Massachusetts

Jobs/ Divided Governments

Lets take a look at two states California and my home state of Massachusetts.  California has divided government with Democrats in control of the state legislature and Arnold the Republican “terminator” as Governor for the last 8 years Massachusetts has both a a Democratic Legislature and Democrat Deval Patrick as Governor for the last 4 years

• California – 12.4 % unemployment. foreclosure abound, & education in crises mode. Government grinded to almost a hault.
• Massachusetts 8.6% unemployment, #1 in student education 2007 to 2009 (US dept. of education), and 7 straight months of jobs growth. All this with 97% of our citizens having health care for years.

If all Republicans and Democrats do is fail to compromise and like the tea party – let off steam/scream – the result can be far worse than expected when your state has a divided legislature.

Compare Massachusetts. employment rate or education rankings with that of any high population industrialized state like New Jersey (9.6% unemployment) Florida (11.7%) etc.. Right wing, CNN even rated Massachusetts as #5 on list of best states to do business in.

TARP

An in depth analysis of what it cost us to keep from economic catastrophe. Answer extremely little.

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KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index	Percentage	Volume
Dow	+0.39%	down
NASDQ	+0.09%	down
S&P	+0.44%	down
Russell 2000	+0.47%	-

Technicals, Fundamentals & Analysis

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

US Stock Markets -

Same Old Song - The Black Box/High Frequency Traders are buying the dips. Markets move slightly higher and volume down.

• Good news – markets move up in lighter volume
• Bad news – No worries the Fed will inject money into the economy. Currently using the POMO
• Dollar fall – Means better outlook for exporters in their earnings reports.

Here’s a stock analysis by respected Abby Joseph Cohen

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell  -0.80% Friday.  Looks like we have had a very short consolidation. Basically free fall. Set chart to one year or more – You will see big support level at $74+. Currently dollar at $78.09. For stocks fall is = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose a tiny +o.25% Friday.  An 8 week bull run, then a two week fall, now pushing higher. Now flat for last few sessions = Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.]   Rose to +22.42. Still lots of room to move higher or lower. Location= NEUTRAL

Reading Tea Leaves

Hard to see any serious stock reversal with the dollar continuing to fall. The BB/HFT’s algorithms seem to be set to buy the dip.

Earnings season is around the corner and the lower dollar should help forecast of exporters.

Positions

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

(I do manage 6 accounts that have other positions)

• EWS (Singapore)  One of several foreign ETF’s that have broken out and starting to get over extended.
• USO (price of oil/commodity). Exploded through resistance level and nearing 5 month high. Part of this is tied to dollar falling.
• SSO (2x what S&P does) 1/2 this got stopped out for small 4% gain.  A 2% trailing stop the rest set today.
• TYH (3X technology) Got stopped out for a measly 1+% profit.

Considering taking profits on 1/2 of EWS & USO. EWS is in double digits for profits and USO close. Would let the rest ride. Perhaps another 2% stop loss set near open. Both EWS & USO are longer term investments.

What happened to Green Mountain Coffee  GMCR - An almost 20% dip between close and the next day’s open is the risk you take in investing in individual stocks. Big melt ups and downs are unpredictable.  That’s why Investors411 has spent time on beating the drums for “Diversity” and “Pigs Gets Slaughtered” (See last weeks and previous updates).

Your safer owning all or a large chunk of YOUR stock List.

Same holds true for country based ETF’s but they are far less vulnerable. Only in a huge meltdown will you see them drop perhaps 4% between a close and open.

Same smaller impact for Dividend based stocks and ETF’s (see positions section of blog)

Especially if you are holding only a few stocks – we are entering earnings season and the volatility increases.

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Celebrities will Save Us – NOT

Last weekend we were fortunate enough to see Pirate Radio . Before the movie, a promotion for Glenn Beck came on featuring him crying, screaming & on his knees in front of a theater audience. This evangelical performance was to be broadcasted over the next few months in theaters nationally. God help us.

Poor Arnold “the terminator” Swartzenegger – the celebrity Californian’s elected to save their state. He couldn’t and next to Michigan, California has the highest unemployment in the country. Like Palin or Obama (see past updates) America’s fixation with celebrity status and Beck tears, screaming or getting on your knees, will save nothing. “The terminator’s” problem is he couldn’t save Californians from their own greed and governance.

• Prop 13 limited tax increases and erased a $4 billion tax surplus in a few years.
• Property taxes were based on when you bought your property. So a property bought decades ago pays far less in taxes than an exactly similar property bought today.
• You need a 2/3 vote of the legislature to change any taxes
• Californians voted for things like costly regulations limiting pollutants because so many were dying from filthy exhaust and waste.
• The “Free market” capitalism  mantra dominated California and unregulated companies like Enron were allowed to rape the state.

EW in the comments section of the blog, seems to suggests who will save us from ourselves .  One example – We spend trillions in foreign nation building wars, yet keep cutting taxes.  Our system of governance isn’t working. It’s being overwhelmed.

Tom Friedman on the Charlie Rose show  articulates the problem. You should see the video LINK But here’s a list of some of his main points that we need to overcome

• Money in Politics
• Gerrymandering political precincts
• Cable TV fracturing & empowering extremes
• Internet (both good and bad) but also empowers extremes
• Permanent presidential campaigns
• A globalized business community that is AWOL on major issues.

EW like Tom Friedman seems to believe “we need better citizens… not leadership.” China is producing better solutions than we are. As Tom Friedman’s grammy puts it -  “A great power that only produces sub optimal solutions will no longer remain a great power.”

KISS & STOCKS

Keep It Simple Stupid

For those of you whose eyes gloss over in the stock section I’ve tried to KISS it today, but I left a little in for those who want the deeper analysis

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.14%	down
NASDQ	-0.50%	down
S&P500	-0.32%	down
Russell2000	-0.17%	-

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

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

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

Technicals, Fundamentals & Analysis

Basically we had another  the dollar rose so stocks fell day.

Volume decreased and was well below average.  This is surprising on an options expiration Friday. What this tells us. – There is no money coming in from the sidelines – Its certainly more than beginning to look like a whole lot of investors are NOT going to get back into the market. Long Term this is understandable and a bearish for markets The rally in stocks is based on the dollar falling – when that runs out we have a problem

However, the Dow was down over 100 points below where it closed and rallied into the end of the day.  Why?

It’s Thanksgiving week and historically stocks rise on this shortened week. (best guess 7 or 8 out of last ten years) Monday’s have been good to stocks since Sept (again @80%% of the time)  The rally was simply short term traders getting in front of what they expect to be a good week.

Big news for week is the shopping numbers fro Black Friday & the unemployment #’s for the week.

Congress is loosing patience with the Fed & Geithner - LINK – This could negatively impact stocks, but most likely in December.

FEARLESS FORECAST – Up Week

Now going to get a bit more technical

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

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Significant forecasting tools/Indexes for stock markets

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

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

The BDI has broken out to new yearly high

The BDI fell a significant -155 points yesterday and closed at 4507. The up 16 days in a row streak has been broken . Technically it broke out through its major resistance level 4291 (this year’s high)  The BDI has rallied about 2300 + points since late September.

The BDI is starting to go PARABOLIC – starting to move up too far too fast-inevitable result is a crash and burn.  We seem to be at the top of the parabola. DANGER for Bulls

Going Parabolic is one of the easiest technical forecasts to predict. Investor’s411 called this reversal to the day.

What it means – Long term we created a higher high on the chart = Bullish. Short term we are on the way down = Bearish The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets.

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The Dollar is currently the #1 forecasting tool .

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

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

US dollar rose  +0.43% Friday. The dollar closed at $75.61 .  The dollar is in a narrowing trading range between $75 & $76.

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

It is a short term indicator and no t to be used for major trends.  Traders and short term investors should find this oscillator very useful.  There are dozens of similar forecasting tools, but the McC Index is clear, simple, and right now pretty accurate. The more oversold we get the better the odds are the market will rebound and visa versa on overbought.

The index closed at -29.78 This indicates stocks are somewhat  oversold .

Key to chart – Zero  is roughly  neutral and roughly when you approach to @ +60 you are overbought and approaching-60 you are oversold . Buy at oversold and sell at overbought. Nothing is absolute in this chart. In fact using the moving averages as a central point is better than using zero. Nothing is absolute about the minus or plus 60 number either.

Oversold conditions = buy, Overbought positions = sell

Positions

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

I did get a chance to do some editing in the Positions Section of the blog.

Long Term Outlook - We are on the cusp of change between CAUTIOUSLY BULLISH and NEUTRAL for stocks.

Long Term Outlook = CAUTIOUSLY BULLISH