Investors 411 Blog

The Mighty Casey Strikes Out

The beloved Boston Red Sox were eliminated from the playoffs . I’m going into a cocoon till spring training.

“Deja Vu all over Again”

Yogi Berra’s famous phrase is applicable to our financial situation.

It’s been just over a year since the shadow banks brought the world to its knees and we almost fell over the brink. We had the socialist or communist bailout – you the taxpayers. Nothing has been done to really fix the problems that existed. The dominance of the financial sector continues over politicians and the media continues. Our growth is being measured just like it was before.

This screams for any investor to keep a watchful eye on your investments. If we keep allowing GREED and self interest to run financials the next meltdown is going to be bigger than the last.

Afghanistan

Our #1 & #2 priorities should be Pakistan and Iran . If anything terrorist taking over part of what is equivalent to the Pentagon in Pakistan is very significant. LINK In Newsweek magazine Joe Biden comments that we spend 1/30 the money on Afghanistan than we do nuclear armed Pakistan. No matter how much of a war monger or peace nick you are simply recognizing the greater threat is critical. In fact it looks like any meaningful change has been at best marginalized.

Nobel Prize

Kudos to Obama on winning the Nobel Peace Prize. It sure helped that he wasn’t Bush. Will we continue to spend trillions on wars? Perhaps the Nobel committee is trying to nudge Obama to more peaceful of negotiated methods of solving problems.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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

Basically the US markets have been up 5 days in a row and are close to reaching new yearly highs. Volume dropped Friday, so technically  its hard to see a breakout behind such weak volume figures.

Fundamentally, earnings season begins this week and next week they flood in.

The dollar is still the key to worldwide recovery.

For Jim Cramer fans here’s a critic for investment advisers Nick Kapur of  Motley Fool . LINK You should always take entertainers and the politically and self interest  driven comments coming out of CNBC with a grain block of salt with a grain of salt. Like everyone Cramer has his share of horrendous calls (“be out of the markets for the next 5 years”) and good calls. Remember their advertisers make $ every time you “buy buy buy” and “sell sell sell.”

The BDI has turned positive. = Bullish for stocks

Fearless forecast for week – The dollar has ruled. Basically the lower dollar has given US companies a chance for better profits. So last earnings quarter and future forecasts (providing dollar keeps falling & it looks like it will) should be better than expected. Technically we are approaching new highs is WEAK volume . Technicals, are telling us the resistance levels (old highs) will hold.

Markets rose even though the dollar was up significantly Friday (see below) . This is bullish The lack of Volume is giving us a Bearish signal . The BDI has turned Bullish -

Bottom Line – Mixed signals with a bullish tint. How markets react to news looks like it will drive stocks this week. So far reactions to Alcoa and other early earnings reports has been good.

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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) .

The BDI is @ 46% 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 nine day rally continued. It rose a +46 points yesterday and closed at 2695 .   We seem to have started to reversed the longer term June move.  Resistance level of 2491 (last months high) first major hurdle to cross – We’ve broken out over these levels and technically created a higher high. -  Bullish for stocks .

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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.

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

The dollar reached a new yearly low (barely) last week and rebounded big time Friday +0.60% The dollar closed at 76.43. We have developed a support level just below $76.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Our positions in gold GLD and Brazil EWZ are clearly out preforming US markets and our China position. The later two are approaching new highs. Would buy more of GLD & EWZ on dips.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

What’s Up - Pakistan  - Are we making the same mistakes? ; Israel/Palastine - an ineviable war and a path not taken; Polls and Avaaza; Markets continue low volume & low volatility. Stocks held onto Monday’s gains; Volume and volatility continue to fall. Bulls with the football

Refugees (Photo LA Times)

Pakistan

Are we going to learn from the mistakes of the past? Right now the Pakistan government is fighting the Taliban in certain areas of Pakistan. This has created a refugee problem of  almost a million people. 

One report shows the same old counter productive results. Each day the Pakistan military announces the # of Taliban killed. Each day in the massive refugee camps full of people fleeing the violence, Taliban allies offer food and help to those whose lives have been shattered. Add to this often unmanned Ameirican planes blast the Taliban and there is significant civilian collateral damage.

There are some signs that things will be different. For now the Pakistani clerics are supporting the government denouncing the Taliban tactics. Also, Hillary Clinton has asked for $110 in humanitarian aid. Perhaps this time the focus will be more on winning over the hearts and minds of the people instead of focusing on body counts. Only time will tell.

Netanyahu  (Photo Google images)

Israel/Palestine

This is a minefield whenever its brought up.  So let’s take Obama’s Notre Dame advice and look for some common ground. A recently conducted poll of Palestinians and Israeli contained the following results.

• 70% of the Palestinians and 65% if the Israeli’s wanted Obama involved in the peace process.
• 59% of the Israeli’s think Obama is trustworthy  vs. 31% think Bibi Netanyahu (Israel’s PM) is trustworthy 

The Bottom Line here is the USA/Obama should get more involved in the peace process. If this situation is allowed to fester another war is inevitable, perhaps within a year.

 Avaaza (Voice) is a multi national group of 3 million members that is trying to get Obama more involved in the peace process. Check  out Avaaza.org. and their add.  Another way, if Avaaza is not your cup of tea, is obviously to directly contact Obama and let him know how you feel.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

Markets basically went nowhere and Volume remained light.

In one sense this is bullish – we held onto Monday’s big gains. However, volume has been weak and well below average for the last 4 trading sessions.  Since volume is the chief confirmation factor of a price move, we simply have no confirmation of the price move.

XLF - The ETF that tracks financials (mostly shadow banks ) moved lower yesterday -2.03 in light, but increased volume. The chart (see side of blog) shows light volume for the last 7 days. The XLF has entered a rangebound pattern between 11+ and 13+. Yesterday’s close was 12.04. The downside volume has been greater than the upside volume. This gives a little of the mojo to the bears.  A breakout from this range (@11+ to @13+) will determine the overall markets next move.

Market’s Major Mantra - Again – “If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks” 

WTIC - Oil prices closed at $60.10. Up +0.86%. Prices had established a range between $54 and $60. We are sitting directly at a major resistance level for oil.  

HIgher oil prices have two sides. Higher prices for oil usually means investors think the economic picture is getting better. Higher oil prices means everyone pays more for gasoline.

BDI - The Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. The BDI broke through a major resistance early last week and rose another +1.5% yesterday. Repeat - World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed. Very Bullish indicator for world economics and stocks

Reading this weeks tea leaves - Our primary forecasting tool – Volume – is not clear, so let’s use our secondary indicators -  

Markets moved higher on good news (India) and the BDI give us a short term bullish bias.  Resistance level of 13.08 on XFL is the breakout area to watch. Any move above this is very positive for bulls. Another important breakout level is 930 on the benchmark S&P 500. Right now the bulls have the football.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

Pakistan the epicenter of terrorism – Wins one for Democracy.  Are stocks on a bull run or a dead cat bounce?; AIG – Follow the money.  Are We All Socialists Now? The financial channel ducks and covers. An uplifting  comment/story by Stewart E. – about hanging together in tough economic times.

Pakistan Wins One for Democracy

The lawyers and opposition leaders “Long March” to have the Supreme Court Chief who was ousted under the former dictator seems to have won a major victory. It was bloody, but the  government caved in as police/army refused to keep beating the demonstrators and Mr Chaundhry (former chief justice) was reinstated. For more see NYT or Times of India

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AIG – Follow The Money

We’ve shoveled $180 billion into AIG to keep he worlds entire financial system from going under. Yet we still can’t find out exactly where the money has gone. No one talked – For five months everyone’s lips have been wired shut. – the company, the Bush administration, the Obama administration  & the Fed. See NYT Saturday editorial

The icing on this toxic cake is the crooks at AIG are being given $165 million dollar bonuses (a “contractual obligation”) including the small division that traded credit default swaps and sunk the company. More from Financial Post

AIG caved yesterday to all the pressure and listed most of the companies who it owed $ to. Hint – the trading of toxic, over leveraged debt with these other mega crooks. Opps, my mistake they are called financial companies. Check out the list or crooks here 

They haven’t caved on the bonuses yet.

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CNBC Ducks and Covers 

After heavily promoting the Jon Stewart/Jim Cramer smackdown. Not a word could be found about it  on CNBC financial channels or blog. Further indication of just how badly Cramer did and how mad  common folks are at the”Fast Money” financial news network. Here’s the LINK to the original Stewart shot across the bow. 

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Are we All Socialist’s Now?

Over the last 4 decades the far right has hammered Americans with how poor our government does thing vs. the wonders unregulated capitalism.

The answer to them is take a look at the socialist systems of public eduction, police departments, fire departments post offices, and libraries. Do you really think AIG, GM Citigroup, Merrill Lynch and Lehman Brothers would have done a better job?

What would have happened if Social Security had been tied to the stock market?

We’re not socialists, but Americans are waking up to the fact that unregulated capitalism is a huge rip off, and government is the only institution strong enough to regulate it.

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Solutions

In the comments section (on right side of blog) you’ll find a comment and a story  submitted by Stewart E. who notes “we are all in this together” The story about Beth Israel hospital and how they are handling the recession. It’s author or a “A Head with a Heart.” is Boston Globe columnist Kevin Cullin

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AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING