Paul Otellini – Intel CEO with new billion $ China Factory

US Employment – A Deep Dark Whole

Today in the NYT Tom Friedman has an interesting article on US competitiveness and an interview with and an interview with Intel CEO – Paul Otellini – who is opening a new billion dollar plant in China in October.  Freedman/Otellini try to sell their reasons this plant and future plants will go abroad and they make a few decent points.  But, let’s not kid ourselves, globalization, gives emerging markets huge advantages over the US. Besides tax breaks why do US companies like Intel build plants & create jobs in emerging markets.

• There are already plants here and emerging markets are growing over twice as fast as us. It beneficial to have a plant near faster growing markets where few exist.
• Cost for engineers (workers) in China is about 75% less and 35% less in Germany than the US.
• Labor costs to build the factory (usually the #1 cost in construction) are significantly less in emerging markets.
• There are no health care costs in China and a universal health care in othe indutrialized democracies – In the USA health care over 17% of GDP while other indutrialzed democracies are between 5 & 10%.

Solution – One area we should all agree on is increasing funding for the Research Tax Credit. From today’s San Jose (Silicon Valley) Mercury News – “What’s really needed is to increase the value of the credit, and to make it permanent, as President Barack Obama proposed in his 2010-11 budget.”

This will NOT solve the problem. Those 4 bullet points are very significant to the profit bottom line. But its a step in the right direction toward getting us out of a deep dark unemployment hole.

KISS & Stocks (Keep It Simple Stupid)

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

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage	Volume
Dow	+0.02%	up
NASDQ	+0.32%	up
S&P 500	+0.23%	up
Russell 2000-	+0.88%	-

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

See Positions , Strategy , and Overview for changes made over weekend. (No changes this weekend)

A bigger rally collapsed in the last 1/2 hour of trading. Volume was up, but only the NASDQ was above average. Longer term rallies are usually lead by the NASDQ & small cap stocks (Russell 2000)  These two indexes have taken over market leadership in the last few weeks.

Most foreign indexes are higher overnight and this AM. The fundamentals behind this are probably the fact that Greece has approved budget cuts demanded by European Union (really Germany) for a loan,

But, and its a big BUT the broad New York stock exchange is now in oversold territory according to our McClellan Oscillator.  This is not your parents buy and hold forever stock markets more and more economic bubbles have burst or are forming.  So right now, even though momentum is with the bulls, its time to start cashing in on some of your profits. The more oversold we get the more you sell.  See positions below.

Significant Indexes

• McClellan Index rose to +62.51 yesterday We are now over +60 or Oversold territory. Time to seriously consider selling into any rallies.

Positions

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

The mistake made was not buying enough long positions when markets got oversold last month or at -60 on the McClellan Oscillator.  Right now in Wall Street terms its time to start taking money off the table.

• recently bought (added to) EWZ (Brazil) - considering selling into any rally today or at open
  
• 1/2 of MOO (agriculture ETF), - Sold at 44.55 for +5% gain
• The remainder of THY (ETF that does 3X what techs do) – Sold into rally yesterday at 143.50 for +15% gain
  
• remainder of EWZ – Will sell into larger rally
• remainder MOO – Will sell into larger rally
• FXI (China) – Will sell into a larger rally
• IMAX – Still holding on (rallied 4+% yesterday)

ETFs because of their size and diversity are more prone to follow the broad NY Stock Exchange’s McClellan Oscillator.  Individual stocks less so, but most will.  Of course in the past few years there have been times the NYMO has reached over 100.  This is why you sell in moderation and not all at once. If we get up to area’s close to 100 Investors411 will start using ETF’s that short the market.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Will Any of YOU Defend Obama?

huffington post phot

Check out the last 4 comments on the right side of the Blog starting with Bob Sadinsky’s – “Republican Lite” Besides someone else would have done worse (McCain & Palin) is there anyone out there who will sing Obama’s praise?

D. pointed out Tom Friedman’s we need nation building at home not Afghanistan  -  LINK Popeye does damn with faint praise – Afghanistan speech was a brilliant political move for Obama & Abby Gold reminds us what’s happened in Afghanistan to invaders for the last 100 years.

One of you privately sent me an email of someone very significant who praised Obama on Afghanistan – Mike Huckabee LINK Huckabee was the leading Republican candidate for president. Unfortunately, he’s toast as a candidate. He granted clemency to the guy who killed the 4 cops sitting in a Washington cafe.

Huckabee might not have  been your political cup of tea, but he was a decent guy who, like Obama made overtures to fellow American’s who disagreed with him. The Republican’s leading alternative is probably Sarah Palin – God help us.

So here’s some Obama good news from me besides he gives eloquent speeches – Bank of America is repaying $45 billion of its TARP loan with interest, the economy is clearly stronger as measured by GDP (in part due to stimulus package) and the rate of job loss is declining.

Remember Larry Wilkerson’s words from yesterday’s Update -

“If you are a praying person, he {Obama} needs your prayers and support. If you are not, he needs your support. Because all of us Americans put him where he is–and I do not mean by votes. We–all of us–let George W. Bush and Richard B. Cheney set us up. Moreover, we all contributed to creating the perilous fiscal state that is now a more dangerous threat to our country than any terrorist could ever hope to be”

KISS & STOCKS

Keep It Simple Stupid

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.18%	down
NASDQ	+0.42%	down
S&P500	+0.03%	down
Russell2000	+1.17%	-

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

The dollar rose a modest +0.34% and this seemed to keep a lid on a growing desire for stocks to rally.  Were in December so I guess you can call it a Santa Clause rally led by internet retailers like recommended AMZN (at new high)

Bernanke’s confirmation hearing goes in front of congress today. No matter what you feel about the guy, if he does not get confirmed it will hurt stocks.

Jobs # for November on Friday.

Now going to get a bit more technical

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

——–

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 rose +82 points yesterday and closed at 3836. Technically  the BDI broke out through its major resistance level 4291 (this year’s high) over a week ago.  The BDI has rallied about 1700 points since late September. After 16 up days in a row, 9 down days in a row & down through the former resistance/now support level 0f 4291 . This is a chart that usually gives off signals – the rate of decline was slowing and yesterday turned.

What it means – Long term we created a higher high on the chart = Bullish. The BDI is far more useful as a long term indicator of not only world trade, but specifically China and growing emerging markets. Recent price drop-Nothing to panic about yet

——-

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  +0.30% yesterday . Anything close to or over +/- 0.50 is significant  The dollar closed at $74.64 . 

——-

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

The index closed at +25.24 This is a slightly Overbought Position . This chart is showing we seemed to have reached a plateau. It’s spilled over a little bit, but the McClellan index has moved between +25 & -25 .  There has been no clear buy or sell signal for over a month,. Oversold conditions (@ -60) = buy, Overbought positions (@+60) = sell

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

Positions

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

This section need to be updated – Sold 8% (24 to 16 % position in portfolio) of FXI and all of DGP. Taking profits was a mistake and bought back all of DGP (Double gold) & 1/2 of FXI.  This all happened because yours truly got spooked over the Dubai crisis.

Recommended ETF’s

Gold (GLD & DGP) – (recommended positions) is also at a new high. Warning – this ETF is starting to go parabolic (up too far too fast) Perhaps we have reached the top of the parabola. If  we have another day or two of volume increase and major price move (above 1%) we will probably get at least a short term hit. Long term holders – the fundamentals are still good. Traders and shorter term investors keep a close on this growing parabola. Time to take some profits – now or in next few days (depending on escalation of price & volume)  Sell into the parabola

MOO – Our new agriculture ETF is also at a new yearly high and on a breakout run.  Each of the recommended ETF (except anything that is 2x or 3x a sector or country) is hopefully a long term position.  This stock is fundamentally aided by the growing middle classes of India and China eating better and a falling dollar.

EWZ (Brazil) – Again at a new high.

FXI – Overall excellent for the year, but lagging right now and within a few percentage points of new high,

NVS -(A stock, not an ETF) Our swine flu play – we had a nice run with this stock now up over 20% – It is a solid company, but it was mainly a swine flu play.  Our town is getting out shots on the 7th.   We already took 1/2 the profits on NVS and will take the rest in any slight rally. The scare is diminishing. This stock had a big volume decline yesterday. Looks like the momentum players are heading for the exits.

Long Term Outlook = CAUTIOUSLY BULLISH

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

——–

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.

——-

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.

——-

$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

How to Clean Your Computer Screen

Thanks to one of you who sent in this most  valuable LINK

What Happens When You Cheat?

• You cheat – From Income tax to a college exam – Fines, jail, expulsion – there are consequences.
• Big Shadow Banks cheat – Get truck loads of money and executive get lavish bonuses
• Ahmadinejad cheats/steals election – You get the religious leader’s blessing, violently crush opposition and become president
• Karzai (Afghanistan) steals election – You get a do over even when your brother is perhaps the countries top opium dealer and on the CIA payroll for last 8 years.  LINK
  

You and I pay consequences and are held accountable. Others….

Back to Back Tom Friedman Editorials – Afghanistan

TF is usually a hawk when it comes nation building and military escalation, but surprisingly he opens with “We need to be thinking about how to reduce our footprint and our goals there in a responsible way, not dig in deeper.” LINK

TF echos what Investors411 has been saying for years – As much as we and moderates in the Arab world want to see modernization we can’t do it for them. In fact, our involvement almost always makes things worse. This time the Pulitzer Prize winner adds

“A strong, healthy and self-confident America is what holds the world together and on a decent path. A weak America would be a disaster for us and the world. China, Russia and Al Qaeda all love the idea of America doing a long, slow bleed in Afghanistan. I don’t. ”

Where’s Waldo – Obama

Unemployment, Afghanistan, Health Care , etc. Where is our charismatic leader? Hard at work?  He spent his last few days going coast to coast on a fundraiser in FD, CA and even right here in MA. He’s out campaigning in VA and NJ.  Politics as usual or change we can believe in?

Is Obama’s work ethic beginning to look like Bush’s on Katrina? -  Difference – Obama does look good on the golf course.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+0.14%	down
NASDQ	-1.20%	up
S&P500	-0.33%	down
Russell2000	-1.13%	-

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

The dollar rules. The correlation is probably around 90% on a day to day basis.  The fall in stocks over the last three trading days is due to the rise in the dollar’s value vs. other currencies.

Basically the dollar falling is an indication that long term debt of the USA is growing relative to other currencies.  Growing US deficits is almost a consensus view. This has been ongoing since 2000.

What caused the three day rise in the dollar is probably all technical.  So many traders were short the dollar (expecting it to fall further) when some entity (probably a central bank(s)) bought dollars the rise forced the shorts to buy to cover.  A simpler explanation of this is basically there were so many sellers that there were no new sellers left.  Same thing often happens with buyers. Remember, just about everybody sold stocks in the spring and the fact that we ran out of sellers was one of the reasons markets turned.

For more see section on dollar below.

——–

Significant forecasting tools/Indexes for stock markets

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

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

The BDI is @ 30% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI lost -31 points yesterday and closed at 3013. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 900 points since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict he daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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 for forthethe third straight day +0.26% The dollar closed at $76.21 .  This is above the former support – now resistance level of $76.oo . Technically - Bullish for dollar & Bearish for stocks.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at 76.88 this AM. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions as we get close to this resistance level. The rate the dollar is falling has diminished as we approach this important resistance level. A sign that it will hold. However, if it falls we could see a major correction for stocks.

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

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

Outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - Our problem is one of timing. We can’t get a 5 to 10% dip to invest. Investors 411 should have much larger positions in emerging markets .

Look to add to EWZ (Brazil) and FXI (China) positions if they continue to fall this week . Bought more EWZ yesterday (see below)

For Traders (not long term Investors )

NVS -  (You could also sell 50% and put in a stop/sell order) I sold 50% of NVS (5% of portfolio) for a 12+% gain. Placed a stop/sell order at just under $50.00 for the other 50%.

EWZ – It was a mistake to sell (9% of portfolio or 50% of total holding) of this. Buying it back -  Added (5 % of portfolio) EWZ at 71.7.  Will buy more if/when it drops lower.

Traders – Three major tech stocks leading the charge – Hope CSCO joins them when it reports earnings. Investors411 has a (5% of portfolio position in CSCO that is down over 3% )

• AAPL – cutting edge computers and telecom revolution (phone’s) moving into China.
• AMZN – Fabulous earnings report and forecast.
• GOOG – Internet adds is growing even in USA.
  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Tom Friedman’s Dream/Nightmare

Sunday TF wrote an editorial LINK that opened with imagining President Obama in 2012 standing in Iraq under a banner “Mission Actually Accomplished .”

This is the dream of anyone who wants to build a 20th century colonial empire.  The person who should be standing ALONE under any banner in Iraq in 2012 or any future date is an Iraqi President.

• Britain got out of India – It wasn’t pretty but the end result is the world’s largest democracy in India and a fragile democracy in Pakistan.
• The US got out of Vietnam – Again it wasn’t pretty, but now Vietnam has one of the world’s fastest growing economies and even its own ETF – VNM . Like China there is one party rule, but millions are coming out of poverty into a growing middle class.

Our efforts to colonize the Muslim world have made the overall situation worse, cost trillions in dollars and who knows how many lives. Let the nightmare of colonialism go .  If there is a clear and present danger – act. Now we are on the verge of nation building in Afghanistan whose #1 economic product is opium not oil. It’s long past time for a change to a new strategy.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.08%	up
NASDQ	+0.50%	up
S&P500	+1.22%	down
Russell2000	+2.04%	-

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

Reading the Tea Leaves -  BE CAUTIOUS volume has in no way confirmed the move higher. If you look at the beginning of the bull run (March April and May)(check out weekly charts of a major US index) there was huge volume behind the move higher. You expect some slower volume in the summer, but volume has not returned to the markets. In fact there has been significantly more volume on downside days than upside days this month.  Our #1 confirmation factor of price moves is calling for – bears to rule

The Dollar (see below) The slow/moderate fall of the dollar is a trader’s dream . One danger for a fall in the dollar is the rise in oil prices. $100 dollar oil would negatively impact stocks.  As long as the dollar falls it holds up stocks. – Bullish for stocks

Bottom Line – Still CAUTIOUSLY BULLISH Long Term Outlook (see below) The dollar trend is the trump card that is firmly in place. Every big volume decline is trumped by the falling dollar that pushes US equities higher. The second major reason is the stimulus packages in emerging markets like China, India and Brazil have worked. China, especially, never entered recession and the growing middle classes here has led the world equities higher.

The drag is concentrated in the USA. Why – We already had a huge debt, our financial industry still has  huge phony unregulated profits, and we are/will be wasting trillions trying to nation build.

——–

Significant forecasting tools/Indexes for stock markets

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

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

The BDI is @ 30% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +42 points yesterday and closed at 3043. A higher high price on its chart pattern has been confirmed The BDI has been rising (with one bump) since late September. =  Bullish for stocks & world trade right now

——-

The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict he daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$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 a significant +0.56% The dollar closed at $75.47 . Bullish for stocks

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

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

Trades made this week are updated at the end of the week. -  Sold 50% of position in EWZ and all of EWY. – This sure looks like – a big mistake – Should have been adding instead of subtracting – especially EWZ – Still no one ever went broke taking profits. - Sorry – Did not update Positions section.

Outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - My problem is one of timing. We can’t get a 5 to 10% dip to invest. Investors 411 should have much larger positions in emerging markets .

For Traders (not long term Investors )

NVS - One of the 2 stocks owned (the other is CSCO). This is a swine flu play. Obama has declared a national swine flu emergency and NVS’s vaccine is not due to be distributed till mid December.  NVS is going to have too little too late. Taking profits today. (You could also sell 50% and put in a stop/sell order)

EWZ – Yes it was a mistake to sell 9% of this. Buying it back.  Will add to both FXI (China) and EWZ this week  A falling dollar is just an additional fundamental reason to own these areas. Other reasons have been listed over and over again.

Traders – Three major tech stocks leading the charge – Hope CSCO joins them when it reports earnings.

• AAPL – cutting edge computers and telecom revolution (phone’s) moving into China.
• AMZN – Fabulous earnings report and forecast.
• GOOG – Internet adds is growing even in USA.
  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

More Troops – Bad Bet

Nicholas Kristoff’ s editorial in today’s NYT on why more troops in Afghanistan is a bad bet. Investors411 praised the fact that we tripled aid to Pakistan.  Here’s Kristoff’s money quote.  “American policy makers were completely blindsided in recent weeks by outrage in Pakistan at the terms of our latest aid package — and if we can’t even hand out billions of dollars without triggering nationalistic resentment, don’t expect a benign reaction to tens of thousands of additional American troops. ”

Jobs Jobs Jobs

Investors411 has painted a bleak picture of long term job prospects for Americans over the last few month. When you add to this shadow banks are still in the shadows and foreclosure problem is at best stabilized you have a bleak picture for Main Street USA.  Perhaps those that have seen gains in their stock portfolio’s since the spring will spend and juice the economy. However, especially for older workers, as Abby Gold in the comments section points out, on Main Street its not a rosy picture.

Solutions – One specific help would be to extend something like the $8,000 homeowner credit for first time home buyers. 350,000 buyers took advantage of this program – it worked especially for lower priced homes. The ripple effect is those new home buyers have to furnish those homes. Two respected individuals have offered their solutions

• Mort Zuckerman (right of center – editor of US News & World mag.) in an editorial titled “The free market is not up to the job of creating work” suggests a “massive program(s)to restore stable jobs growth.” He suggests a National Jobs bank and allocating $65 billion toward it. LINK
• Tom Friedman (left of ccenter/pro business – NYT columnist) looks at the failures of America’s education system to keep up with the increasingly  globalized world.  Here’s the money quote – “While the subprime mortgage mess involved a huge ethical breakdown on Wall Street, it coincided with an education breakdown on Main Street — precisely when technology and open borders were enabling so many more people to compete with Americans for middle-class jobs. ” LINK

Pay Cuts on Bailed Out Companies

Obama administration is forcing pay cuts on top executives of 7 bailout firms. Good first step, but what about all those other shadow financial institutions who used the Fed or collected big time from AIG’s  bailout? Goldman Sachs & many others gets away without any claw backs in this. Huffington Post LINK or NYT LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0.90%	up
NASDQ	-0,59%	up
S&P500	-0.89%	up
Russell2000	-1.35%	-

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

This is a US stock market dominated by professionals and traders.  Some sort of programed trade kicked in the last hours and the pro’s left the building.  The volume way well above average and the fall from what was a rally was over 1%. Volume increased significantly in the last hour’s price collapse = Bears asserting dominance

The dollar fell significantly which almost always means US equities rally. This again = Bears asserting dominance

The dollar fell so overbought oil prices rose significantly LINK to chart +2.25 to $81.37 . Obviously oil prices above $80 is going to hurt ma and pa consumer in any recovery.  Sure looks like some entity or group is manipulating oil prices. Up 9 of last  10 days and going parabolic (up too far too fast)= Bears asserting dominance

The BDI rose (probably did not have time to react to swift fall in equities)

Reading the Tea Leaves – There is no specific fundamental(s) that you can point to that says yea that’s the reason stocks tanked in big time volume at in the last hour of trading.  Obviously “the Pro’s” know something us common investors do not. Earnings season has been much better than expected with companies beating on both TOP and bottom line. The dollar fell. The BDI is rising.  Stocks should be rising.

Stocks falling on good earnings news, a rising BDI and a falling dollar is a disconnect from what has been a historically a positive trend .  Think of this as a sign in the road saying WARNING SPEED BUMP AHEAD.

——–

Significant forecasting tools/Indexes for stock markets

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

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

The BDI is @ 30% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI rose a significant +85 points Friday and closed at 2917. A higher high price on its chart pattern has been confirmed and it sure looks like a bullish run could be starting. =  Bullish for stocks & world trade right now

——-

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 fell a significant -0.55 % The dollar closed at $75.12 . We have developed a support now resistance (it’s called support on the way down and resistance on the way up) level just below $76 . The dollar closed below its support level. = Bullish for stocks

NB -

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

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

The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

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

Trades made this week are updated at the end of the week. -  Sold 50% of position in EWZ and all of EWY. Have no position in XLE. Also for TRADERS (not investors) strongly considering buying some companies listed yesterday that had outstanding earnings, but have fallen over last few days.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Afghanistan Bubble Building

Islamic Republic of Afghanistan جمهوری اسلامی افغانستان (Persian: Jomhūrī-ye Eslāmī-ye Afġānistān) د افغانستان اسلامي جمهوریت (Pashto: Da Afġānistān Islāmī Jomhoriyat)

So after adding 21,000 to the original 38,000 troops in Afghanistan the generals are calling for another 45,000 troops for Obama’s “necessary war.” This would be a unilateral increase of American troops. This unilateral increase would put over 100,000 troops in nation building Afghanistan for the next 5 to 10 years. Basically we will end up unilaterally increasing troops by almost 200%. How is any of this different than the unilateral Cheney/Bush military approach.

Have we learned nothing from the trillion(s) spent in Iraq. – A corrupt government, dominated by Shia’s who love Amadinejad & still have huge economic problems. Imagine Israel bombing a suspected Iranian nuclear plant. It not only would turn Iranian religious fanatics into terrorist bombers, but the Shia’s in Iraq would join them.

What happens next probably Pakistan, Yemen, the Sudan ? Frank Rich has a column on this “Obama on the Precipice” in the NYT LINK

China blowing by the USA

Tom Friedman had another column this weekend entitled “The New Sputnik” on China blowing by the USA in the creating of alternative energy. LINK

This is just another reason why the #1 investment choice of Investors411 continues to be FXI -The China ETF.

Blowing and Building Economic Bubbles

Both the WSJ and the major financial channel are cheerleading unregulated capitalism this AM. Why not, the Lehman Brothers collapse is a year behind us and taxpayers have bailout Wall Street. Happy days are here again and nothing substantive has been done to regulate or reform what got us into trouble in the first place. Economist Simon Johnson on “Was the G 20 Summit actually Dangerous” traces the lack of capital requirements for US financial institutions. LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-0,44 %	down
NASDQ	-0.79%	down
S&P500	-0.61%	down
Russell2000	-0.47%	-

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

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

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

Technicals and Fundamentals

Volume declined and was below average. Technically, it looks like the bears are running out of momentum. In the very short term we are a bit oversold – so look for an early rally.

Big news for week is the jobs number fro the month of Sept. coming out Friday.

BDI seems to be turning higher = Bullish

Fearless Forecast – Took it on the chin last week as major US indexes fell. However September is turning out to be a pretty good month. The dollar is the over ridding factor in market direction. It would be good in the long run  if US markets stopped moving higher without some sort of more major retreat (5 to 10%) Constantly going higher feels too much like a bubble building.  Fearless forecast for the week is for the dollar to fall and markets to rise.

This rally is built on the falling dollar, means US goods (exports) will cost less abroad. Therefore for major US companies that sell overseas profits will grow.

——–

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) .

2388 is support now resistance level/number to watch – Yesterday BDI +20 t o close at 2183. Short term Bullish for stocks

The BDI is @49% off its high (early June) Before that it gained almost over 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 ) A 50% retracement from highs is a major support level. Therefore some stabilization is understandable.

What this means – World trade is in trouble – lots of ships are sitting in ports empty.  To some degree, China has stopped buying raw materials and/or the US consumer is not buying as rapidly as earlier in the year. Braking a support level is significant, but 2183 (current level) is still a long way from the Dec. 2008 663 low. = Storm clouds gathering

——-

$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

The dollar fell -0.17% yesterday and closed at $76.78. After a major two day rally that created a higher price high (bullish) the dollar cooled off a bit.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

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

revised to reflect recent trades this weekend

Plan to add to EWZ (Brazil)

Also MVIS (a stock) NOT an ETF is technically looking like its small three day retreat makes it a possible buy.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Mid Year Review of Stock Positions

Scroll down to bottom of STOCK section

Iran Day 13

Iran Photo from Andrew Sullivan Blog

Violence continues. See previously recommended sources – Lede from NYT, Huffington Post, Andrew Sullivan & BBC for more. At 9:13 EST Nico Pitne y at Huffington Post has a video of the Supreme Leaders military firing on demonstrators here

What can you do to help the protesting Iranians? Tom Friedman has an interesting long term approach. Iran’s Green Revolution = America’s Green Revolution. you can read about it here

Obama Debate Rages on

The are you happy with Obama ? debate continues to rage in the comments section. More fireworks See posts by  "A Friend" and D.

Health Care

Going to spend a lot more time on this . Two important points for now .

• From D’s comments post - "if a private option is so bad why have none of the dozens of counties that have public heath care voted to change back to private health care?"
• Time magazine’s Michael Grunwald has an excellent article on Health Care costs here Why some major hospitals and areas charge less than others for comparable services. Example Mayo Clinic & Cleveland Clinic @40% less than UCLA Med Center and John Hopkins.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.28%	down
NASDQ	+1.55 %	flat
S&P500	+0.65%	down
Russell2000	+1.06 %	-

-

Technicals & Fundamentals

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool - volume – gives no indication of which way prices will flow .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD – The Dollar rose +o.73% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. In the short term we are seeing some breakdown in the strong inverse correlation between the dollar and stocks. The best explanation for this is that the dollar is trading within a range and when it breaks out of that range (78+ to 81+ see yearly chart here ) this inverse correlation will again become  more apparent.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and now a 4 day fall. Technically we failed to make a higher high and if/when we make a lower low it will be technically a very bearish sign .  Momentum is building to the downside.

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Reading the Tea Leaves

This market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. Look for the areas around 875 and 850 on the benchmark S&P 500 as support levels.  So far because of the lack of heavy volume this looks like an over bought correction and not a total meltdown that tests the old lows.

Investors411 has recommended buying some downside protection on any minor rally. A 5%+ position in -SDS – An ETF that is ultra short’s the S&P 500 -  Bought yesterday at @$57. This is probably not going to be a position that will be held for a long time.

Caution – The last time I was worried about a drop (Swine flu) I bought FXP (ultra short China) and got burned

Mid Year Review of Our Positions

Part #1-Part 2 tomorrow

I’ve rounded off some of the numbers and the first number is the % of the entire portfolio invested. You can learn more by going to "Positions" section on top of blog. Some position in the same ETF were added at different times, so they have different results.

All numbers are approximate All position are year to date or from when they were bought this year (This does not include some short term day or swing trades – If your interested in this send me a separate email)

Our benchmark S&P 500 is flat for the year

FXI -(China)

• 8% of portfolio, up 24% position open
• 8% of portfolio, up 37% position open
• 8% of portfolio, up 20% position open

FXP – (Ultra Short China)

• 5% of portfolio down 13% position closed

EWZ (Brazil)

• 6% of portfolio, up 26% position closed

GLD (Gold)

• 3% of portfolio up 13% position closed.
• 3% of portfolio down 4% position open
• 3% of portfolio up 9% position open

QLD (Ultra long NASDQ 100)

• 6% of portfolio up 16% position closed

XLF (Financials Stocks)

• 5% of portfolio up 23% position closed

IFN (India)

• 3% of portfolio up 1% position open

GEX (alternative energy)

• 3% of portfolio up 10% position closed
• 3% of portfolio up 3% position open

The Hedge (Equal amounts of QLD – ultra long NASDQ 100 & SDS ultra short S&P 500)

• 15% of portfolio up 1% position open

SDS

• 5% of portfolio up 1% position open

Analysis tomorrow – But obviously Investors411, as in past years, toasted of our benchmark S&P 500

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Ballots over Bullets – Oprah, that’s right Oprah Winfrey – Healthcare vs. for profit illness care – Our Positions – The new Hedge is starting out with positive results – FXI, QLD, EWZ & IFN

Ballots Over Bullets

Tom Friedman has a Ballots Over Bullets editorial in today’s NYT. He echos what Investors411 has described as the results of Obama’s speech, and the relationship to the Lebanon elections. Like the economy, there are a few green shoots of hope in the Mid East. They may get crushed, but at least we’re not locked into the "you’re either with us or against us" mantra.

Oprah and HealthCare

Never thought you’d see Oprah Winfrey in Ivestors411. She is one hell of a business women. But Ophra also is setting a standard in health care. It may not be perfect, but what her show deals with is heath care and what we in the USA deal with is a for profit illness care .

Oprah promotes "wellness,  prevention, and alternative medicine" far more than our conservative, for profit medial establishment. Our mainstream medical establishment is addicted to drugs, surgery, and pills  like Cheney is addicted to bullets, hate and torture. There are alternatives that work.

Dr. Deepak Chopra , who I had the privilege of spending some time with decades ago, is now one of the loudest voices for change in the medical establishment. Take a look at his "Mainstream Medicine and the Oprah Factor"

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.02%	down
NASDQ	+0.96%	up
S&P500	+0.35%	down
Russell2000	+0.60%	-

-

Technicals & Fundamentals

Remember – Forecasting what markets will do is all about how potential investors feel about the  fundamental aspects of stocks and the economy. Technicals (looking at chart patterns) gives us some idea of where the traffic signals are. It all about predicting attitude.

NASDQ is again separated from the pack.  The distinction may look small, but over time is has and hopefully will continue (see our "hedge" position) to outperform.

Volume was below average. No confirmation of a price move.

Reading The Tea Leaves

• Oil prices now over $70 a barrel - WTIC
• The BDI (measures world trade) has fallen 5 days in a row
• Interest rates of 30 year fixed mortgages have risen over 0.50% in last month.
• Chrysler’s bankruptcy deal and possible GM’s could get bogged down in supreme court. = Way more unemployment and foreclosures

There is fundamental long term trouble brewing just under the surface. The above factors is they continue in the same direction combined could crush a budding economic recovery.

