Burning Book

Libya – The UN/Obama’s reason for a no fly zone was to prevent a genocide. The USA/Obama policy is the removal of Ka Daffy. They are two different concepts. Obama’s action in the use of force against Libya without congressional approval was probably unconstitutional, but events on the ground called for immediate action before the collapse of opposition forces.

Japan –  It’s obvious to the whole world that the Japanese government has not been honest about the extent of damage from their nuclear problem. The Japanese people have been heroic. Radiation 20 km away from plant is 1600 times normal according to IAEA A significant potion of Japan is going to become a radiative wasteland like Chernobyl disaster in Russia.

Smoke and Mirrors of a

Manipulated Markets

Burn all the historic book on stock market analysis out there. Forget the analysis of of self interested talking heads on the tube. What we have in the USA is simply a manipulated market that has  radically altered what used to pass for traditional investing.

Forget the experts and/or brokers who are paid exorbitant fees for market analysis. Burn the book and blow away the smoke. Here’s new rule #1. When volume is abysmal US stocks move higher. Little else matters.

Low volume = a rally

Why when volume plunges does the market rally? Simply put – Its easier to manipulate. This allows those entities juiced by zero % interest rates, those benefiting from the Fed POMO program, and big US companies with hoard of cash to manipulate stocks higher.

One favorite way is through High Frequency Trades (HFT’s) that almost mystically make huge buy and sell offers for stocks appear, vanish and sometime buy. These automated computer programs seemingly vanish in high volume but reappear when volume dries up and drive stocks higher. Of course certain HFT’s are always around taking advantage of trade imbalances.

Bottom Line –  For all of you who trade or own stocks  This is a headline driven market and it takes a massive headline to overwhelm the manipulators. It took both the Middle East crisis & Japan Catastrophe to even put a dent in manipulated stocks.

Short term the tsunami of  liquidity makes this a manipulated bull market. Longer term there are some very negative consequences, but that’s another editorial.

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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	+1.50%	down
NASDQ	+1.83%	down
S&P 500	+1.50%	down
Russell 2000	+2.31%	-

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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

• Lowest volume since Feb. 14th. Low volume = markets rally. The lower the volume the easier it is to manipulate the markets Therefore the manipulators –  the Fed, shadow banks, High Frequency Traders & others push stocks higher.
• The far less than 50% of the market that belongs to investors who make their decisions on stock valuations are currently focused on  - higher oil prices, a falling dollar, economic distortions created by Japan, & emerging market growth
• The following is becoming the dominant force in the US stock market. -If markets go down its because of fundamental reasons. When US stocks rise its because of manipulation.
• Since QE2 began in November there have been dozens upon dozens of low volume rally days. Sometimes huge rallies, sometimes small. That’s the new normal.

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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 again -0.42% Bearish longer term pattern. Major support level broken. Down 6 of last 7 days. For stocks = 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 +6.32  Right in the middle – not overbought or oversold. = Neutral

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Reading The Tea Leaves

The USD and the MO are the two technical tools that have a track record of working in this manipulated US stock market. One is neutral the other bullish.

The dollar’s fall is good for stocks, but as mentioned numerous times before, falling too far too fast is dangerous. We haven’t reached those levels yet, but if the dollar falls another 3 to 5 % rapidly you are going to hear a chorus of very worried economists

What to watch today

• USO - ETF for oil - Oil up = stocks down - Now back above $100. - Headlines from Libya. (diminishing factor, but still important)
• 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 (diminishing factor, but still important)

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Positions

UWM – Will sell 1/2 at @5% profit and let the rest ride. Will sell/haves stop at 1/2 at price it was bought for

See yesterday’s blog for list of considered ETF’s

Will buy the dip to buy if we get one today. Of course if there is a catastrophic negative headline I’ll wait to buy. Perhaps last day before MO gets too high to buy.

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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.”

If the majority of the major indexes again start to trade above their 50 day moving averages the long term outlook will change back to CAUTIOUSLY BULLISH. The Russell 2000 (small cap stocks) already is and the others are close. (See charts at top right of blog)

Popeye & Mama Jama (AKA Olive Oil)

Your Comments

Mama Jama – Are 25 hedge fund managers are worth 658,000 teachers? The 25 moguls/oligarchs who run the giant hedge funds and only get taxed at 15% are earning $25 billion a year vs and average teacher whose salary is 38k per year (plus benefits) and being taxed at 28% – Only in America.

Want to learn more about the Ten biggest Lies or Distortion Wall Street is feeding Main Street from Les Leopold

Popeye - This comment caught both Paul and my attention yesterday It summarizes globalization & US political impact on Main Street – Big business no longer needs the American consumer to grow. To them the Chinese consumer is replacing them. (You could replace China with the word emerging market consumer)

So not only are jobs being outsource, but so are consumers.

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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	+0.09%	down
NASDQ	+0.15%	down
S&P 500	+0.10%	down
Russell 2000	+0.10%	-

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Technicals, Fundamentals & Analysis

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

• Markets were flat & volume abysmal AGAIN
• Yesterday rare earth metals exploded higher. The new ETF for the sector REMX was up over 7% on a climax run.
• Can’t emphasize this point enough - The Fed has now accumulated over a trillion dollars worth of T bonds  from its 21 Prime Dealers (Big financial institutions) These institutions all have trading desks that invest a lot of that money in stocks. It also helps to keep a lid on Treasury yields and the new currency helps drive down the dollar. Without quantitative easing and low interest rates stocks would not have made the gains they have over the last 18+ months.
• China has almost cornered the market on rare earth materials.

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Reading The Tea Leaves

We had some odd moves on the significant forecasting tools (see above) and No real reaction from stocks.

However, if the dollar and T bill yields continue to fall like yesterday  - It sure looks like the Fed’s manipulations through quantitative easing and low interest rates are having a significant impact.   This would be good for US stocks. Two points investors are looking at suggest quantitative easing may continue/ morph into QE3#

• The deep economic trouble of state budgets (see Meg Whitman’s comments in last weeks blog)
• Continued high unemployment.

AAPL the world’s #! tech stock is the canary in the coal mine. If the General rolls over watch out.

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Positions

• #1 UWM - (2x small cap stocks ETF) – Sold 1/2  for +9% profit
• #2 UWM
• EUO - (double short the EURO currency)
• UCO – (double long oil) Bought Tuesday at  12.39 (this is a trade of short duration)
• SLV – (Silver ETF) Bought Wednesday at (see comments section of blog.)

Selling 1/2 of UCO at open and putting a 2% stop loss on the rest. This ETF is currently at the price it was bought for. See yesterday for explanation)

Buying GDX – (The double gold ETF) –  A lot of the rise in price in gold has to do with the Fed’s print and dump of money. It says instability and gold says stability. GDC has dipped recently.

SLV has reacted technically even better than gold. It also has industrial uses

EUO have a stop placed at what it was bought for. It’s about 2% above that right now.

Your Stock List – Paul informs me that YSL#3 is currently under performing the benchmark S&P 500 +5.05% to +3.78%. Disappointing results However, there have been 13 gainers vs. 3 Losers. – It’s been two of those losers that have dragged down the entire list. Both are Chinese internet relate stocks that have big losses – BIDU & especially SOHU (More later)

UWM – The Critic informs me that the UWM (our major ETF position) that was bought on the same date as YSL#3 was published (11/22) for 35.76 is up +22% over same period. Since Investors411 has both bought and purchased double and triple positions in this market basket ETF, she is compiling a more complete record.

I’ve tried a lot of other ETF’s that have been less successful over the same period. Example EEM, which was held on the same day UWM was purchased was sold earlier for a +4% profit.

Comparing the two is like comparing apples and oranges. Especially since many of the ETF’s turned out to be short term trades.

Diversity is the key here. I strongly feel that having both ETF and stock selection has merit and is a way of diversification. YSL numbers 1 &2 outperformed the benchmark S&P by over 2 to 1.

Let’s give it all more time before the final results are in. Then learn from what was done.

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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)-

A Call to Action

Simon Johnson (Former IMF chief economist and MIT Prof.)

You make the difference – The folks at the Baseline Senerio have joined with others, after the President’s speech yesterday to support legislation offered by Sherrod Brown (D – OH) & Ted Kaufman (D- DE) to take stronger action against the shadow banks. (Obama did not endorse this bill) Nobel Prize winner Krugman’s view

I’ve signed their petition and hope you do too LINK

Bottom Line – Since Financial reform bill(s) wind their way through congress a most unusual phenomena is happening – They are getting TOUGHER. Republicans are caving (not a lot but  a significant handful) The harder you push the more protections for  Main Street – YOU, your taxes, your rights, your stock investments – will have.

Consensus on Shadow Banks is starting to move. Shadow’s have even hired and paid a phony front group that has already spent $2,000,000 to pose as a group that wants to break up banks, but actually promotes the opposite. Link to Video

Obviously the outright collapse of shadow banks would be devastating economically. However, what’s needed is legislation with some teeth that protects YOU.

Debate in comments Section

See J Sovjani latest reply – This debate has gone from GM to Dumpsters to Washington Square NYC. . A significant chunk of the folks who are on the private mail list of this blog are artists or craftsmen and you can follow the entire thread by scrolling down at this link

News Junkies

SHerwehe has sen in the following site that lists front pages  of newspapers across the world. I’ve used this site for months and it is really useful because it shows not only the different biases in the USA, but across the world. The US government has a post that actually translates foreign papers, but do not have time to track this down.

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	+0.08%	up
NASDQ	+0.58%	up
S&P 500	-0.23%	up
Russell 2000	+1.12%	-

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

Technicals, Fundamentals & Analysis

See Positions for changes made each weekend

Answer -stocks so eat.

The NASDQ had fair sized gains gains in increased, above average volume. The Russell 2000 (small cps) out performed and the other two major indexes inched higher in increased above average volume.  Markets all rallied into the close = Bullish

US equities greeted Obama’s financial reform speech with a rally of almost 100 Dow points (Down @-80 to up +9.37 at close) Obama’s certainly no Teddy Roosevelt. = Bullish

Their is a giant cookie monster of ”programed traders” [ huge institutional investing] that comes at the same time and to the same place (Wall Street) each afternoon and devours all the cookies (stocks) it can eat. Every dip is getting bought no matter the cause. =Bullish

Stocks rallied despite a significant rally in the dollar. The Greek debt situation grows and the dollar is rallying because the Euro is falling. = Bullish

AMZN & MSFT Two tech giants both were down after reporting earnings in after the markets closed yesterday – drops of -5+% in in post market trading, still down but much better in pre market trading= Bearish

Analysis – If markets are down around noon expect the Cookie Monster to eat the cookies, vegetables and whatever is out there

Significant Indexes

• McClellan Oscillator rose slightly to +5.49 yesterday.  [Basically, 60 or above = Overbought = sell. -60 or below = Oversold = buy]. More sophisticated investors can use the 50 & 200 day MA’s and adjust from there. StockCharts has a better version of the McClellan chart ($NYMO) LINK. - This is almost right in the middle of NEUTRAL territory
• US Dollar – rose a significant+0.58% yesterday. [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules Is very important. Remember, dollar down almost always = stocks up and visa versa. The positive earnings reports are overshadowing the dollar which is in the upper end of a consolidating range between @$80.00 & @$82.20. Dollar at 81.65. If it moves to either side of that range it will impact stocks.

Positions

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

UWM – Investors – Our long position, ETF, that does basically 2X the Russell 2000 will continue to hold into the weekend. Considering a smaller position in TYH (ETF that does 3X NASDQ) on a dip.

Many of you are reporting excellent results in IMAX, VCI, SHOO, SNDK MSPD & VLTR and others. Do NOT chase these stocks, unless you really know how to day/swing trade – even then most are too overextended to risk a short term buy.  Traders should think more about selling as issues get over extended. Use the basic strategy – see top of blog.

Again McClellan Oscillator is NEUTRAL and a better time to buy (less risk) is when stocks are oversold.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING