News /Trends/ Politics

• United Nations – “voted Thursday to authorize military action, including air strikes against Libyan tanks and heavy artillery and a no-fly zone, a risky foreign intervention aimed at averting a bloody rout of rebels by forces loyal to Col. Muammar el-Qaddafi.”  Thanks to Popeye for heads up on NYT story

• Japan – Someone, somewhere, somehow really knows what’s going on. But their lips are sealed as Japanese government says one thing and other countries say something else. Latest news “smoke from reactors,” at Huffington Post. This smoke and mirrors is exactly like the shadow banking system in the USA who doesn’t even have to follow FASB

• Anonymous – More on the internet hacker group that “above all intends to break the international banking cartel centered at the Fed“

• United Nations – Irony: Almost every country that voted to give Obama/France & England cover to take out Ka Daffy, cited the support of the “Arab League.” It just so happens that the vast majority of the Arab League is itself oppressive dictators.  Oh well – we sacrifice one revolution – Bahrain,  to crush a more despotic regime in Libya.

• G7 Intervention - The G7 countries Central Banks have intervened to prop up Japan. The BOJ is already printing & quantitative easing money out by the truck load. Stock Futures rise as G7 Brings International Relief to Japan

• Obama – He shoots he scores: It took Cheney/Bush months of phony arguments and all they got was a now disintegrated “coalition of the willing” in Iraq. In a couple weeks Obama (Boy did the Clintons push for this) got a unanimous security council vote (10 voted yes & 5 abstained).  International credibility to attack Ka Daffy might even be a last second buzzer beater for the rebels.

• Basketball – The most passionate US sporting tournament began yesterday. While you may call the above topics March Madness, the 68 college team tournament owns the rights to the real title – March Madness. (video)

• Libya – Just in  - Ka Daffy says OMH and halts all hostility.

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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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Index	Percentage	Volume
Dow	+1.39%	down
NASDQ	+0.73%	down
S&P 500	+1.34%	down
Russell 2000	+0.46%	-

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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. See Investors411 STRATEGY section for more

Japan’s nuclear situation is still the trump card – Situation improves  so do stocks. Now, Libya & oil become another dominant factor. Market movement is dictated more by behavioral psychology than technicals at this point. However, there are some relevant technical and fundamental points.

• G7 intervention in Japan a short term positive for world markets. Stabilization better than chaos.
• Visions of a kick ass  adrenaline rush war in Libya dance in traders minds today. But that can change to burning oil fields.

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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 fell a HUGE  -0.93% yesterday. Bearish longer term pattern. Chart shows dollar broke short term support, but directly above a major support level. = Bullish
• 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 -54.76 Still close to -60  oversold level.=Neutral/Bullish

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Reading The Tea Leaves

Obviously, we had an oversold MO at -88 and we had a rally. But there was a second factor to the rally and that was the HUGE drop in the dollar. Some of this has to do with the Japan situation. The Bank of Japan (BOJ) last night has intervened to prop up their currency as well as the G7. The BOJ is printing gobs of money and using quantitative easing.

We’ll probably see a roller coaster ride for the dollar.  The long term trend is down. This makes US goods cost less abroad and increases profit. Bad news here is you don’t want the dollar to fall to far too fast. It becomes as worthless as Zimbabwe’s currency. It’s also troubling that in a disaster (Japan & Arab revolutions) people do NOT buy the dollar as protection.

Longer Term – A potentially winnable war in Libya, Japan rebuilds without nuclear power, and Saudis plus other oil dictatorships asserting authoritarian power/stability. If only those reactors don’t radiate a big hunk of Japan we have the potential for bulls to run.

What to watch today

• USO - ETF for oil - Oil up = stocks down - Now back above $100. – Headlines from Libya.
• UUP - (Tracking ETF for dollar) Remember - The dollar is a contrarian indicator. Bad dollar = good stocks
• AAPL – Trading below 50 day MA is bearish.
• Japan Rector Developments

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Positions

Longer Term - A low MO has for the last 3 years been an accurate the signal to buy. I’ve used this Positions Section as an aggressive ETF section for short term trades. Any long position below should outperform if we don’t hit leg two of a worldwide recession. Japan will be in recession. However, quantitative easing will pick up the slack in the USA (a QE #3) if the situation gets too bad. All this is one big inflationary bubble that bursts down the road, but for now its still bubblicious.

So I’m buyer today – probably UWM . See comments section for more.

UCO -(2x oil prices) Why not, its also a hedge against higher gas prices.

REMX (Rare Earth ETF) - Really believe this a good long term holding.

DGP – (ETF is 2X gold)also SLV (silver).

DBC - (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy.  A good alternative would be DJP that is more agriculture and metals - Both DBC & DJP are on breakout runs.

RJA (Agriculture commodities Index)An ETN, not an ETF. Hopefully longer term holding. .

UWM (2x small cap stocks) TNA (3X small cap stocks)

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CONGRATULATIONS To Paul who just got a kudos from the HGSI Technical Analysis site

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 the new “YOUR Stock List.”

Note changes to Long Term Outlook

Social Security Fix

Remember Republicans, & Wall Street demanding lots of Social Security funding to should be tied to he stock markets. The Dow is now down 20+% and could go a lot lower if oil prices keep climbing. Can you imagine seniors panicking as their life saving evaporate. Several years ago this was a major topic in Market Updates. Security means the investment is secure.

The UN and Zimbabwe

One truly wishes the UN was strong enough to truly challenge the death of democracy in in Zimbabwe. However the UN has, in effect, lost its former leader the USA. The UN lost its moral pro democracy), economic (30% of worlds GDP) and military (50% of arms spending) leader.

The US went rogue or unilateral in its invasion of what the head of the UN called an “unjust” war in Iraq. UN weapons inspectors found no WMD . Scott Ritter The UN’s chief weapons inspector editorializes constantly about what’s happened then and now in Iraq. American corporate media ignores or censors the views of the man that was right about Iraq.

The Cheney/Bush administration relentlessly attacks/criticizes the UN and preaches the “You are either with us or against us” mantra. The rest of the world looks at the US differently now after Abu Graib, Guantanamo Bay, rendition & torture became our mantra not democracy.

Without the moral might, will or military backing (tied down in Iraq) of the US, the UN does not have the power or character it had before the Republicans took over the White House. The UN is still our best hope, but it has been critically weakened by the country that used to be “the leader of the free world.”

Big Oil

What Big Oil needs to do is become Big Energy today

In one sense Big Oil is ever so slowly changing – example Exxon admitting their working on solving the greenhouse gas problem. That is a move in the right direction. Unfortunately the change is happening at a slow pace. The Democrats/Obama threat of a windfall profits tax has light a fire under Big Oil and increased the rate of change.

Maybe its too optimistic or hopeful view, but Big Oil/Energy should be leading the charge in alternative energy sources. There are a lot of folks outside and within Oil companies that are trying to make this change happen at a far more significant rate. Keep pushing.

The Cost of Waiting for Big Oil To Do the Right Thing editorial by Robert Kennedy II and William Achtmeyer

Stocks

Index % Change Volume

Dow -1.46% down
NASDQ -2.32% down
S&P500 -1.82% down
Russell2000 -2.78% –

US Markets

Oil Prices are trumping all other aspects of the market. Technically markets had a significant meltdown in reduced volume. The lighter volume is usually a decent technical sign, but Oil Prices are in the spotlight. Whatever they do US and worldwide equities will move in the opposite direction.

Chart of benchmark S&P 500 S&P reached a new closing low and like the Dow is almost certain to enter ear market territory.

Chart of oil (WTIC) Oil rose 1.84% After a three week consolidation oil broke out of its trading pattern and is on the rise again.

Earnings season begins next week.

The VIX

Chart of VIX The VIX rose 9.60% to 25.92. The bad news here is that the VIX which measures fear in the market is no where near the levels it was when we had out other reversals in stocks. The VIX (measures fear through volatility in s&P 500) needs to pass 30 and the last three reversals happened when the VIX inter-day went to 35.

Reading the Tea Leaves – OIL RULES – Nothing else seems to matter and a worldwide stock and economic meltdown is getting more likely each day. The oil supply/demand equation is the leading factor. The US is where this breakdown began. US credit /transparency problems, falling housing prices and lack of consumer confidence are all spreading negatives to the rest of the world.

The Dow has failed to hold its major support levels, the S&P has just broken through its major support and the NASDQ and Russell 200 seem like they are going to get dragged down too. The rest of the world is on the same train and eventually will follow.

Long Term Outlook Changed to Bears Rule – The lowest of the 5 categories Market Updates uses.

Recommended Sectors (Long Term)

OUTLOOK (results for June and outlook for July and Beyond)

Gains and Losses are approximations from looking at charts

USO - Chart – Gain +14% USO is the ETF that tracks oil prices. No explanation needed.

UNG – Chart – Gain +13% UNG is the ETF that tracks natural gas prices.

EWZ – Chart – Loss -9% EWZ is the ETF for Brazil.

RSX – Chart – Loss -10% RSX is the ETF for Russia.

TRAMX – Chart – Loss -4% TRAMX is a mutual fund whose main focus is the oil rich Mideast.

Tomorrow Updates will cover the outlook for these 4 ETF’s and 1 mutual fund.

Changing the Asset Allocation. – Reasons

1) Dow has broken support and officially entered bear market territory.
2) The level of fear (VIX) has a long way to go before reaching a point where the s&P will reverse itself.
3) Consumer confidence numbers are horrible and the media is spreading bad news.
4) Oil prices (daily chart) show no sign of a climax buying where they go elliptically higher
5) unemployment numbers should continue to rise

If everyone was throwing in the towel, you could call a bottom, but the VIX does not show this. So there is more pain and volatility to come. I really hope I’m wrong

Note changes in BOLD

Steel (SLX) has been combined with other commodities and this whole section reduced. Cash allocation has grown 5%. The + is for more conservative investors. If you do not like wild and bumpy rides cash and to a much lesser extent gold is the place to be.

Bottom Line

Long Term Outlook BEAR’S RULE 

Dow at low of the year, gushing high oil prices, record low consumer confidence, growing US unemployment, declining US housing prices vs. a government rebate check and hope that global growth will hold up in China/India. Looks like the good guys are outnumberd. (Caution – this “Outlook” is based on US equities and while US markets greatly influence other markets it is not necessarily the outlook for recommended sectors.)

The question for Wall Street is not whether there will be a recession or not, but how long will it last.

Asset Allocation/Recommended Sectors (long term)

* 45 +% Cash
* 35% Energy-
EWZ, (Brazil) & RSX (Russia) two energy rich countries. TRAMX – mutual fund for oil rich Mideast
PBW and GEX (alternative energy).
XLE (energy companies) OIH (oil services)
USO (oil prices) UNG (natural gas prices)
KOL (coal companies)
* 15% Commodities – MOO Agribusiness, XME (mining & minerals) SLX (Steel)
* 5 +% Gold – GLD (Gold)

Chief Strategy – Buy the dips of trending sector
Changes to Bottom Line Section Bolded
As Always Do Your Own Research Before Investing