Dawn over Newton MA

Obama’s Prime Time on BP

Preview here. Major American oil companies & BP will be in front of congress today. The Bottom Line for me is – the transformation to alternative fuels. This is the golden opportunity to make a giant leap forward to alternative energy solutions.

Chaos and lies has surrounded BP (the free market’s) response to this oil spill. Government from the past and present administration has bought BP line for way too long and was caught with its pants down by its ankles. The right wing’s solution is to scream & their drill baby drill mantra.

Perhaps today in front of congress and with Obama there will be the DAWN of some different solutions.

Wonder if oil executives will make the same mistake and arrive in big private jets like the car executives did? Will they get called on it?

Dawn of Financial Reform

The NYT Business section lead story the Volker Reform section of financial reform looks like it will pass! –

“Bankers have all but given up on defeating …would effectively bar federally insured banks from trading for their own accounts”

What this means is that YOUR FDIC insured deposits would NOT be used socialize the risk of banks trading opaque, over leveraged derivatives. Gee instead they might even loan that money to buisnesses and home buyers.

Current war – Blanche Lincoln’s Derivatives reform. See above link. Better email your congressperson or Senator and tell him/her you support Linclon’s bill.

Why Afghanistan?

The Pentagon, yesterday released the reason we  and should continue in Afghanistan, They have perhaps a trillion dollars of minerals. The Iraq war was fought over oil and now the loosing effort in Afghanistan needed an excuse to continue. China could get those minerals instead of us. What happened to terrorism and why is it the war machine – the Pentagon –  doing a report on minerals now?

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	-0.20%	flat
NASDQ	-0.02%	up
S&P 500	-0.18%	up
Russell 2000	+0.50%	-

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

Technicals, Fundamentals & Analysis

The benchmark S&P 500 fought its to its 200 day moving average/resistance level. Got their in the morning and spent the rest of the day in retreat. = Bearish

One significant data point that investors/traders should remember – Currency markets>Bond Markets>Stock markets. Translation = Because currencies and bonds are so much larger than stock markets they are the DOG that influences how the TAIL (stocks) wags.

With the NYSE up +75 points at it high yesterday – Interday the MO easily reached the +60 or overbought territory. This over bought position added strength to the resistance level and hurt the bulls yesterday. = Bearish

Looks like we may see some teeth in financial reform. Long term Bullish but short term = Bearish

An investment agency downgraded Greek debt in the PM yesterday, but the Euro held onto a significant move higher. In past, this would have sent the Euro tumbling. Sometimes there is a delayed reaction, but for now & for stocks = BULLISH

The Baltic Dry Index BDI has dropped well over 20% of its value in the last month+. Since the BDI measures shipping rates this fall is NOT good for world trade, economics. For stocks = Bearish

Futures up this AM = Bullish

Significant Indexes

• McClellan Oscillator rose to +50.26 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. Considering the volatility of the MO this is about as close as you can come without being overbought. = moderately bearish
• US Dollar –  The dollar fell a significant -0.77% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. The dollar was @ -1.4% lower in the AM and rose throughout the afternoon.

Reading the Tea Leaves -

A lot of reasons to be bearish this AM. But almost all of Wall Street’s eyes are focused on what’s happening to the EURO. FXE is the ETF that tracks the Euro and it was up +1.09% yesterday despite a downgrade of European debt. There’s a lot of reasons – see red bearish signals above, but if the EURO is going to continue to go up so will stocks.

FXE is the ETF to watch along with Spain’s (EWP underperformed yesterday)

Another charge at the resistance levels for stocks seems likely. Remember, each failed charge weakens the attacking force.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

With the DOW up 113 points at it high yesterday – Interday the MO probably reached the 60 or overbought territory. This over bought position probably hurt the bulls yesterday. = Bearish

Traders - YOUR stock List from 2/6 & from 9/6 a list of stocks that were outperforming and “worth a trade.”

• VCI – broke out to new high
• SNDK – broke out to new high
• SAM – broke out to new high
• BIDU – @4-6% rally
• ESRX (not on list but position Investors411 held) – broke out to new high

No one ever went broke taking profits. My best read of the tea leaves is to sell 1/2 into today’s rally (let the rest ride and hope it turns into long term gains)

Of course the ultra long ETF’s often mentioned (UWM, THY) have have done as well in the mini rally of the last three trading sessions.

Dumping 1/2 of UUP for small loss.

The bottom line is will the EURO continue to improve?

From Yesterday – Change in outlook – This is tentative . Upgrading to NEUTRAL. Technically, this looks justified, but frankly, fundamentally I sure don’t see the light at the end of the tunnel.” – It was premature. Major indexes bounced off their 200 day moving averages and retreated in heavier volume. Not the technical breakout we were hoping for. Let’s wait till the resistance level actually falls to change the outlook. Maybe today Therefore, a return to CAUTIOUSLY BEARISH.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

HMS Titanic

Sipping White Wine

Every year major capitalist leaders from around the world get together at Davos Switzerland and to sample the world’s best wines. This banquet usually sings the praises of globalization and unfettered free markets. But the tone decidedly changed.  France’s President Sarkozy took the lead. What’s unique was wealthy wine sippers went after banks (David Ignatius editorial) in arguably the banking capital of the world – Switzerland. Populism (going after the too big to fail banks and using YOUR tax dollars to bail them out) was popular.

Bottom Line – Volker (who goes in front of Senate Banking committee today) & Obama have both spoken out against the too big to fail shadow banks. The Supreme court has given them added power (see past updates). Remember – for something to get done it has to pass the Senate and Chris Dodd (D – CT) is the chair of the Senate finance committee.  He’s the guy who approved the HUGE bonuses for Wall Street Shadow Banks.

Betraying a Nation

Thanks to Yankee Bob for filling in and bringing to light some credible and different ways of fixing our deficit problem.

If we are on the  sinking economic Titanic and the passengers are running from side to side frantically looking for an answer –  the real question is what is the crew (political leaders) doing about their boat. Even an idiot realizes you cant keep cutting taxes and increasing weapons, social security, medicare/medicaid, which combined with the increasing debt make up 70+% of the budget.

Senators (D – ND) Kent Conrad and (R – NH) Judd Gregg worked for 2 years to form a bipartisan commission to deal with the sacred budget cows that both parties have. Two weeks ago it came to a vote in the Senate and even sponsors of the Bill like (R) John McCain switched sides to vote NO .  In all 22 Democrats , 23 Republicans , 1 Independent were too afraid to vote for this bill.  It failed to win the necessary 60 votes to break a filibuster. (53 yes to 46 no) Here’s a David Broder editorial and a list of the cowards who “Betrayed America. “

Obama promised to form a Presidential Commission to look into this, but it lacks the power of a Senate commission.

Future Wars

We supposedly want China’s support in backing harsh sanctions against Iran .  So The US (Obama) goes ahead with selling $6.4 billion dollars worth of weapons to Taiwan.  China want to have a reconciliation with Taiwan and wants the island to be part of China. China embargo’s  Think we will ever get China to join us with harsher sanctions on Iran?

Like the giant alien plant Seymour in Little Shop of Horrors – the Military Industrial Complex in the USA keeps crying FEED ME

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	+1.17%	down
NASDQ	+1.11%	down
S&P500	+1.43%	down
Russell2000-	+1.20%	-

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.

US markets rallied significantly in decreased below average volume. Volume did NOT confirm the rally. Only the NASDQ had volume that was even average.  Yesterday’s trading was an oversold bounce.  Technically, so many traders/investors had sold conditions were oversold (see McCellan Oscillator below) and we ran out of sellers.

Volume, our #1 technical forecasting tool, has indicated a major reversal is potentially underway. Three+ big volume combined with major declines shows major players heading for exits in the last 2+ weeks.

The major event of this week will be the Monthly jobs report at the end of the week. Earnings season is basically over.

Significant indexes

• McClellan Index at -53.52 =  Yesterday we rebounded from over -90 .  We are just below -60 or oversold levels. If everything eles is equal both  long term investors and even short term traders should buy when markets are oversold and sell when they are overbought +60 .
• BDI – This chart shows the Baltic Dry Index (scroll down) , a measure of shipping costs, Has broken through a major month long  support level at @ 3000 and is falling. Yesterday the BDI closed at  2745.= Bearish – especially for China. More on this tomorrow)
  

Fearless Forecast (for week) The US jobs report is critical for Americans, but not Wall Street. Wall Street can grow on profits from abroad. In fact, earnings reports which are getting better each quarter, are mostly improving on growth from emerging markets. China, the #1 emerging market has moved to slow growth and prevent a bubble – this has slowed their economy and stocks over the last month. However, the FXI has rebounded over the last few trading sessions in strong volume = Bullish The BDI is showing the exact opposite of a rebound, but an economy that’s slowing.= Bearish

So we have conflicting signals on China’s growth story. We also know from past experience that US which is still the economic leader worldwide (this position has diminish for a decade and continues to do so) can move significantly higher in weak volume. We saw this form Aug to the end of last year.