What’s moving this market is a falling dollar. Russia did/said something this AM to cause the dollar to fall further – So stocks and oil prices should move higher this AM.

Position s – (See positions section of blog for more)

• The Hedge – Q LD went up +1.68% and SDS went down -0.54 %. This means our latest and second largest position made +1.24% yesterday.
• FXI – China -1,25% yesterday.  #1 position has dramatically clobbered the benchmark SPX this year. This ETF is falling in decreased volume and a new buying opportunity is/may arise.
• Looking to buy  into IFN (India) EWZ (Brazil) on dips.
• Looking to buy back into QLD (a separate position from "the Hedge")

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTIN G !

WHAT’S UP – China leading world out of recession; Huge stimulus and Chinese banks loan package has dramatic positive short term impact on stocks; Shadow banks are winning in their tug of ear with Obama’s administration: Stress test results; Investors411 recommended positions have possibly best day ever!

 

-

China

Chinese Banks are lending money - big time They were not nearly as over leveraged as American shadow banks and China. Their stimulus which is bigger per capita than the USA’s is also helping turning the Chinese economy. A second stimulus package is projected soon. Some outstanding growth stats announced yesterday. Some details on China’s stock’s explosion higher yesterday here and here

For more see 4/16 Investors411 blog on China or (recommended) Positions section of blog

Bottom Line – China is leading the rest of the world out of the recession. In the long run this much stimulus is going to be inflationary.

Shadow Banks

There’s the good, the bad and the ugly about shadow banks. But the the good is the fact that they are leadings stocks higher, It seems in the tug of war between increased governance  by our government and allowing US banks to continue to move in the shadows is moving in one direction –  the Shadow’s are winning, NYT story.

Stress Test

Shadow bank, Wells Fargo was thought to be one of the banks that failed the government’s “Stress Test” and it moves up +24% on the stock market.  Talk about moving higher on bad news = great for stocks.

“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter”    Full WSJ story

 

Why Tom Friedman is Wrong (part 2)

Sorry Started this when my server/modem went crazy on me last Thursday. See his editorial “A Tortuous Compromise.” in which he invisions a decent wesern US democracy in Iraq. 

Imagine Rush Limbaugh and the far right coming together as “brothers” with Move On and the far left. Multiply that times 10 and add a mountain full of oil money/power to fight over and you have how the Shia feel about the Sunni’s in Iraq.

What happened is the Shia (60% of the population) kicked ass in a civil war over the Sunni’s (20% of the population and Saddam’s group) Add to this years/decades of mass killings. This is almost as bad as imagining Hamas and Israel coming together in one democratic love fest. 

STOCKS

 

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+2.61%	up
NASDQ	+2.58%	up
S&P500	+3.39%	up
Russell2000	+4.07%	-

-

Technicals & Fundamentals

China (FXI =+8.95%) (see April 16th blog)and Financials (shadow banks) added high octane jet fuel to last week’s breakout.

S&P 500 turns positive for the year! SPX closes at 907 – First major technical resistance level at @ 940 (an old high and close to the 50 day moving average)

XLF - The ETF that tracks financials (mostly shadow banks )Broke out of its consolidation pattern and rose +10.14% in increased above average volume.  Therefore, volume confirmed a huge breakout. If you’re in recommended ETF’s that do 2x & 3x what the XLF day you did spectacular. (see positions)

The XFL had been consolidating between @ 9.4 & 11.3. XFL closed  above breakout levels at 11.73 .

A Wowie Zowie Rally!

Wow! Yesterday was a fabulous day for Investor’s 411 recommended Positions.

See Positions at top of blog. Most Investors411 recommended  positions did 2 to 4+ times better than US markets. Both China and Financials are recommended ETF’s (see positions) 

Even GEX (alternative energy) was up +9.95%.  Also Brazil (EWZ) was up +5.98%.

Reading the tea leaves - Obviously, would love see stock positions hold onto their gains and not rocket higher or lower. Moving too far too fast is reason for concern. Consolidation over a few weeks is best in the long term for bulls.  

Those shorter term traders should obviously book some profits soon. Why be greedy? There should be a whole lot of traders buying the first dip today.  Let’s see what happens after that.

Caution – Don’t get all caught up in this good news. There are massive economic problems out there in the USA and many foreign countries.

  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !