Putting together YOUR Stock List takes a lot of time (every Tuesday), so there is no economics/political section today. Sorry

If you would like to add names to the stock list or want to get on the private mail list that sometimes get additional info – email me at barrjozwicki@gmail.com. Please check out your comments section on right side of blog.

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	+0.41%	down
NASDQ	+0.88%	down
S&P 500	+0.51%	down
Russell 2000	+1.34%	-

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)

Despite some bad news on Greek debt and fears of greater financial reform US stocks moved higher in significantly reduced volume.  Moving higher on bad news is a bullish signal

VOLUME – The bible of technical analysis, and virtually all other books on reading chart patterns, Edwards and Magee’s Technical Analysis of Stock Trends, says this, “Volume is of the utmost importance in all technical phenomena.”"Although price action is the most critical of factors in charting, volume tells us the conviction of the marketplace.”  The fact that volume has NOT confirmed the major US indexes move higher over the last 8 months is driving technical analysts to drink.

You have a small core of true believers who are buying and holding and a vast amount of short term traders. The buy and hold investor simply NOT returned to this market.  Without more money coming into stocks its hard to see markets advance – yet they do and in doing so seem to break the basic rules of supply and demand economics.

Bottom Line – Technically I don’t understand why markets are moving higher, but they are. There are fundamental reasons – Stimulus, emerging market growth , etc., that help to justify a rally, but technically you have to at least scratch your head  Old saying, “Markets/stocks can remain irrational longer than you can stay solvent.”

Significant Indexes

• McClellan Oscillator rose a bit to +8.75 yesterday. +60 or above = Overbought -60 or below = oversold. StockCharts has a better version of the McClellan chart ($NYMO) LINK. – Investors411 manta is its much better/safer to buy when stocks are over sold and sell when they are over bought. When the $NYMO is around zero those who can accept more risk can nibble on stocks & ETF’s
  

Positions

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

From yesterday – “If stocks do not take a hit Monday, on worries over potentially more stringent rules in financial sector, we have one strong bull market and get on the train.”

YOUR Stock List

This list has been developed by YOU sending in your stock picks, we discuss them individually (usually by email) and if they are trending positively they get included in YOUR list. Thanks to many of you who have sent in choices. If you payed attention to the List published on each Tuesday, you’ll find a lot of winners. One way to back check this is to use the calender at the top of the blog – click on past Tuesdays.

NB -Last Week’s comments in black. This week’s violet. Chart links underlined in Blue

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

• CAAS – Volume dropping as stock consolidates = bullish A buy the dip stock Some increase volume behind dip, but at strong support level - A risky Chinese company, but its now or never time to buy the dip
  
• PCLN – Volume dropping as stock consolidates = bullish A buy the dip stock Still consolidating after breakout – A buy the dip stock
  
• F – Still going up, but too overextended – wait Huge sell off last week and strong but less volume rally yesterday -Too risky
  
• IMAX Investors411 owns this stock – Went elliptically higher and now must find base. wait. Made a strong move yesterday and broke out of  short term consolidation pattern – A buy the Dip Stock
  
• CSCO, Like AAPL exploded higher, now consolidating A buy the dip stock Seems too over extended from 50 day moving average, but clearly a market leader – Will move with technology
  
• SHOO – failed breakout but still has potential Consolidating in what looks like cup & handle trading pattern – A buy the dip stock
  
• ICON, Volume dropping as stock consolidates = bullish A buy the dip stock – Failed breakout back in consolidation pattern – Potential, but too risky
  
• VPRT Falling in heavy volume = bearish – Wait Consolidated and made a move yesterday – Possible breakout candidate
  
• DGIT Thinly traded  Still consolidating in weak volume = bullish A buy the dip stock - A bunch of higher lows over last month in “ascending wedge” pattern & at its resistance level – Potential breakout stock
  
• CTCT Thinly traded - Exploded higher too over extended wait Dropping  – has potential but too thinly traded.
  
• VCI starting to consolidate Still Tempting, but risky Big fall/volume Friday partial recovery yesterday – too risky
  
• CREE -  dipping in weak volume = bullish, a buy the dip stock Still consolidating a buy the dip stock
  
• SNDK – .  dipping in weak volume = bullish, a buy the dip stock Dipped last week and major rally yesterday A buy the dip stock
  
• VSH – .  Dipped/fell in moderate volume. Tempting Strong volume on down days -Weakening
  
• HMIN – Falling Too much downside volume. Rallied in weak volume Too many other stocks look better
  
• RINO – Broke out yesterday in heavy volume = bullish – a buy the dip stock Failed breakout, lower low, Other stocks look better
  
• CTRP – Faces a resistance level & just dipped in weak volume a buy the dip stock Dipped in weak volume last week, rallied off support level – a buy the dip stock
  
• CNAM Went elliptical now finding base. Huge risk but huge reward Wait - Fall in weak volume, two day rally in strong volume – Big risk China stock, but potential big reward. If you got guts a buy the dip play
  

New plays that have similar 3d fundamentals as IMAX. Personally I’m more comfortable with this group because I believe in the fundamentals behind 3d technology.

• DWA (Dreamworks) Consolidating but some big down volume days – wait – rallied yesterday at 50 day moving average – potential. Think their new Dragon 3D movie will be a success and move this stock up.
  
• CNK (Cinemark)  Still a bit over extended – Tempting Consolidated over week & broke out of that pattern yesterday. A buy the Dip Stock
  
• RGC (Regal Entertainment) Too overextended wait for dip.- Tempting Just keeps moving higher

32 million new heath care customers (Obama/Pelosi health care bill) means some stocks are going to rally on this increased supply and the growing aging population of baby boomers who need health care. New group

• ESRX (Express Scripts) – (see yesterday’s blog) Investors411 own this stock. - Broke out, now a bit over extended wait for dip.
• TEVA (Teva Pharmaceuticals) Gone elliptical – wait for dip. (Sorry had trouble downloading last two charts from Stockcharts)
  

Note – The above section is meant to educate YOU and is basically technical analysis. Many other factors like overall market movement, sector analysis, fundamental analysis, your level of risk and other factors should be considered before buying.

Analysis - Overall market conditions (McClellen Oscillator) are more favorable this week than last. However they are not optimum for buying (see above). 3D stocks and health care sector continue to outperform. Most of these individual stocks do rise in higher volume and fall in lower volume – a bullish sign YOU have certainly chosen some winners.

Personally I  nibbled yesterday ESRX & TYH (an ETF – more tomorrow) and will nibble some more today in a dip.

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Health Care

Robert Reich – fromer Sec. of Labor

Frankly Abby Gold (see comments on right) says it all on health care .  This country used to care. There was a bond between neighbors. Now the rich get socialism whenever they are in trouble and the poor and working class average Americans get ground into the ground. This is a mega trend in the USA that’s spiraling in the wrong direction.

Economist Robert Reich has an editorial on – What happened to the public option. LINK

Mexico & Afghanistan

(to be continued over weekend)

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	-0.90%	up
NASDQ	-1.66%	up
S&P500	-1.34%	up
Russell2000	-2.41%	-

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

Volume – Volume  rising (see above chart) is important, but it saw still below average. So there is no real big forecasting signal.

Something called Options expiring (3rd Friday of each month – today) is probably what’s behind all this volume. The more sophisticated short term traders are forced to cover some of their bets at the last minute before they have to buy or sell a stock they have an option on.

If you get lost with a term or want to know more use Investopedia.com dictionary and other help programs or Stockcharts.com tutorial programs.

Why Stocks Move Lower – Yesterday we did Higher and probably the #1 reason is the government shoveling so much money into the economy at almost zero interest rate forces people into stocks. The alternative is a measly couple points in a bank savings account or add another point for a bond. So here’s the downside -

• Job, Job, Jobs – Companies fired workers and now first will  first hire overseas where it cost less and the growth is greater.
• American’s middle class went overboard into debt and is now saving more. Our consumers are saving more, therefore, not buying. Good to save more, but bad for economic growth
• Trust – The rich (shadow financials & others) get risk socialized by the government and the middle class gets capitalism. Folks know their getting screwed – they/we are angry.
• Foreclosures – still happening at a far too big a rate despite stimulus.

The best case scenario for economy – All those who made huge money in the stock market or trading credit derivatives this year buy and eventually this will “trickle down” to the middle class.

Important to remember – Stocks can move in one direction and the economy in another.  Perversely, in the short term, if job loss stays high interest rates will stay low to act as a counter balance.  Stocks historically always rise in low interest rate environments.

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 rose a n insignificant  +18 points yesterday and closed at 4661. Up 16 days in a row . Technically it broke out through its major resistance level 4291 (this year’s high)  The BDI has rallied about 2400 + 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

——-

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  +0.31% yesterday. The dollar closed at $75. 29 . This is back above the major $75.00 support level. 

CAUTION – The first breakout (up or down) is often false. This happened two days ago . Dollar back in trading range. The top of that range is the falling 50 day moving ave. now at $76.02

——-

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

The index closed at-22.67 This indicates stocks are slightly oversold and momentum for bears is growing

Even though the Dollar Rules consider overbought levels (60+) on this index a point to lighten up on stocks)

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

Sorry have not had a chance to update Positions section in well over a week – see past updates.

Long Term Outlook - We are on the cusp of change between CAUTIOUSLY BULLISH and NEUTRAL for stocks.

Bottom Line – As Investors411 warned US equities are turning negative.  The point to add to positions will NOT come till we reach oversold positions on the McClellan Oscillator

Long Term Outlook = NEUTRAL

GDP = + 3.5%

This better than expected number is obviously a positive . Its due to the Obama & Bernanke stimulus – Cash for clunkers, tax cuts, first time home buyers credit, low interest rates etc.

It’s the first positive growth in over a year . Since only 40% of the Obama stimulus has been allocated and interest rates should remain low -  the next few quarters should also be positive.

The question becomes when you take the stimulus away what will happen?

Globally the canary in the coal mine is Israel, Norway and Australia. We are a globalized world and these 3 countries have already started to raise interest rates. If their economies continue to grow with raised rates others will follow.

The US does have a specific unemployment problem that will anchor it down longer than other countries. (see below). However, we’re getting some real growth abroad, especially emerging markets. Hopefully, this growth will be strong enough to drag the US along with it.

Jobs, Jobs, Jobs

So far the recovery act has saved or created enough jobs to “shave @2% ” off the unemployment figures. You can get a breakdown state by state at Recovery.com LINK

You can debate their figures, but a jobs recovery is going to be harder than most predict because

• The financial shadow bank crisis created a much bigger hole than most people realize
• Globalization will send most new jobs abroad.
  
• Education of American workers/students has not kept pace with technology.
  
• Our huge deficit will limit stimulus needed to create jobs.
• Our manufacturing base has been seriously diminished.
  

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+2.05%	down
NASDQ	+1.84%	down
S&P500	+2.25%	down
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, Fundamentals & Analysis

The Lon Term Long Term Outlook is back to CAUTIOUSLY BULLISH As mentioned yesterday – When the Long Term Outlook is changed we often go back and forth for a while as stocks move above or below key support levels

The discouraging part of yesterday’s rally is THE LACK OF VOLUME . Once again upside moves have little volume and downside moves greater volume. Volume has historically been the #1 confirmation factor of market direction. So this is a very bearish sign

However – The Dollar Rules. Yesterday the dollar moved above the previous days high and closed lower than its low (See chart below). Technical analysts get very excited about a reversal that “engulfs” the previous days move. It fell  over 0.50% which is a significant drop. Investors411  predicted this because it was approaching its  strong resistance level – its 50 day moving average.  As long as the dollar remains below this resistance level - Bearish for the Dollar & Bullish for stocks.

Monitors Question/statement (see comments section of blog)  Sorry I’m not being clear. Yes, I did recommend adding (nibbling) to Brazil and China yesterday (I did) & yes I did lower long term outlook. These ETF’s (FXI & EWZ) had dipped more than 5% & were “buy the dip opportunities.”

NEUTRAL -  Even though it is a downgrade it is still an overall environment that some ETF’s should do well. When  CAUTIOUSLY BEARISH becomes the Outlook – t hat its time to sell. Secondly, as mentioned we are on the cusp of change. Lastly, This market is very difficult to call because the old rules about volume have been cast aside and the dollar now rules.

The Dow is outperforming other major US indexes – This is probably due to the fact that these 30 giant stocks benefit most from the falling dollar (relative to other US companies most of more of their profits come from abroad)

Bottom Line – There are no universal rules in market analysis. Right now the Dollar is trumping volume and all other factors in predicting the direction of stocks and this is quite unusual.

——–

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 modest +27 points yesterday and closed at 3013. Exactly what it lost yesterday. 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 fell a SIGNIFICANT -0.67% yesterday. The dollar closed at $75.96 .  This is almost exactly on its support/resistance level of $76.00 . 

From yesterday – The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at 76.78 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.

Past statements -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. Looks like we will get at least our 5 to 10% dip now.  Investors 411 should have much larger positions in emerging markets .

Current positions

EWZ (Brazil) – Bought at 69.5 (4% of portfolio)  Now = 20% of portfolio

FXI (China) – Bought at 42.75 (4% of portfolio) Now = 24% of portfolio

GDL = 11% of portfolio

SPX = 20% of portfolio

For traders also have positions in NVS & CSCO

• Going to sell some SPX -reasons – Free cash for other investments & take profits
• Need more diversity in emerging markets than just China and Brazil
  

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

On Education

Imagine if your were president/dictator of USA. What would you do with education? I would give teachers massive tax cut/eliminate taxes on the first $50,000 they earn and raise taxes on the top 1% of individuals in the country to pay for it. (see yesteday’s Tom Friedman editorial)

Waiting for Financial Reform

Monitor has some excellent comments (see comments section on right side of blog). The long term picture for the USA is certainly one of decline relative to the rest of the world. A fall that is going to hit Main Street harder than anyone else.  We built a huge deficit under the Bush administration & created the worst financial crisis since the Great Depression.

But, we are still waiting for some kind of financial reform.  Add to this we are still spending trillions nation building overseas and stimulus, the usual cure for a recession, is puling us further into debt.  No wonder volume is NOT growing as stocks advance and the dollar  falls. People are loosing confidence in the USA.

One of the  most troubling in all of this is where is the financial reform? Obama was all about “change we can believe in” and aside from a few minor adjustments, where’s the change?  Where’s the transparency? Where’s the accountability? Where are the new laws to prevent corruption?

The reforms that fixed Wall Street after the great Depression were removed and capitalism was left without checks and balances. Look what happened – A massive financial meltdown.  Author Ron Chernow concludes his editorial in today’s NYT  entitled “Everyman’s Financial Meltdown.” as follows ” [we] still await a new season of financial reform.”

More Pay Cuts for Shadow Banks

From yesterday – Obama administration is forcing pay cuts on top executives of 7 bailout firms. Good first step. Now we get step two. Fed is proposing review of pay at 28 of the largest shadow banks . LINK Two steps in the right direction, but we need a whole lot more.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+1.33%	down
NASDQ	+0.68%	down
S&P500	+1.06%	down
Russell2000	+1.37%	-

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 .  We had another significant rally in weaker volume. The Dow was close to even in volume. Historically volume has always been the #1 confirmation factor of an equity move in price.

Oil prices fell LINK to chart -0.22% to $81.19 . 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 11 days and going parabolic (up too far too fast) Oil prices like stocks usually move inversely to the price of the dollar.

The BDI rose significantly again = Bearish for stocks stocksandand world trade.

Reading the Tea Leaves – from yesterday -  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 . Perhaps yesterday’s rally was a delayed reaction to the overall drop in the dollar, rise in the BDI and some better than expected earnings reports.

However, 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.

Best guess is for rally today.

——–

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 +84 points yesterday and closed at 3001. 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 -.09% The dollar closed at $75.05 .  Perhaps yesterday’s rally was a delayed reaction to the significant 0.55% decline in the dollar the day before-the two day total drop is -0.64% 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)

The falling dollar is getting a lot of PR. A lot of this is politics and fear mongering. However the dropping dollar does show a growing weakness in America economically and the potential for higher inflation. The real test for the dollar lies in the March 2008 lows around $71+

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 .

Monitor’s comments are right on (see comments section of blog)-Investing 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 emerging markets.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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

"The Family"

THE FAMILY – The Secret Fundamentalist Group at the Heart of American Power - is the title of a New Book by Jeff Sharlet.

This group of Congressmen and Senators has met secretly for decades and has a "C Street House" in DC where some members actually live. They believe that "they were chosen by God not the people for their leadership positions" They are " a Christian Mafia" that are answerable to each other and not the voters. Hillary Clinton has actually praised their leader Doug Coe .

Some high profile events besides Sharlet’ s book (who lived with this group for a year) have blown their cover.

• Philandering Governor Mark Sanford (R. SC) is a member of this group
• Philandering Senator John Esign (R. NV) is a member of the group
• Congressman Zach Wamp (R. TN) has recently partly broken the code of silence

When The Family members talk about accountability, they talk about accountability to this invisible group not to the voters. This is NOT democracy. The Family has existed for decades and was "deeply involved with lots of the death squads in Central Americas."

Rachel Maddow has an expose on the cracking the cover of this secret, mysterious, powerful, christian, fundamentalist cult who have secretly spread their tentacles throughout the world  here (video)

NPR also has interview with Jeff Sharlet here

Jeff Sharlet has his own site here

Your Comments

Check out the comments by Bob Sadinsky & "Confused Investor." on the comments section of blog.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+3.07%	up
NASDQ	+3.51 %	up
S&P500	+2.96%	up
Russell2000	+3.85%	-

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

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

Technicals and Fundamentals

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

Markets exploded  higher in increased above average volume. Not quite kick ass volume, but decent volume, especially for the NASDQ. Finally volume confirming Bull’s Rule.

The benchmark S&P 500 broke through a resistance level and finished at 932 . The last resistance level is 956 – this year’s high. The NASDQ also financial broke a resistance level and ended the day at 1862 , The NASDQ high for the year is 1880 . Now reasonable to expect that this year’s high will be challenged – Bullish sign.

Financials/Shadow Banks are probably going to continue their charmed existence, because t he Obama administration & the Fed has deemed the big ones too big to fail and they keep kicking the can down the road on any major fix of the problems that created the economic meltdown. The NYT did an editorial on this (see yesterday’s updates) Yes fixing the problem could have a negative short term impact on financial stocks, but everyone would be better off with a more transparent & ethical banking/financial system in the long run.

All of this rally is probably a false sense of security, because the fundamentals that created the problems have not been fixed. But for now ride the momentum .

After Intel’s fundamentals surprised investors, the next two stocks to look at are Google & IBM. They report after the closing bell. Alcoa (commodities) was the first to surprise, but markets did nothing. Now investors are  expecting a better than average earnings reports from these two tech giants. If we get decent numbers or forecasts (it does not have to be a "grand slam,") the tech rally should get extended.

JP Morgan reported earlier today and did well.  Few expect other banks to have the blowout numbers that Goldman Sachs had.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) A massive 6+% gain on top of yesterday’s significant 3+% gain. So the prediction on Monday about a bullish turn has come true again.  Price rise here is bullish for stocks across the world. Bulls Rule – gaining momentum.

In a nut shell the BDI is

• short term - Bullish
  
• mid term -  Bearish pattern
• long term - Bullish pattern
  

$USD - The Dollar is on the verge of falling down through in its in its 5+ week long consolidation pattern between $79+ and 81+. Dollar closed at $79.40.

—–

Monday’s Fearless Forecast for week – So expect a rise with some financial stocks reporting early in the week and that rally to get tempered later in the week Intel surprise is a strong fundamentally Bullish factor

Changing Long Term Outlook back to NEUTRAL – Both the BDI (world trade) and technology are green shoots

Our Positions

Personally I’m adding to positions early this AM and/or on any dips. (5% to 10%) addition .

• Added another 2.5% to INF (see positions section at top of blog)
  
• Added 5% to QLD (see positions)
• For those traders (not longer term Investors) who bought recommended FAS made over +11% yesterday. This could go higher,  but no one went broke taking profits. So either set a 5% stop below current price or sell. I took profits at Adding the the close yesterday.

Adding another 5 to 10% today on any dip. Next two positions to be added on small dips.

• EWZ had huge volume behind its rally yesterday
• EWS (Singapore) NEW ETF not previously discussed. This market has outperformed all other major markets. It sits smack dab in the middle of trade routes and has a huge port facility. It is on the verge of breaking out of a multi month consolidation pattern.

If Google & IBM fail to deliver we can temper this move back into stocks.

From Yesterday – Rally ho

Note to Confused Investor (see comments on left hand side of blog) – Will clean up the Positions section this weekend. You’re right. Remember this is just one person writing, editing and publishing this blog.  Please allow for some foot dragging and especially poor grammar.

Note change in Long Term Outlook up ANOTHER level to CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Climate/Energy, Cap and Trade, or Waxman-Markey Bill

photo from Treehugger /flickr

Tom Friedman here weighs in on the climate/energy bill that goes under the  many different names used in the above title

It’s easy to agree with Friedman who thinks that the Republican Party is becoming the party of “sex scandals and polluters.” Earlier this week Investors411 went over two significant reasons to back this bill – It fights global warming and reduces pollution.

Another fact on pollution smog increases the chance of premature births by 128% here

Here’s reasons 3 and 4

Changes Mindset and Produces Jobs .

Friedman-”if this bill passes. Henceforth, every investment decision made in America — about how homes are built, products manufactured or electricity generated — will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable.”

What all this innovation means is new industries and jobs, jobs, jobs.

Stops Groveling to Petroleum Dictators

This is one significant step toward alternative energy and away from dependency on oil. The USA has reached peak oil decades ago and our domestic oil production is more than 1/2 of what it used to be link here The era of cheap oil  is over. New technology will squeeze oil out of shale and dig miles beneath the ocean to make up some of the loss but this gets very very expensive.

Oil production is dominated by a cartel and dictators whose butts we have to kiss to get the supply.  Look how cautious the world is on condemning “Supreme Leader” & Iran because they have oil. We spend trillions on the military to fight oil wars and ensure oil supplies. Why not encourage alternative energy instead? It would save lives, save future trillions in military wars, promote democracy and lead us toward energy independence.

Bottom Line – Reality is this Bill is a small step and watered down. But we have to take the first step now

Iraq

Most recent polling data on Iraq withdrawal here

• 73% favor withdrawal 26% opposed
• 52% violence will increase, 32% violence stay the same, 15% decrease
• Almost 66% believe we should NOT go back if violence increases.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.97%	up
NASDQ	-0.49 %	up
S&P500	-0.85%	up
Russell2000	-0.46%	-

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Technicals and Fundamentals

Volume was still well below average. Up slightly for NASDQ & Dow, but moderately for S&P 500. Volume is still giving no clear sign of market direction.

How markets react to news is another significant forecasting tool. Yesterday consumer confidence numbers for last month came in more negative than expected and that according to most sent stocks down. Reacting negatively to bad news is a bearish sign

Of course this could get balanced by the markets reacting positively to good news. This would = a neutral market.

All this makes Thursday’s (I stated Friday earlier this week-number of different sources making conflicting statements – ) monthly unemployment numbers the major fundamental catalyst for the week.

Technically the consolidation pattern continues.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI up for second day in a row. Long term Bullish although consolidating right now.

$USD - The Dollar rose +0.39% . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up= markets down. We are in a month long consolidating pattern after a multi month fall Long term Bullish pattern that is consolidating (neutral)

This correlation pattern could break down in the future, because oil is bought in dollars and oil also goes up as dollar goes down.  Higher oil prices are a danger to fragile economic recovery

VIX – Measures Volatility in S&P 500.   The less volatility means the better investors are feeling. Yesterday the VIX rose 3.94% yesterday. This is a moderate move higher.   Longer term 4 month trend down and we are near Sept. 08 lows. Bullish long term trend for stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iraq Fireworks

US troops are leaving Iraq cities today. Last night there was a different kind of fireworks in the skies in Iraq. (Huffington Post photo)

Here’s one big problem – The fascist government in Iran is a major backer of their fellow Shia in Iraq. This includes Sadr who fought US occupation and immediately recognized Ahmadinejad as President. Reasonable to predict the "Supreme Leader" in Iran will try to have the same fascist and militant influence in Iraq as they do over terrorist groups Hamas and Hezbollah .

Iran (week 3 )

Nico Pitney’s blog at the Huffington Post has broke and provided more info than any other US news outlet . here

Elections were certified by Supreme Leader’s government. More, but smaller (in thousands not 10′s of thousands+) demonstrations and increasing arrests. Iranian protesters are shouting Allah Acbar on their rooftops every night in defiance.

Climate Change/Environmental Legislation

Willing to bet that 75% of America’s population has no idea that this legislation is working its way through Congress. Yesterday Investors411 went over one reason why this legislation is important – to combat global warming . Let’s go over one more.

#2 Pollution

Close the garage door, turn on the car engine, open the car windows, go to sleep and you don’t wake up. Pollution kills

We are a carbon based economy and this has had a huge positive economic impact. But the cumulative effect of growing population and increasing pollutants has turned many Chinese cities days into nights where cars have to drive around with headlights on and use windshield wipers to view the road (massive pollution mostly from coal). Simply put, pollution kills by everything from cancer to emphysema.  Trillions in health care costs could be saved and life expectancy would grow with less pollution.

Realism is needed here . Carbon based energy is very efficient and transitioning to alternatives is going to take many decades.

Chevron has "human energy" ads that proclaims we are going to need to work on ways of creating new sources of energy – wind, solar, geothermal, natural gas and oil. They’re right. You simply can’t just shut down oil exploration without devastating the world’s economic structure. But we can take some concrete steps to more environmentally friendly solutions.

(to be continued)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+1.08%	down
NASDQ	+0.32 %	down
S&P500	+0.91%	down
Russell2000	-0.51%	-

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Your Market Questions (part 1)

Thanks for all the public and private comments on how well Investors411 did in the first 1/2 of the year .

See Positions section & last Thursday’s update . (click on calendar) The major question is will we do as well in the first 1/2 of the year in the 2nd 1/2. Also, a general worry over the long term viability of stocks and the economy .

These questions are  outlined and addressed  in the Strategy and Overview sections of blog. Most of those sections were first introduced at the beginning of the year, then added to a few months ago. Little has changed.

The long term economic problem is the huge hole that was dug by removing the regulations on capitalism and letting greed run wild.  When it takes decades (especially the last one) to dig an economic hole, you don’t climb out of it overnight.

What’s happened is most savvy investors realizes that we almost had a complete world wide financial collapse last September and it now looks like we will survive. The major problems is getting banks to make loans, keeping loans affordable, and fixing growing unemployment.  Fixing these now could have long term negative impact.

China, India, Brazil simply have better balance sheets than the USA and in the case of Brazil more natural resources. They also did not did deep holes.

If we don’t develop alternative energy we will be stuck in a downward energy spiral forever. Cheap oil (the kind that bubbles out of the ground) is a finite commodity. Any recovery is going to be accompanied by rising oil prices.

Will the second half be as good as the first? I doubt it. Our core holdings should outperform, and if stocks do go higher in the USA our ETF’s should do even better . Investors411 biggest mistake is not being disciplined enough in buying dips.

(More later)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . If trade is diminishing through out the world then a worldwide recovery is in big trouble. BDI started back up yesterday Long term Bullish although consolidating right now.

$USD - The Dollar fell-0.72% Friday and -0 0.04% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. Neutral – we are in a consolidating pattern.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX – Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling. Yesterday the VIX fell to the same level it was when Lehman Brothers collapsed and markets exploded to the downside.  Stocks still have not reached the level they were when Lehman collapsed. Long term Bullish for stocks

NB – The above are secondary indicators. Our mantra has always been Volume is the #1 forecasting tool – Right now volume is not giving any clear long term signal.

Reading the Tea Leaves .

This weeks fearless forecast – A rally, but one that does not get to new highs. Yesterday we had a mild to moderate rally in 3 of the 4 major indexes. Small caps(Russell2000) lost ground, but this is probably due to the annual rebalancing where some stocks are added and others kicked out of the index.

Short term – Volume dropped and markets rallied – you like stocks to go up, but when volume drops in a rally a reversal is usually around the corner.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Iran Day 14

Collage of dead protesters – Photo Andrew Sullivan Blog

Sorry, I’m just too emotionally exhausted and heartbroken to continue sifting through the blogs and tweets on Iran. You look at too many videos, audios blogs, tweets, and analysis and it’s overwhelmingly sad.

Best 4 sources still

Nico Pitney at the Huffington Post here

Andrew Sullivan at the Atlantic here

Robert Mackey at the NYT here

BBC- world’s largest news outlet that strives to be unbias here

The Obama Debate

We’ve had an excellent debate over Obama’s policies and effectiveness in the comments section of the blog .  You all have make some great points. Investors411 has both praised Obama and condemned him (mostly over the choice of Larry Summers as chief economic advisor)

Right now Obama is a very popular president (something like 60% positive and 32% negative) So what.

To jumble the title of his book – We have The Hope , but not enough Audacity .  This summer is the time for him to forget about consensus building and take charge. The single issue he alone can make the most difference in  this summer is health care.

"[Obama's]command of the issues — and ability to explain those issues in plain English — is a joy to behold. His administration has spent months talking and working with everyone on health care. Fine. Now its time for Audacity.  Take one plan and lead. See Nobel Prize winner Paul Krugman editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+2.08%	up
NASDQ	+2.08 %	up
S&P500	+2.14%	flat
Russell2000	+2.88 %	-

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Volume was below average again  and up just a smidge for the NASDQ and Dow. Perhaps some expert analyst can glean something from the volume, but the bottom line is no big moves are being made by the big institutions and there are a lot of people sitting on the sideline. Some of these folks are very unlikely to get back into investing in stocks. Volume is NOT confirming any price move.

Yesterday’s big move higher was probably a whole bunch of traders (as opposed to long term  investors) getting caught having to cover their short positions.

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Top 3 Recommendations/concepts

Very happy with the mid term results posted yesterday! Obviously Investors 411 toasted the benchmark S&P 500.  Going forward 3 recommendations/concepts

• China (FXI )will continue to outperform USA (See Positions & Overview at top of blog for more on this and other recommendations)
• Brazil, (EWZ ) India (INF ) and alternative energy (GEX/PBW ) are still decent buy the dips plays.  But you have to be careful on all of the above including China. Even though they will outperform USA. They will fall faster in a meltdown.
• The economic problems  created over the past decade are massive. Over leveraged or phony wealth accounted for huge part of economic growth and where is that growth going to come from now?  Our (the USA) debt, dependence on foreign oil, and our inability to change entrenched special interest groups are three large anchors holding our economy back.

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 %	-

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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

Iran Day 11

Iranian protestors – Photo from Andrw Sullivan blog

Neda Agha-Soltan has become the hero of the Iranian revolution from American media (LA Times here ) to Arab media here In fact al Jazeera has a whole section devoted to "Iran in Crisis" here Al Jazeera is an outlet for mostly Arab Sunni’s and Iran is Persian Shia’s. No love lost between these two groups. You heard and saw Neda’s story at Investors 411 3 days ago.

More of the same in Iran. Less on street demonstrators and more violence. Previously listed best  sources are still telling the story to the world. Some predictions from BBC – What’s next for Iran here

One issue that many on the far left are not going to like to hear. Israe l has certainly made mistakes in its two recent wars with Iran and her proxies (Hamas & Hezbollah). But seeing how the Iran’s "Supreme Leader" treats his own people you can see how hard it is to make some peace with him or his clients. Of course, the first the recognize and lavishly praise Ahmadinejad’s & "Supreme Leader’s" victory was Hamas (here) and Hezbollah (here )

Barack "Hoover" Obama?

Yesterday Abby posted an article by Kevin Baker on Obama from Harper’s magazine. Unfortunately you have to be a subscriber to reference the article. You can view some excerpts here The focus is that Obama has not and may not be able to change the strong intrenched interest that created the economic mess we are now in. President Hoover (his picture above) did nothing and the Great Depression grew.

Context We tore down the regulations on "free" markets and developed a massive credit debt over the last decade that has exploded. Yes, Paulson, Bernanke (more the previous Fed chair Greenspan) and Bush were leaders in creating this mess, but late last year when we stood on the edge of economic catastrophe they (PB & B) instituted a plan and prevented world economies from falling off a cliff. Bernanke, Geithner & Obama have followed through and added to that plan

Remember Lehman Brothers cause over $400+ billion dollars of debt to spread throughout the world when it went bankrupt. People were lined up in panic at insurance companies and banks. What if AIG, CitiBank, Merrill Lynch Fannie, Freddie. AIG and so many others had followed Lehman. The end result would have rippled through out the system and economic catastrophe would have been the result.

How Obama handles the economy is priority #1. Because it is the world’s economy and he is easily the most important/influencial figure. Unlike Hoover whose inaction significantly added to the Great Depression Obama has acted. But its those entrench interests that have dug in. Time will tell.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-2.35%	down
NASDQ	-3.35 %	down
S&P500	-3.06%	down
Russell2000	-3.88 %	-

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Technicals & Fundamentals

US markets took a major hit on a bad economic forecast from the World Bank.

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.

Major event – Fed Meets today and issues statement on Wednesday

Yesterday’s major event was The World’s Bank lowered its outlook for the world’s economy this year from -1.7% to -2.9% .  This is some truly bad new s for long term investors.

Since volume is out as a forecasting tool right now, today’s price move will act as a confirmation of yesterday’s move. Do we fall further (bearish) or rebound (bullish)?

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 is the index to watch. Dollar went up +0.57% yesterday. Any move over 0.50 is significant.  It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows. Still to early to tell.

All together now -  our mantra – when the dollar goes up stocks go down . This strong inverse correlation has existed for many moons.

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 the BDI fell minimally on Friday and significantly yesterday. This is a very important chart that has just rolled over. It usually moves in one direction for an extended period of time.  If it moves past and creates a lower low than it had eight days ago it would be a serious sign of trouble Right now, the momentum is with the bears.

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

You can play with the chart and create different settings to get a better idea of what’s happening, (the same with all other links to different charts)

Reading the Tea Leaves

Still think 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. The benchmark S%P 500 has already broken through support and fallen 6 to 7% from its high to  893. Next significant support level is 875 to 880. As stated above volume is NOT confirming (or has yet to confirm) the downside move. So far this still is a technical correction of a market that went too high too fast.

Both the dollar and the BDI have started to trend in the wrong direction (If you’re a bull on stocks) Add the World’s Bank prediction and you have lots of reason to hear the bear’s growl.

Got burned with this the last time I did this, but buying a little protection on any minor rally. Adding small position in SDS (ETF that does 2X the opposite of the S&P 500)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING