Obama – Leadership & Polls

Lots have analysts have remarked how fast Obama (now at about +50%) poll numbers are dropping .  The one missing ingredient is leadership.

Yes, Obama has lost  support among Democrats and Independents for nor following though on some of his promises. However, the most visible issue is the health care debate . He is getting slaughtered on this because he has NO POSITION . There is something vague about if nothing’s done medicare will go broke and in another 8 years costs will double. This is True, but what or where is the Obama Health Care plan?

Right now Obama looks like that 98 pound weakling who is getting sand kicked in his face.  They labeled him and his non existent Obama plan all sorts of names and it sticks because he doesn’t have a concrete plan. Unless he chooses something and leads the only way to go is down and the mob will win .

Cash for Clunkers

The best stimulus program to come out of government .  The government spends something like $3,500 and gets the consumer to spent $15,000 to $20,000 on a new more fuel efficient car.

The government is getting the consumer to spend @5 times what it has invested .  That 5 times gets multiplied by fuel efficiencies, tax revenues, keeping manufacturing jobs, and the employees of the dealers and manufacturers spend that money to buy other stuff. This all gets money flowing even faster.

This program should be continued with other big ticket items that can be made more fuel efficient .

The best rival to Cash for Clunkers is the $8,000 stimulus for first time home buyers. This also has a huge multiplier effect.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	-1.96%	up
NASDQ	-2.00%	up
S&P500	-2.21%	up
Russell2000	-2.45%	-

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

Major US markets had a significant meltdown in increased above average volume .  BEAR’S RULE the short term momentum and the volume indicates that there is more downside to come.

A week ago I mentioned that Jim Cramer was wrong and we were due for a more significant correction.

Support levels to watch on benchmark S&P 500. SPX currently at 998. The first is 980 . If that falls we could see a lot deeper correction .  Lots depends on the jobs data on Friday. However, we had great manufacturing news and when good news sinks the market – that’s an indication of more pain to come.

Lots of analyst look at this as a technical correction.  We came too far too fast. But there is a major underlying fundamental factor. The BDI shows worldwide trade falling. Much of this is due to China pulling back on buying commodities. China also has a technically overheated market. (see yesterday’s blog)

The big news for the month is the jobs report on Friday Right now we reacted so poorly to the good ISM (manufacturing) news, you have to worry about the employment news.

On financials from yesterday-If you prefer gambling to investing, I’d wait another day or until prices get closer to 200& 50 day moving average before putting bullish chips on the table.

Therefore , FEARLESS FORECAST – is for a down week .

The  jobs report for August comes out Friday most important fundamental of the week. ISM (manufacturing ) report out today.  What’s key here is  we get a good number (above 50 would mean manufacturing growth) If market does not move higher on good number, it is a strong indication that market correction underway. - You betcha-what now looks like a  correction is underway not only in exporting countries, but importing countries (USA)

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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) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . The BDI has leveled off – Up +2 yesterday

“Remember almost every country has based their recovery on exporting their way out of this mess” (Source – seeking Alpha)The infotainment financial channels and analysts used the BDI when things were going well and are now ignoring it. The #1 factor behind the BDI’s retreat is China seems to have stopped or seriously slowed down buying commodities.

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

The dollar was rose a significant +0.75 % yesterday. Dollar closed at $78.74. Its  major support level is @$77.5 & it has 2 major resistance levels – a falling 50 day moving ave. at @$79.20 and the August highs of @ $79.5 .  If it breaks down through support stocks should rise, if it breaks up through resistance stocks should fall.

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

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The high Beta names are getting beaten up. Financials took a big hit yesterday.   The BDI’s drop and the fall of the Shanghai Index technically (see yesterday’s update) certainly forecasted and forecasts further deterioration. If the BDI has stopped its fall we’re OK

My philosophy has always been why be greedy – China/Brazil in the long run will outperform the USA. But a correction will take those stocks further down.

• If you’re in this for the long term (years) hold onto all FXI & EWZ
• If you’re not let’s sell 1/3 to 1/2 the positions. The gains should be @ 20+% and hopefully buy back in at a lower price

When the BDI starts to recover – reaches a higher high. Then jump back in. Right now, this is NOT some huge reversal, but a correction of an overheated market. If the BDI continues to fall from current levels, we are much deeper trouble.

Your Comments

Both privately and in the comment section of the blog you are asking for individual stock recommendations. OK I have a few. Stay tuned.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

WHAT’S UP? – Iran Day 7 – Kissinger, Kerry, Kahameni, Moussavi, Ahmadinejad, Obama Effect – Some conclusions – The “Supreme Leader” Reading the Stock Tea Leaves – low volume – The dollar & the Baltic Dry Index – plus more

IRAN Day 7

Friday demonstration -Photo Getty

• Perhaps biggest rally yet as “Day of Mourning” brings million+ to street yesterday. Story Link
  
• “Supreme Leader” Ayatollah Kahameni today called the elections fair Story Link
• The “Supreme Leader,” this is the name they use for their dictator, accused US, Britian, and Zionists of compicity incasting doub on the elections.
• Henry Kissinger endorses Obama’s hands off strategy “Anything he [Obama] says would handicap Mousavi “(opposition leader) This echo’s Senator Kerry “Think Before You Speak” editorial

Some Conclusions the Far Left and Far Right are NOT going to like to Hear.

• The focus has shifted. It’s no longer The American’s against he Muslim world (you’re either with us or against us) but between the conservatives and modernist in Islam.
  
• Ahmadinejad was created under the hard line Cheney/Bush approach to the Muslim world. The “Green Revolution” under the “Obama Effect”
• Lesson learned – All Muslim’s are not the same – Just like American there are there many different sides
• If the Ahmadinejad/Kahameni militant temporarilly win – remember they are the main supporters who encourage and support other violent terrorist groups like Hamas and Hezbolah.
  
• Look at what the Ahmadinejad/Kahameni militants do to their own people and think what they would do to you, Sunni Muslims, Israel, or any who do not follow their orthodoxy.
  
• These militants in Iran are more dangerous than “Supreme Leader” Kim in North Korea because they are religious miitants.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.69%	down
NASDQ	-0.02 %	down
S&P500	+0.84%	down
Russell2000	+0.48 %	-

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Technicals & Fundamentals

Mea Culpa – Like many others I’ve been caught up in the events in Iran and not been doing due diligence on stocks and other issues. But still believe in basic conclusions listed this week. However,  the conclusions/forecasts have been pretty accurate starting Monday. See reading the tea leaves below.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD – The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went up +0.45%.   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows.  Too early to tell difinitively. However if you get another 1 to 2% rise inthe dollar the mantra of the last few months will probably reapear. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. +2.41% in low volume. Financials are in danger of breaking down through a major support level. (see chart) They got a reprieve yesterday. Any breakdown would be bearish.

WTIC – Oil prices closed up +0.29% yesterday.

BDI - The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 6 day rally. But again yesterday the move higher was minimal and we have NOT reached the highs of 6 days ago.

We could be putting in a double top or a slightly lower high. This would be a longer term bearish sign if it occured.

Reading the Tea Leaves

The conclusions/forecasts have been pretty accurate starting Monday.

• Monday’s lead statement - Expect a tired low volume market to retreat this week .
• Low volume means indicates no bias toward bulls or bears.
• The low volume breakout has failed and we are back in the old consolidation area and, therefore back to NEUTRAL outlook.
• Strong support at @ 900 on the S&P 500. This has held for a couple days.
• The low volume indicates a technical correction of a market that went too high too fast.
• The possibility of this 4% correction turning into a 10% correction exists – still with low volume

The key two words are low volume . This shows little commitment my major players one way or the other.

The BDI and especially the Dollar are the indexes to watch. This is a technical correction, but volume is the key. Some unexpected bad economic news could turn volume around and put the bears and fundamentals in control.

In the Long term its hard to see the dollar move higher because fundamentally we are printing so much money and injecting a lot of stimulus intothe markets.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING