overbought.”  Obviously stocks were overbought and this added to yesterday’s meltdown. MO fell dramatically to -1.72 yesterday. This is almost the exact middle of the range so stocks are not oversold or overbought. Lots of wiggle room up or down, but after a real bad meltdown momentum is with the bears. However overall position is now = NEUTRAL

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Paul’s Corner

ARRRRRGGGGHHHHHH!!!!!

Wow what a sell off yesterday! Was this an honest reaction to a dismal employment report (A private corporation report) Greece or just en excuse for profit taking? It looks like a small bounce at the open, which is usually expected after a big drop.

Looking at the market we find the Treasuries, Gold, Silver and the  Commodities at the top of the list yesterday  above the  indexes, DOW, S&P, Naz 100, etc. As Dave Garlardi reminded us last evening on the HGSI Webinar when we find these indexes at the top you don’t want to be in the market. Is this merely a buy the dip opportunity?

A good search on a down day is for the high demand stocks, 4 of the top 5 were “medical/pharma” groups. 2^nd on the list was the “Internet services” group.

Internet-Services (7.00%, 7 securities)

• Cogent Communications Group (CCOI)
• IAC/InterActiveCorp (IACI)
• NetEase.com  Inc. (NTES)
• Rediff.com India  Ltd. (REDF)
• Sify Technologies Limited (SIFY)
• SINA Corporation (SINA)
• VirnetX Holding Corp (VHC)

It looks like VHC carried the group (in fact it was the top high demand stock yesterday), here is why:

LINK

All of the stocks on Your Stock List went down as expected. Most hit support. JNPR down almost 10% from “Cautious Outlook” remarks from the CEO. Since JNPR has been in a constant downward slide for 3 months now I doubt this is a buy the dip opportunity.

The usual warnings of capital preservation come out after days like yesterday, this sounds like a good idea IMO.

So what’s the market going to do today? Let’s load up Quote Tracker………here we go folks another day of fun! (fun?)

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

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Positions

SLV/AGQ (very roughly 2x silver) This is a high beta commodity, full of speculators and therefore will fall far faster than stocks –

Mea culpa – Should have taken profits on 1/2 yesterday. Will do so today – hopefully in a rally.

REMX – (Rare Earth metals) Investors has a 1/2 position in this ETF

NLY - Annaly Capital Management – An ultra high dividend stock.

YOUR Stock List – These are growth stocks that have higher risk.

Strategy - Until we get a sign from the Fed that they “have our back” buying the dip is out and selling into rallies is in. (unless you can find a superior stock – see Paul’ and other bloggers in comment section of blog.)

Investors411 will be adding ETF’s that short the market in rallies. See comments section of blog for when this happens. See POSITION’s section of blog for some alternatives.

The sky is NOT falling. But the bullish fundamentals that have kept the bull market growing since November are changing. This brings uncertainty/fear and investors sell under these conditions.

Disclosure - I own both SLV & REMX

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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Jane Mayer/Investigative Journalist

The Secret Sharer

Editorial by Yankee Bob

In a SciFi novel you may run into a Facist Police State . In this Police state for the sake of Homeland Security, some people,citizens or outsiders may be branded as dangerous or even threats to the Security of the State and therefore, Enemies of the State. That threat that could brand citizens as enemies of the state will be decided not in a court of law with all the tenents of due process that the citizens are costitutionally entitled to.

Nope. Faceless bureacrats,agents of the government or corporate hires acting on behest of a private contractor , will make that judgement call. That call that can brand a citizen as an enemy of the state and no longer deserving of or given their rights to due process.

Now ,what kind of threats can land a citizen in such a pickle? Well,it could be some corporate hire merely finding something that they deem as ” SUSPICIOUS.” Remember,a private contractor can’t say to it’s Boss, We haven’t found anything. They have to come up with stuff no matter how shaky it may be because they have to prove that they are worth the expense. They need to justify their existence or their contract dries up. They will use powerful computers,in private ,that have the ability to monitor all communications,foreign and domestic, and cell phones,faxes, and email.

Merely going on line to certain sites could be enough to cast suspicion on you. Bank records,credit activity,taxes,birth records,travel,spending,…everything can be tracked and recorded without a warrant or court order. This can only happen in a police state you say. We have Constitutional safeguards you say. YOU ARE WRONG. THESE PROGRAMS ARE ALREADY IN PLACE AND FUNCTIONING IN THE UNITED STATES! You are being trcked and recorded!

THIS,…IS BEING ARCHIVED!

We have been warned. We were warned in bits and pieces over the years but the big picture is in place. The telecom carriers have cooperated in the program and sought and were given immunity from prosecution for breaching the rights of Americans. All communication goes thru this program. It records and archives it all ,leaving the door open for future investigation. All on the quiet and all in secret. Whether you trust Obama with this power is irrelevent. Maybe he gets replaced by a Rick Santorum or Michele Bachman type.  Maybe Dick Cheny or his daughter Liz.

How can you be free if every move and every communication is being recorded and can be used against you. You are subject to investigation merely on whim and suspiccion ,without due process. You can lose all of your rights ,at the whim of a corporation or a politician and none of it follows due process. Your rights,your freedoms sre yours but only at the perogative of unseen hands and forces. It is a brave new world! It’s a good thing none of our politicians or corporations would ever abuse this power.

Oh ,Please!! Please , Read the link!

LINK

to New Yorker Piece by Jane Mayer

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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

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

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CHANGE

IN LONG TERM OUTLOOK

After over 8 month of almost always CAUTIOUSLY BULLISH,

Investors411 is downgrading the long term outlook to NEUTRAL.

This is largely because of the uncertainty created by the Fed’s ending of QE2 (quantitative easing) on June 30th.

Stock market investors and professionals hate uncertainty. That’s what we will have after June 30th. Last year between the end of QE #1 in March and QE #2 our benchmark S&P fell (scroll down to weekly chart) at its worse @-17%. (1220 to 1011 – see chart) Every pro and serious trader is aware of this fact and may be front run the end of QE #2.

The Fed still has YOUR (stock Investors) back with low interest rates, but the lack of additional capital injections after June 30th changes the equation.  At some point down the road if the economy/stocks toasts the Fed will be forced into some form of adding liquidity. But that’s down the road.

The economic outlook worldwide is grim. Europe’s debt crisis,US debt crisis, Japan’s GDP fall/crisis, China’s corruption/inflation The bright sport remains emerging markets. When you add the democracy revolutions in the Arab world (obviously a move in the the right direction) that uncertainty grows. The economic situation NOW has more uncertainty than last year.

Technically, the traditional growth areas tech and small cap stocks are under performing.  Investors are moving into safer stocks. Dividend stocks are one of those areas.

Bottom Line -I think there is a better than 60% chance we’ll see a summer meltdown like last year. The training wheels are coming off the bike and I don’t think our economy or the world’s economy is ready to ride yet.  I hope I’m wrong.

The Fed will probably ride to the rescue with more liquidity if things go bad, but we are now entering THE UNCERTAINTY PERIOD.

Remember stocks did rise for a short period directly after QE1 ended. So this change is NOT a panic move, but a longer term move to NEUTRAL  based on uncertainty.

Holding non defensive stocks, especially high beta stocks may be a problem.

YSL #4 will under perform – sell into rallies

Investors411 may use ETF’s that short the market

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Shorter Term Forecasting Indexes

There are hundreds of forecasting tools, – These two tools have worked

When they stop working Investors411 will use other Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar fell  -0.44% yesterday. Stocks rallied as the dollar fell and rose when the dollar stopped falling yesterday.  For stocks shorter term trend = Bearish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO rose to -1.79. Squarely in the middle of = Neutral

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A List of high dividend Utility Stocks

Caution - Neither Paul or I have had a chance to go over the price charts yet.

Criteria – The three year dividend growth rate is greater than zero. Latest dividend after ticker symbol.

• EXC – 5.03 %
• ETR – 4.80%
• DPL – 4.41
• AVA – 4.36%
• DTE – 4.53%
• AGL – 4.41%
• CMS – 4.13
• D – 4.09

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Check out the advice, recommendations, analysis by bloggers on stocks,politics and trends in the comments section of the blog  Many of the best concepts regarding YOUR Financial Future are discussed their. Watch for Paul’s Corner every Tuesday and Thursday

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Longer Term Outlook

NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Relax – Investors411 is taking a break

Will be back on 4/25 Some links and comments below

• No change in general market outlook – Still bubblicious and CAUTIOUSLY BULLISH If we close below last weeks low outlook changes to NEUTRAL
• Short term bearish tend, still in place as of closing on Friday even though we’ve had three days of slight gains.
• For the top 3 investments for the 2nd quarter LINK HERE (scroll down)
• For YOUR Stock List - LINK HERE (scroll down)
• For information on all suggested portfolios LINK HERE (scroll down)
• For why we are Investors in Wonderland LINK HERE (scroll down)
• For a message to my fellow cows LINK HERE (scroll down)
• Our proven indicator of an oversold or overbought market has been the McClellan Oscillator (+/- 60 a rough guide)

Be sure to check out the comments section for Paul’s enlightened comments on the markets.

Reading The Tea Leaves

June 30th is the date that the Fed’s quantitative easing is “supposed” to end. The zero% interest rates and QE has forced anyone seeking higher returns into stocks or junk bonds.

Markets will have a growing supply of $ till then and even if it does completely shut down that supply of money will still be in the economy. So as both the stimulus (Obama compromise) winds down and “supposedly” QE 2 ends we loose the money supply that has driven stocks higher.

Two major questions arise.

• Will frightened investors front run June 30th and yank their money out? - This would be shown by a big  INCREASE in volume on down days for the stock market – This has not happened yet.
• Once QE 2 ends, who will buy our treasury bonds? We’ve already seen Pimco (largest private US bond company) get out of treasuries. I agree with the group that thinks that if a storm comes after June 30th the Fed will be forced into some other kind QE.

On another matter

Friday night Goldman Sach’s Jan Hatzius again dropped GDP outlook for USA from 3.5% at start of year to 2.5% a few weeks ago and 1.75% Friday night. Aside – yes GS is a Vampire Squid (link is yet another example) but most of the time someone from GS or their protegee has run treasury and many key financial  post in the White House for over a decade. They have the inside info. While this downgrade hurts the USA economically, emerging market growth is far more critical to globalized US stocks.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Outlook for 2nd Quarter

Case for the Bears

• Japan problem is underestimated and damage to the country’s GDP and the world’s supply change is worse than expected
• The latest housing and consumer confidence numbers are worse than expected and a second housing recession is expected.
• It’s only a matter of time before one of the PIIGS countries in Europe defaults and it will spread.
• Libya is a stalemate and challenges/chaos toward oil dictators will grow.
• State budgets are breaking down because of the lack of revenue and this means greater unemployment.
• More people in the USA are on food stamps than ever before.
• Opaque corrupt Shadow banks  are facing a mortgage crisis (thanks to Robert H for the heads up on the 60 Minutes Show)
• Quantitative easing will end and everything will fall apart because there is no entity big enough to buy as many treasuries as the Fed.
• Inflation and the over supply of unsold housing is going to explode in China, sinking the rest of the world.
• Inflation is coming and this will squash equities
• Earnings disappoint

The Case for the Bulls

• The Fed is going to keep pumping liquidity into the economy. QE #2 continues to June 30th.
• Even after 6/30 there will be a whole lot of liquidity sloshing around and QE 3# is likely if we start falling.
• The recovery from -700k jobs per month to +200k jobs per month shows an economic rebound in the USA.
• Emerging markets are growing again.
• The lack of wage growth and the huge numbers on food stamps in the USA will keep inflation lower than expected.

Bottom Line for Most Stocks – Once a trend is in place, you go with the trend until it breaks.

The Fed Rules (see past updates starting in November or Strategy Section of blog) This trend has crushed major black swan events (Japan & revolutions &  anticipated impending doom listed above) and until it breaks its strong.

This trend has a new force behind it – the better employment numbers. As unfortunate and cruel as the lack of wage growth and record number of people on food stamps  is, it serves to mitigate inflation. Obviously it also show an wealthy oligarchy further crushing lower class Americans.

Dramatically higher oil prices and/or a dramatic fall in the dollar could break the bulls. Of course some unforeseen catastrophe could too. Also,  if earnings season is a disaster, instead of mildly disappointing we could end up down.

Short term we are oversold and ripe for a small correction, but the Long Term outlook remains CAUTIOUSLY BULLISH

and – yes its all a bubble – How can you build a growing economy on a corrupt financial structure and a  growing imbalance of wealth in the #1 economy of the world?

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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

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS - Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated liquidity stock bubble. See Investors411 STRATEGY section for more. Remember Fed liquidity (POMO, QE 2 or quantitative easing) announced ending is June 30th.

• Yawn - Another low volume rally. In fact, the lowest , non holiday,  volume day since 2008.
• Repeat - Bulls have two strong fundamentals – Jobs are recovering and Fed’s liquidity injections.-
• Because of the corruption, and lack of transparency housing still a major problem
• Wages still have not increased for most American workers.
• The above two factors should mitigate rising inflation in commodities.
• China has raised  interest rates – 4th time since October – They are worried about growing too fast and a housing problem. This will hurt stocks in the near term
• Emerging  Markets are leading this leg of bull market and the above should give them a whack.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks]   The dollar saw a huge rally collapse and ended  a wee bit higher +0.10. Chart pattern showing volatility/erratic so short term hard to call, but longer term bearish  For stocks = Bullish/Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] MO fell to +46.12. Over past three months The MO has had problems getting over +30. This is, therefore, the highest the MO has been since early September 2010. We haven’t hit +60, but for stocks = Bearish

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Reading The Tea Leaves

Little change from yesterday, except that the leading emerging markets are even more overbought and overdue for a correction.

Bottom Line - No Black Swan events have been able to seriously impact the Fed liquidity driven equity market.

What to watch today - Market movers - UUP (the dollar) still has most influential, unless others make some huge move.

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya not good.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Tech giant and market mover – Trading below its 50 DMA. Since mid February this char shows a series of lower highs and lower lows = Bearish
• Japan Rector Developments – This keeps getting worse.
• EEM – Emerging market ETF – On a breakout run, but getting  way over extended.

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Positions

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices. Historically driving season in summer drives prices up in the late spring. Supply problems exist because of revolutions/instability in oil producing countries. If these problems are resolved then UCO should NOT be held.

REMX (Rare Earth ETF) - Really believe this a good long term holding.  Simply put because of limited supply of rare earth metals and big demand is going to outperform almost all other sectors. Only some sort of major economic collapse will hurt this sector. A buy.

DGP – (ETF is 2X gold) and/or SLV (silver). AGQ (2x silver) Both inflation worries and a falling dollar positively impact this sector. Silver actually has a manufacturing component.

RJA (Agriculture commodities Index) For a more complete list of commodity ETF’s see POSITIONS

UWM (2x small cap stocks) or TNA (3X small cap stocks) The later for more aggressive traders. Closest correlation to MO and falling dollar. Small cap stocks are outperforming.

EEM (emerging markets) and/or ILF (Latin America) EDC (3X emerging markets) The later for most aggressive traders. Emerging markets are leading the world and after underperforming for years they are back.

EWV (ultra short Japan) The horrific and tragic situation there has been minimized. This holding acts in part as a hedge especially for US small cap stocks and emerging markets.

TMV (3x 20+ year Treasury yields)

A winning hedge has been UWM & EWV combination (some of you may have problems emotionally shorting Japan)

ROM (2x techs) & TYH (3x techs) The later for most aggressive traders.–  Technology has been toasted and if the S&P is higher on June 30th, this sector should catchup.

I’ll keep this on the blog’s home page for a week or two then place it ion the Positions page.

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Your Stock List created 3/7 has underperformed the other 3, because it is overweight tech stocks. A major tech stock, Texas Instruments, bought another company and this should help the whole tech sector today. Paul R often comments on these and other stocks/sectors in the comments section of the blog.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See “POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.“

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The Stock Bubble Bursting

Yesterday we went over the fact that the foundation of this stock bubble lies in our huge debt and the shadow banksters

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Since September Investors411 has been describing the impact of  the tsunami of liquidity our Central Bank has introduced and  the influence of High Frequency trading on the stock market. How this Bubble-icious Stock market is forming is listed below in brown in the Technical and Fundamental Analysis part of the blog.

As JS points out in the comments section of the blog – bubbles can build for quite some time. So what can kill this bubble ?  The events in Egypt barely dented it. The answer is good economic  news in housing and employment. Not phony news but real progress. This will mean that the FED will have to stop its quantitative easing.

The tsunami of liquidity means inflation down the road and  our Fed keeps building it higher every day. This makes future inflation more of a problem each day. Socks hate inflation.

Some food commodity prices have gone parabolically higher in the last few days and that’s an early warning signal. This is, in part, driven by the tsunami of liquidity around the world. Some food prices rising are probably not strong enough to cause a meltdown in stocks.   Rather this is a warning of what’s to come. (inflation)

Bottom LIne for those who hold stocks - You can ride this expanding bubble. Old Wall Street term. “Stocks can remain irrational longer than you can stay solvent.”

Perhaps the Fed is playing/manipulating this all perfectly. However, if history is any indication the pendulum always seems to swing too far in one direction.  We all need to stay awake because when bubbles burst the fall is fast and dramatic.

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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

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS – Investors411 term for the stock market – We are all riding on the outside of an ever expanding &  Central Bank manipulated stock bubble.

• Once again stocks rallied in below average volume.
• Mantra #1 – till it no longer works - still endorsing the concept that the Fed POMO [schedule] is and will be the key factor in keeping a long term rally going. Another term for this is quantitative easing or QE #2.
• Mantra #2 - 50% to 70% of the volume on US stock exchange is soaked up by High Frequency Trades chasing imbalances in trades. This means 30% to 50% of volume is made up or real or valuation investors.
• You can NOT compare, use many technical tools, or historic data to evaluate this market because it is being manipulated higher by our Fed or central bank and the majority of volume is soaked up by HFT’s chancing imbalances.
• Two significant reasons allow the Fed to keep the liquidity tsunami flowing - Housing prices are hurting & Unemployment figures are high.

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Shorter Term Forecasting Indexes

• The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar fell  yesterday  -0.29%. There has been the start of a  short three week bullish dollar,/bearish stocks pattern.  -However last two days were bearish for the dollar and bullish for stocks. Shorter term trend is therefore bearish, but longer term trend is bullish for dollar  = Neutral
• McClellan Index - (MO) [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Rose to to +31.84. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. Note: the +30 barrier has become a very strong resistance point.  It fell yesterday.  Stocks outlook = Bearish/Neutral (see below)

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Buy the Dip

Reading The Tea Leaves

The same Old Song - A manipulated US stock market is moving higher on stimulus, low interest rates and quantitative easing. Financials and stocks have received unbelievable support from our government and the Fed.

We have reached over + 30 on the MO and technically this should slow down any rally. However, we are building a manipulated stock bubble and that throws most of the technical rules out the window. So, be cautious moving forward. +60 is the usual overbought level that has worked well for a couple years. Link to chart above.

There are some early warning signs, but its not time for panic.

What to watch today

UUP - (Tracking ETF for dollar)

Remember - The dollar is a contrarian indicator. Bad dollar = good stocks

AAPL – The tech general broke out to a new high and continues to trade above those levels.

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Positions

Commodities are being driven higher by inflation fears in emerging markets. The Fed’s POMO program/QE#2 is a/the major driver of this.

Considering an even higher leveraged ETF for small cap stocks TNA (see below)

Warning - some food commodities are going parabolic in big volume. Time to take profits and/or tighten stops in this sector (especially RJA).

UCO -(2x oil prices)  Wait till it consolidates lower  and returns to pre Egypt crisis levels or below.

REMX (Rare Earth ETF) – Really believe this a good long term holding. Considering buying more on a dip today

DGP – (ETF is 2X gold) .

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy. Perhaps preferable or a good alternative would be *DJP that is more agriculture and metals or RJA (all agriculture)

RJA (Agriculture commodities Index)An  ETN, not an ETF. Up a huge +2.75% in big volume yesterday. See warning above.

UWM (2x small cap stocks) TNA (3X small cap stocks) Would add TNA on big dip

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#4 is under construction.)

Emperor of the World

The last Fed Chair Alan Greenspan used to be thought of as the most powerful man in the world. Now our current Fed chair Ben Bernanke is looked at by many as having inherited the title. This is especially true because this Fed, who meets this week, is far more active in trying to solve the problems created by the “free market or deregulated” Greenspan ruled Fed.

Furious debate rages in almost every economic circle over what our Fed is doing and its impact on the world. Every government and their central bank is trying to manipulate their way out of the Great Recession without causing a Great Depression. Our’s is still the biggest economy in the world so Bernanke has the most power.

The problem facing Bernanke is having NO regulations does not work in economics. (Most rational people know this, greed based ideologues would disagree) Even the high priest of deregulation Alan Greenspan has admitted this.

If there are no cops on the street, and no basic rules to follow then greed runs wild.  You develop casino capitalism where no risk is too great, if government/taxpayers bail you out.

On the other hand (the last 4 words are the four most used words by many non ideological  economist) if you over regulate economics you can negatively impact growth. Will our Fed and other entities worldwide be able to fix the damage with just the right amount of regulations and execute a soft economic landing?

Bernanke and the FED are the most powerful economic group in the world. Investors411 has tried to give you a front row seat in the how the Fed impacts everything from stocks to world wide inflation to commodity prices to a falling dollar and even more.

So far there has been NO Great Depression, and the Bernanke Fed deserves credit for that, but will the Fed be able to engineer  a soft landing? What happens when the training wheels come off?

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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

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

• Were Back – The old pattern of up days on lower volume – Basically as Investors 411 has repeated for many many moons, its the Fed liquidity (quantitate easing) providing the stimulus and investors are staying home  (out of selling) and enjoying the ride.
• Repeat from yesterday.- Monday’s have historically been the best day of the week as earnings season continues.
• Repeat from yesterday – We have what may be a shift of leadership into major US companies and the too big to fail financials that enjoy government and Fed support.
• If yesterday was a rally day (markets up  about 1% or greater) then today is the confirmation day. Do stocks hold onto most of the previous day’s gains. If so rally confirmed and bulls are happy.
• Obviously, still endorsing the concept that the Fed’s POMO [schedule] is and will be the key factor in keeping a long term rally going. (see Investors411 for past months).
• Worldwide Inflation (not USA) is the clear and present danger. Problem in #2 emerging market India
• Appropriate piece via Seeking Alpha from The Inflation Trader
• Obama’s State of the Union is the big political news today and may contain something to drive markets higher.

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Reading The Tea Leaves

From yesterday – The dollar is falling like a stone and that’s good for American exporting companies. There are still growing worldwide inflation fears in part brought on by our Fed’s quantitive easing. (see Friday’s Investors411)

“Don’t fight the Fed” is an old Wall Street axiom. The falling dollar and the special “gifts” to shadow financials are the results pushing stocks higher.

The raising of interest rates in India may take a bite out of stocks today.

What to watch today

UUP -The dollar tracking ETF. Perhaps a reversal today, but clear two week bearish trend. This is good for stocks. However hard to see US stocks take a big hit while dollar is falling.

Dow Index – Dow stocks historically do about 1/2 what Small caps and techs do in a rally.  They have done better for for a month+. Dow at new 2 year+ high.

AAPL - Strong day yesterday. The general for tech stocks bounced off its 50 DMA and for now has issued an all clear signal. Up a massive 3.28%. Very interesting that most of the smaller cap stocks in tech did NOT also have big gains. = Big cap stocks rule

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Positions

• DDM - (2x Dow stocks) Bought at 57.40. Will place 5% trailing stop on this position today.
• REMX - (rare earth metals)(1/2 position) Gained 1.58% yesterday will place another 3% trailing stop on this ETF today.

Under consideration -

DDM - (2x DOW) The trend to big cap stocks is apparent. A buy ,but a bit overbought right now

UCO -(2x oil prices) All commodities, are under pressure from inflation worries in emerging markets. UCO broke support level in big way. Waiting for it to settle.

REMX (Rare Earth ETF) –  Rare commodity used in everything from some TV’s to hybrid cars.

FAS (3x financials) & UYG (ETF that does 2x financials) XLF is the financial ETF. - Shadow banks have numerous advantages. – Opaque, special help from Fed and your still on the bottom line to bailout too big to fail institutions.  This sector is being manipulated higher by Fed. Those that can overcome ethic problems with shadow banks could consider buying. Yes, this is another bubble building.

DGP – (ETF is 2X gold)

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#3)

The Positions, Strategy and Overview sections of the blog are being revised. The changes should be finished over weekend. After this is done if time allows we’ll try a YSL #4

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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

Technicals, Fundamentals & Analysis

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

Major news yesterday and today is Spanish debt. Spain is a major country in the EU and if Spain goes down all of the EU get shaken to its roots.  This is making the Euro weak and therefore the dollar strong. This is important. Europe got hit by the 2008 financial meltdown and because of how their monatary system is structured its far harder to smooth over the bumps as our FED does.

Additionally the 10 year T bill yield is still rocketing ahead

Too early to tell if this is a much needed and healthy correction in stocks or something deeper. I suspect the first.

There is also plenty of reasons to be fundamentally bullish.

Reading The Tea Leaves -

Spain is Europe’s 4th largest economy and its 10 year T bill is trading at 5.53% (relative to ours at 3.52%). The posablitity in investors/traders mind of run away inflation in Europe and the USA is growing. Stocks have historically handled a beginning of inflation well, but if it gets too large everything suffers. The good news in all of this is deflation (a much more significant problem) seems off the table. Could go on for thousands of words but here’s the

Bottom Line – Quantitative easing over the past 18 months has kept stocks surging and stabilized our economy. Europe is having a major negative impact on us and it looks like right wingers and others are going to challenge or put road blocks in front of our FED.(I’m all for more transparency, but these guys want to destroy the FED – lead by Ron Paul.)

Right now quantitativ easing is NOT having some of its intended effect of keeping the dollar lower and the T bills/bonds yield low.

This is going to make for a bumpy ride and perhaps  changes investment strategy.

• EUO – an ETF that double shorts the EURO
• PST – an ETF that double shorts 7 to 10 year treasuries.

Of course, this would be a buy the dip situation.

Positions

• EEM - (Emerging Markets ETF) -1/2 positions sold
• UWM – (2x small cap stocks ETF) – 1/2 position sold
• UWM-
• UWM

Putting stop on 1/2 of  last UWM position at what it was bought for. 40.94 or sell 1/2 for minor 1% gain near open. 2% trailing stop on the rest.

Very Interested in UCO – double oil ETF, but still waiting for dip.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” -

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Did You Know?

Almost 12 million people have viewed Did You Know (Again thanks to HG for the heads up on the Video) on just how fast the world is changing. The entire video screams how important EDUCATION is. Just one example from video.

• There are more “honors” students in India than there are students in the USA. The CEO of Honneywell stated on CNBC that the best engineers in the world were in India. Over the weekend a former chair of the Economics department of a major university in Boston told me that 80 to 90% of the PhD candidates in economics at his school were foreign students

Bankruptcy

In one sense you have to admire Ben Bernanke. Our Fed chair is manipulating everything at his disposal, including an attempt at changing public opinion (a 60 Minutes Interview) to keep a bankrupt country afloat.  It comical and tragic that those who created or are oblivious to the imbalances that caused a worldwide “Great Recession” can recognize the problems in Europe but ignore them here.

The Bottom Line is if Bernanke and the Fed’s smoke, mirrors and manipulation do NOT succeed were all toast.

There are lots of  people out there with doomsday scenarios who document and state - From Zerohedge.com

The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default.

Game over!

STOCKS

Investors411 tries to keep it basic.

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

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Technicals, Fundamentals & Analysis

Flat day & light volume for US stocks. – The NASDQ has joined the Russell 2000 and both are now broken out & trading at yearly highs

WikiLeaks founder was arrested in London this AM – so look for BAC stock (his next target) and all shadow banks to rally today.

A Most Important reminder to Investors and Traders

When trading gets light the Black Box/High Frequency Traders dominate more. They do NOT trade on valuations & fundamentals like markets historically used to do. They use arbitrage and buy discrepancies within stocks,sectors & markets. We take risk. Their risk is like “taking a shotgun and shoot fish in a barrel.”

On heavy trading days they make up over 50% of the volume and on light trading days over 80% of the volume. (CNBC’s Jim Cramer figure is 80%)

Bottom Line – Trading rules have changed. Best example – volume used to be the #1 confirmation behind any sector/index price move. It now maters little and why Investors411 uses the MO as a forecasting tool is because it doesn’t use volume. There are much less pure traders and investors in stocks today, but our size is still considerable.

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Reading The Tea Leaves -

The FIX is in (See last Friday’s blog) - Today the Fed will be buying another $6 to $9 billion in bonds from its 21 primary dealers ( aka shadow banks or the ones that got trillions in loans after 2008 meltdown) Its by now is no longer a secret that they will (wink, wink) take that money and go long the market. The BB/HFT’s that the Shadow Banks & hedge funds use have already adjusted their algorithms for a fresh supply of money today.  Many other investor/traders now realize what’s happening, they will probably front run this stimulus to stocks that usually starts about 2:30 PM EST.

CAUTION – Time to start to pay attention to MO getting too high. We’re not their yet, but keep an eye on it. Also too many people are catching on to the 2:30 Fed stimulus money is coming into the market train.

Positions

• EEM - (Emerging Markets ETF)
• UWM – (2x small cap stocks ETF) (1/2 this position was sold)
• UCO – (2X oil ETF)
• UWM – small cap stocks -
• UWM – Bought more yesterday at 39.75
• DGP – Bought at 42.49 (see comments section of blog for buys& sells)

Still view any dip as a buying opportunity because of the Fed’s market manipulations. When the MO gets closer to overbought I’ll stop buying.

You’d really love a dip this AM to buy, but I doubt you’ll get the chance.

Why so much UWM? – Small caps are leading the breakout. YSL – is also  full of small and mid cap stocks.

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including “YOUR Stock List.” – I’m sure Paul will remind you yesterday and since its inception YSL is kicking butt