Best read of tea leaves – since we are technically oversold we should have an up week . There looks to be no major meltdown in the near future – only a question of will there be a further correction. Technically oversold positions should improve in the short term.

Positions

The  Positions Section (also at top of blog) has the latest buys and sells (Usually updated over weekends – will try to update last few weeks today) – These are positions I actually own

SELLING & BUYING

ETF Watch List

Current owned positions

• FXI (6% of portfolio) China – major technical breakdown of “head & shoulders trading pattern. Bought at @40 Now at @40
  
• EWZ (10% or portfolio) Brazil – Between 50 & 200 day moving average, but in correction. Bought at @ 52 & 59. Now at @67
  
• MOO - (10% of portfolio) Agriculture stocks – Moved below 50 day MA. Bought at 42 Now at@ 42
  
• IMAX – (2% of portfolio) – 3D movie theaters and future TV network. (Will keep adding on each dip) Now at 13.50

Since we are closer to -60 on the McClellan this should be a time to BUY rather than SELL 2010 is NOT going to be the kind of major bullish year 2009 was, but if we add when conditions are oversold you’ll do a whole lot better in the long run. The more oversold the better.

Traders should be able to do well today & early this week because of oversold positions.

Long Term Outlook = NEUTRAL

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

 

 

Index	Percentage %	Volume
Dow	-1.34%	up-huge
NASDQ	-0.11%	up
S&P500	-1.14%	up-huge
Russell2000	-1.38%	-

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News

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Deer in the Headlight

 

Stop staring at the headlights and Get out of the road

The reason Investors411 brings you news like “the worlds financial system has effectively disintegrated” (see last post on blog – Roubini, Volker Soros) is so YOU can stop standing like a deer in the headlights and do something to protect your economic well being. - 

Obviously, the Laissez-Faire capitalism under the previous four Presidents has spectacularly failed. The tech, housing, and credit bubbles have all burst under the absolutism of “free market capitalism” and something better has to arise from the ashes. 

Over the last eight years we have so decimated/cut and tainted the staffs of regulatory agencies from the SEC to the FDIC that any short term solution from Madoff to Nationalization becomes,at best very very difficult. 

The Real Structural Problem

What we watched over the last 8 years is an orgy of economic bubbles bursting because of unregulated greed of our capitalist system. Yes its time to restore balance, but first you have to recognize the long term structural problems. Researchers Picketty and Saez on where the money’s gone in our country over the last 40 years. Quote from economist Robert Reich& graph from Picketty and Saez -

“since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don’t spend as much of their income as the middle class and the poor do — after all, being rich means that you already have most of what you need. That’s why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It’s not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation’s income.)

This is the beginning of a “Great Recession.” and the real long term structural problems of income inequality have to be addressed. (see Overview section of blog) Only then will we find a long term solution.

Stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

 

Short Term Outlook

Both Citi Group and Bank of America were again had massive losses on Friday based on fears of nationalization.  The ETF that mirrors financials is XLF

The major indexes recovered from -3% losses in huge volume on Friday.  After 5 straight days of financial meltdown technically it looks like we may see a short covering rally continue.  The huge volume in financial stocks, the Dow and the S&P indicates a short term climax selloff. This is where all the weak or frightened investors panic and sell. The more solid long term holders remain. The rally from the 3+% fall is all the short term traders caught in short positions selling. Technically, Friday’s trading and the oversold conditions indicate a short term rally in stocks should continue.

You shouldn’t get too excited  - this is a technical bounce. Sometimes these bounces can be the start of something bigger. What we need is some major change in fundamentals like slowing unemployment or decline in the default rate of mortgages to give any rally substance.

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Long Term Outlook = BEARS RULE

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See STRATEGY, POSITIONS, OVERVIEW (new) & ARCHIVES sections of blog for more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

The Sky Fell

Three very significant economic/business guru’s (George Soros, Nouriel Roubini and Paul Volker have basically all come to the conclusion that “the world’s financial system has effectively disintegrated.” and “there is [little or]no prospect for any near term solution.”

Investors411 has concluded each Market Updates with the same for months. “The problem in financial sector is far far far far far bigger than first imagined. Impact of mess is going to take years to resolve.” This conclusion is now under the Positions heading at top of blog.

Legendary Investor George Soros- “Sees no Bottom for World Financial Collapse” (Yes you are seeing double my mistake)

Former Fed Chair and head of Obama’s economic advisory council Paul Volker - “I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world.” Same Reuters’ source

The columbia economist who predicted this meltdown Nouriel Roubini “Laissez-Faire Capitalism Has Failed”

Long Term Outlook = BEARS RULE

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING