Tom Friedman Pulitzer Prize winning NYT Editorialist

The Strike Out

The Date – June 29th 2005

The Editorial - The End of the Rainbow – Ireland

Ireland adopted an unbelievably lowest corporate tax rate of 12.5%, America’s shadow banking and casino capitalism (AKA free markets). Tom does an Irish jig for joy over what he sees as a bright  future. Tiny Ireland now needs a gigantic EU bailout and austerity to just survive

The Home Run

The Date – December 1st 2010

The Editorial – From WickiChina – China

What the Chinese officials on their way to world economic domination would be saying about our self destructive government and media if WikiLeaks. At first I laughed then it was just sad. A sample  -

There is a willful self-destructiveness in the air here as if America has all the time and money in the world for petty politics. They fight over things like — we are not making this up — how and where an airport security officer can touch them. They are fighting — we are happy to report — over the latest nuclear arms reduction treaty with Russia. It seems as if the Republicans are so interested in weakening President Obama that they are going to scuttle a treaty that would have fostered closer U.S.-Russian cooperation on issues like Iran. And since anything that brings Russia and America closer could end up isolating us, we are grateful…

Well worth reading and passing on to your friends,

START

Strategic Arms Reduction Treaty (Part 2)

YOUR Comments – Yankee Bob is back and you can read his full comments by linking to yesterday’s blog. Here’s how he starts

There was nothing heroic about Ronald Reagan. He declared war on the government and did much to land us in this deregulated un-unionized social welfare state for the rich and corporations. Beyond the petty politics he was a murderer. He gave funding ,training, aid and comfort and the green light to Death Squads all over Latin America. He condoned torture and murder without due process to further his political agenda…

Jim J concludes

I understand that the joint Chief of Staffs all support the new START treaty. What happened to Republican patriotism?

Paul R on START

I don’t recall who recently said it, but when asked about rep support for START his comments were “sure, but we need to modernize the military first”. “Military” Republican stimulus plan

START – Part 3 (tomorrow)

Stocks

Investors411 tries to keep it basic.

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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Technicals, Fundamentals & Analysis

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

World Stocks - December has historically been the best or outstanding month for stocks.

USA – Today is confirmation day for yesterday’s rally. If stocks can come close to holding onto their gains or improve on them the rally gets confirmed. This more often than not means our newly born bull will continue to grow. The big news is still Friday’s jobs report. Built in are expectations of improvement.

Europe - Early in the day there was hyped news that the US Treasury was going to help Europe with its problems – later it was denied.

Emerging markets – EEM the ETF for emerging markets was up +2.87% yesterday. Good news especially for long term investors is that emerging markets outperformed the major US indexes. USO – (oil ETF) another rally leader +3.22% UCO (leveraged ETF 2x oil +6.20%) When energy prices move up it often not only reflects economic expansion in USA, but increasingly emerging markets.

Reading The Tea Leaves -

The “Good News” from yesterday was - Trend exhaustion  -49 on the MO shows we are technically reaching a point where there are fewer and fewer sellers out there.

Congratulations to several of you who recognized how over sold markets were getting and took the risk by buying the dip on Tuesday.

Ideally you’d like the MO over -60 but The Critic (see comments section of yesterday’s blog) is right – generally – the lower the MO goes the better your chances are for catching an oversold bounce and a more successful longer term trade. Her statement from comments section -

“So I buy when the MO is at -50. There’s much more room from -50 to +100 than -50 to -100. The odds may not be perfect, but they are in my favor.”

Also -The McClellan Oscillator (MO) and other forecasting tools are far more related to broader Indexes or ETF’s than individual stocks. Example - Paul R points out how over extended both DECK & IMAX are right now in the comments section.

How you play the MO and other  forecasting tools depends on your level of risk. The Critic uses leveraged ETF’s (EWM, SSO, UCO & TYH) as part of her portfolio and although she has NOT announced it in the comments section she has done quite well. TYH was up +6.53% yesterday. If she bought near the previous day’s low the total gain was +10% She also has a diversified portfolio of long term assets and uses YOUR Stock List.

Direxion and ProShares are the two companies that offer leveraged ETF’s. See POSITIONS section for blog for links. Obviously something that’s leveraged 2x is less risky than most 3x leveraged funds.

Bottom Line – As I stated in the comments section – This big a move off a retest of a major support level. It usually indicates that the rally will continue. (This Retest = Price moves down to support level,  remains above the support level for a period of days (9 days), then falls back down and retests strength of the support level. It held. Then, in one day stocks moved higher than the higher of the previous 9 days – A breakout. = Bullish

Positions

• EEM - (Emerging Markets ETF)
• UWM - (2x small cap stocks ETF) This is now up over +7% since it was bought @ 10 days ago. Once a leveraged ETF goes up 5+ % I usually sell 1/2 or put a tight trailing stop on that 1/2 of @2% on it each day. I’ll do this today.

From Yesterday – This means at least a short term oversold bounce. And what a bounce it was.

Long Term Investors - Mea Culpa – I like the odds to be more in our favor before making major long term investment. So I did NOT put out a clear BUY signal. However realize if you can tolerate the risk -60 on the MO is NOT a line in the sand and like The Critic you don’t have to wait.

THE PURPOSE OF INVESTORS411 IS TO EDUCATE YOU ON HOW TO USE SOME BASIC FORECASTING TOOL AND ACT ACCORDINGLY. Stock Markets are moving faster than ever before and by the time I get the information out it sometimes has gone stale. Also I’m NOT watching stocks move all day and sometimes ignore markets entirely. THEREFORE, USE INVESTORS411 AS AN EDUCATIONAL TOOL - If you have a problem I will answer your email ASAP.

Investors – A -15 on the MO still gives us some wiggle room. Considering UCO and more UWM on a dip today. This is a higher risk trade/investment.

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.” -

Lets do some math. To jump star the USA economy. (Compare with a country like China that’s trying to slow down their economy) the US has $700 TARP (almost all paid back with interest), $787 Obama Stimulus, $1.7 trillion of QE #1, other billions/trillions the unaudited Fed loaned out at almost zero% interest and now QE2. (guesstimate $500,000 billion & more later.

Most of this funding has gone to the shadow banks and to help consumers impacted by the 2008 meltdown.

The most remarkable part of all this is the huge amount of money that’s had to be used to just stabilize the US economy at a 9.6% unemployment rate and a 2% GDP. GDP would easily be below zero without it. Yet there are those on the far right who would allow shadow financials and all Americans to become over leveraged again.

Jon Stewart Rally

Politico said there were 250,000 (impressive) at the Rally to Restore Sanity in DC this weekend. Here’s one voice on the rally His closing speech at the above link. Well worth the read.

Mantra - “Not making any specific move until dollar breaks out of its range. I would look at a breakout higher for the dollar, and a corresponding fall in stocks and the MO to oversold as a buying opportunity for long term investors. “Looks like next Wednesday Fed meeting is the big event.”

Managing Risk - Lots of YOUR questions in the comments section are on Managing risk (When to invest)

• Ideally we’d like the Long Term Outlook to be Bullish, the market over sold (MO at or below -60) and the dollar’s long term trend – bearish & the BDI to be bullish.
• It seems highly unlikely we are going to get all three at the same time. If we do I’d jump.
• What you do depends on YOUR level of risk
• Right now the dollar rules and which way it breaks will probably have a lot to do with the future of stocks.
• The Long term Trend is – CAUTIOUSLY BULLISH.
• The MO is below zero.

So its not a perfect set up, but it is slightly favorable . The dollar is the key factor & it has NOT broken out of its range. I’d say the Tea Leaves right now are slightly bullish. If you can handle the risk invest. A dollar dropping below its support level and an/or an MO nearing oversold (-60) would be better.

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.”

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Creating Jobs

Kaufman Institute last month came out with an exhaustive study on job creation. We’ve seen how the old giant companies from Apple to Wal Mart out source jobs my the millions to emerging markets. We’ve been told its small companies that are the engine of job growth in the USA. But it seems to depend on just what type of small company it is is even more important.  One major  conclusion - US job creation is dependent on start-ups and young companies

Health Care

Fear Inc. has dominated what we think about “Obamacare” or the recently passed health proposals. AP poll shows we have no idea what’s in the health care plan. Best example

• 81% – When asked did the nonpartisan Congressional Budget Office reported did they say Obama care would increase government debt.  81% answered WRONG .- “Obamacare will decrease government debt & reduce red ink.”

Fear is the mind killer that distorts reality and wins elections. 39% of Americans still believe ObamaCare has Death Panels. Here’s a list of the 10 major reforms that took place yesterday.  You can like or dislike Obamacare, but It’s depressing that so many Americans have such a perverted concept of reality. So let’s end on an upbeat of HOPE

Hope

The following is one of the conclusions by JS from the comments section.

“We need more graduates that “make something”, not all the lawyers, MBA’s our top schools are spewing out. I also wonder how all the time, money spent on entertainment, and all the smarter students going into these fields are effecting us. Maybe we need a rethinking of our moral compass (not just Gordon Gecko’s). Maybe the current state of the economy will encourage better behavior. They happened after the depression; maybe some good things will come out 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!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. CNBC’s Jim Cramer -”BB/HFT make up 80% of trades.”

US Markets

Up till yesterday the super computers of the BB/HFT’s had been buying into the close. Looks like some something spooked them and volume increased as they sold late in the afternoon. Probably poor economic news out of Ireland/Europe. Selling & increased volume into close = Bearish

How markets react to news is an important forecasting tool. For the last few weeks markets had been brushing off the bad news,but this time they sold on the bad news. It’s when stocks sell on good news that you really have to worry. We’re not there (yet), but we are back in Neutral territory for this indicator.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar rose +0,23% yesterday, but broke a major support level the day before. The inverse correlation between the dollar & stocks broke down earlier this week (not yesterday). First time since late June that this has happened. Trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell  -1.01% yesterday. Two week BDI fall. After 8 week bull run trend seems to be changing to = Bearish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell  to -20.19 yesterday. Trend is now bearish, but at support level (see yesterday’s Investors411) = NEUTRAL

Reading Tea Leaves

The MO is our #1 forecasting tool.

• The -20.19 puts us closer to oversold.
• Zero is usually the middle, but the 50 DMA is at +16.36. So we’re a bit closer to oversold.
• The area around -20 is a support level (see yesterday’s Investors411)

This is one of those transition’s points. Regular stock traders will probably push markets higher in the AM. After a three week rally a three day drop, especially in light volume is just too tempting for traders.  The real question becomes what will the BB/HFT’s do into the close.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

Current Longer Term positions -

• EWS (Singapore)
• USO (price of oil/commodity)- fall of dollar negatively impacting this.
• SSO (2x what S&P does- this ETF is more a trade that may turn into an investment) I now have a 2% trailing stop on this trade and I’m close to getting stopped out of this trade.

Investors

• -20 on the MO is a better entry point  than any number higher, but it is still not overbought territory or -60
• The benchmark S&P 500 yesterday closed at 1124 below its former major resistance/now support level at 1130.
• The good news is a higher price high has been established at 1149
• The bad news is we are down below breakout levels
• Hopefully (for bulls) we’ll have a higher low and our cautiously bullish outlook will continue.

Those investors not invested at all or with a small investment in equities may consider nibbling on a recommended emerging market ETF (see Position section of blog). Waiting for a bigger dip is obviously a much safer play.

Traders

This is again one of those no guts no glory moments that do not always work. You might nibble a new position that looks promising. See YOUR stock list, some some of the leveraged ETF’s suggested in positions. Paul R updates lots of the stocks in the comments section of the blog.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Elizabeth Warren

Fireworks Again

23 Comments yesterday. WOW. You tied a record. Most on politics. It ended at midnight with Yankee Bob on Fascism. You can scroll down to the bottom HERE to read them all. Some strong opinions, and let’s try to be civil.

I told Jim J I would publish his list of candidates to donate to Monday or Tuesday. You can be sure Tea Party candidate that JS (not me) called a “Whack Job.” will not be on it.

Elizabeth Warren

Bravo Elizabeth Warren has been chosen by Obama to set up the Consumer Protection Agency and start running it. The Right Appointment at the Right Time editorial by Simon Johnson.

Poverty Rate Rises

Poverty is on rise. Republican response to their fellow Americans “Let Them Eat Cake” or repeal all of health care. There are many parts of the health care bill I oppose, but repealing the whole thing is just wrong. More on the poverty rate in the US declining for a decade – The Lost Decade from WSJ

Back in 2008 Investors411 warned that the economic meltdown was “far, far, far, far, far, worse” than what people expected. One forecast you hate to have come true.

Digging In Heals

You may think of him as Darth Vader (Democrats – Larry Summers and Chris Dodd constantly compete for this title) But when he speaks its usually policy. Larry Summers – “Maintaining tax cuts for top wage-earners should take a back seat to other more pressing measures, White House economic advisor Larry Summers said, in a signal the administration could be digging in its heels on the issue. ”  From CNBC – All right Larry – something positive. Darth Vader title goes to Senator Chris Dodd for 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!

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Technicals, Fundamentals & Analysis

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

Mantra for September - “The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Term for the Day – Baltic Dry Index – From Investopedia

“A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed)

Changes in the Baltic Dry Index can give investors insight into global supply and demand trends. This change is often considered a leading indicator of future economic growth (if the index is rising) or contraction (index is falling) because the goods shipped are raw, pre-production material, which is typically an area with very low levels of speculation.”

US Markets – It’s a ghost town out there as volume remains pitifully weak.

This is the third Friday of the month when options expire. Almost always this day lacks technical significance unless a major fundamental surprise occurs.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, fell  -0.31% yesterday.  Falling dollar trend for stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell a -3.63% yesterday.  The BDI does not have the immediate impact that the MO or Dollar does. Fourth down day in a row with rate of fall increasing. After 8 week bull run trend changing to bearish, but still= Neutral
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO fell again to +22.38 yesterday. Note while zero is the center of this chart the 50 DMA is at 19.33 That’s a support level. = NEUTRAL

Reading Tea Leaves

If the baby Bull, pictured earlier this week is going to get on its feet, this would be the time to rise.

However, it’s hard to put significance on an options expiration Friday. Perhaps Monday will be the key.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions)

Current positions –  EWS (Singapore).

Same basic outlook for traders- Short term trend is bullish for stocks. If we can get @ a 100 point drop in Dow and you can tolerate risk – you could nibble

Investors – Wait for a bigger drop in MO before going long.

Also if, we get up over +60 on the MO and  the Dow/major indexes rally – that would be a selling or shorting point.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Fear

Each day two classrooms in the United States are emptied in the USA because these children are diagnosed with cancer.

Yet the brainwashing American media yesterday, from networks to blogs, focused on a “mentally ill, homeless and violent” man with guns and a bomb holding three hostages in Silver Springs MD.

Our culture has simple become conditions to over hype anything with guns, bombs and a potential terrorism because fear of terrorism sells politically and commercially. Your chances of dying from cancer, diabetes, heart attacks, or going brain dead from alzheimer are thousands of of times greater than a terrorist attack. Sure, we should be vigilant but we should also recognize reality.

Wikipedia reports that only 16% of the approximately 200,000 rapes a year in the USA are reported. How many classrooms are emptied because of the million women who get raped each year in the USA? Yet our American media growing trend is to focus on any potential terrorist related violence rather than rape.

Guess which country is #1 in the world in number of reported rapes so far this year?

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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!

Technicals, Fundamentals & Analysis

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

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Jim Cramer -”BB/HFT make up 80% of trades.”

Quotes from yesterday - “Churning. “More often than not a big battle like yesterday between bulls & bears means a reversal in direction. In this case that would be a rally….Overall think the BB/HFT’s are setting up for a rally.

We had one big rally in slightly above average, but decreased volume. (sorry for  ”?up” above – couldn’t clearly read the NASDQ volume chart) This is your typical rally in a BB/HFT controlled market.

Significant Indexes

• The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar moves inversely to stocks] The dollar, of course, fell  a whopping -0.82%.  Because the BB?/HFT are obsessed with the inverse dollar/stock relationship, you’d naturally expect a huge drop in one gets a huge rise in the other = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.03% yesterday. After a 5 week rally the BDI has flattened out. Now starting to rise. = Neutral/Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to +6.81 Now above Zero, & both 50 & 200DMA’s. Nowhere near +/- 60 so there is lots of wiggle room on each side, but momentum obviously with bulls. Therefore = NEUTRAL

Reading Tea Leaves

Monitor, a trader, in comments section of blog describes the MO forecasting tool best – “An observation – The McCellan Oscillator works!!!!! Plus or minus 60 seems to be a reasonable point where markets turn. If you like to take risks just go long or “buy the dip” when its under minus 40 and wait. Within a few weeks it will be at over 40 and sell”

It actually not all that cut and dry, but the general focus seems to be correct for a Long Term NEUTRAL market.

Mea Culpa - For long term investors there was a point over a week ago when the MO was below -60 & the Dow fell another 100 points which was a buy point.  Personally, as the record shows, I did buy some long positions TYH & SSO, but let the FEAR of loosing $ force me out of those positions with minor gains instead of holding onto those positions. My mistake.

Obviously another typical BB/HFT rally where short positions are forced to buy stocks to cover their positions. This gives added momentum to the rally.

September looks to be one roller coaster ride, now with an upside bias. There will be buying and selling points for both traders and investors. Stay tuned.

The obvious sub trend brought about by globalization is the economic deterioration of the US economically  vs the ecomomic rise of emerging markets and energy rich countries (peak oil mega trend – see Overview section of blog).

Will the emerging markets grow fast enough to pull the USA out of the Great Recession?

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions –  EWS (Singapore)

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Photo from Politico of all white Tea Party activists – Queston should the USA have the same level of tolerance as Saudi Arabia or are we better than that?

Your Comments

Mainstream media (CNN & others)has chosen to give priority to right wing groups that believe we should ban all  mosques in the USA. Yankee Bob has returned to the comments section with a rebuttal -

“Exactly right!

Fear is the Mind Killer! Prejudice is born of ignorance! We fear that which we do not know or understand! Enlightenment is much harder to attain. It’s easy to be afraid of what you don’t know or understand. That’s easy. Seeking the truth is hard!

Think of what prejudice has cost the world. How many Genocides? How many victims of Genocides, Enslavements, Victims of Prejudice  were denied their human rights. What does that mean as a social cost? Suppose Einstein had been murdered  in  a Pogrom before he gave the world his Theories. Suppose he had been denied his eduction because of a quota on student seats for Jews! How many potential Einstein’s were lost at Auswitz? Suppose Drs. Salk were denied becoming Drs because they were Jewish! The Dr that developed the procedure for blood transfusions that has saved the lives of countless millions,died after being in a car crash and was denied a transfusion because he was Black! What if he was in that crash before he developed his discovery. We have lost so much as a society because of the fear that ignorance inspires!”

Yankee Bob

JS has a lot more valuable information on covered calls in the comments section. Also Dave & Jim J (bonds) have some added information Kudos to JS for initiating and leading the discussion on an alternative method of investment

If you don’t watch the comments section each day your missing out on some of the best investment ideas and most passionate editorials.

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!

Technicals, Fundamentals & Analysis

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

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Weak volume rally is typical US for the BB/HFT.  Although volume did pick up a bit as short positions scrambled to cover. Weaker dollar & rally abroad played a part in this.

NB – The US markets are , for the most part are being engineered by the BB/HFT and now the Fed has taken an even more direct role. Investors411 has beat the drum over the BB/HFT’s, so lets do the FED.

The FED – It was perhaps no accident markets moved higher when the Fed at 10:15 AM EST yesterday opened its window to start to buy Treasuries. Lower treasury rates pushes investors seeking higher yields into stocks. More important Zerohedge.com does a good job describing what happens when cash is given to potential traders. Future auction that inject cash to major traders will occur 8/19,24,26 & 9/1. So stocks should have an artificial boost on those days. At Zerohedge read anything with symbol POMO – Permanent Open Market Operation.

Bottom Line - You’re not getting the Fed’s money and we could see a little juice added to stock on the above dates. Plus the day before traders may rally in anticipation of new cash.

Cash rich companies are also buying back shares – they certainly are NOT hiring American workers.

Significant Indexes

• The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar fell -0.38% yesterday. For stocks = Bullish
• The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +1.09% yesterday. Has broken up through 50 day moving average. Overall trend still = Bullish
• McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to +3.14 = Neutral

Reading Tea Leaves

Emerging markets due for a consolidation after a nice 3/4 day run. MO in neural and the FED injections of cash through 9/1 should keep the nasty Hindenberg Omen at bay at least for a while.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions – EWZ & EWS

Each time we have a MO below 40 and a dip, I plan to buy.  First nibbles and the lower we go the more riskier ETF’s.

Same strategy – Will sell 1/2 ETF at @3 to 5% gain/loss and let the rest ride till the MO moves higher. Sold 1/2 of EWZ at 70.88 for @ +3% gain. Both EWZ & EWS opened and closed near the same levels. In the language of technical analysis this usually means at least a short term trend reversal.

Long Term Outlook – NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

The Cleaver Family from 60′s sitcom Leave it to Beaver.

RIP – Middle Class America

The middle class in America is being systematically wiped out of existence in America by Americas growing wealth oligarchy. Say good bye to The Beaver

Editorial is from Business Insider features 22 statistics showing America Middle Class is headed toward oblivion. This is documented & substantiated evidence that the middle class is being wiped out by the rich oligarchy in the USA. Many many thanks to Robert H for finding this article.  Here’s just a few of those stats –

• 83% of all US stocks are in the hands of 1 percent of the people.
• 66% of the income growth in the USA went to the top 1% of Americans from 2001 to 2007
• 36% of Americans contribute nothing to retirement
• 61% of Americans live mostly paycheck to paycheck in 2009 vs 43% in 2007.
• Bottom 50%of Americans own less than 1% of nations wealth.
• 40% of Americans are employed in low pay  service jobs.
• Competition China garment worker makes 82 cents an hr. Cambodia 22 cents an hr.
• 35.4 is the ave. amount of weeks it takes to find a new job.

The list goes on & on, but you get the picture. Send this to your friends

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!

Technicals, Fundamentals & Analysis

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

Mantra for week -The Black Box/High Frequency Traders control the vast majority of trades.

Another typical light/decreased volume rally that has become the norm for the Black Box traders that control the markets.

Major indexes are cutting through support levels like a knife through butter. = Bullish

For only the 8th time in history the Dow has seen triple digit gains over 3 days

Significant Indexes-

• McClellan Oscillator (MO) rose  to +97.25 [+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. 79.25 = BEARISH
• US Dollar –  The dollar  fell  -0.46% yesterday [Anything over +/- @0.50 is significant.] The dollar/stocks relationship is strong – Dollar up = stocks down and visa versa. Dollar just broke a major support level yesterday = Bullish
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also, good proxy of China.) BDI was in free fall from a high of @4200 to 1700 . This was a huge -60% drop in 8 weeks is very bearish Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI has staged a 7 day+8% rally and is at 1841 = bullish

Reading Tea Leaves-

The Black Box/High Frequency traders are on a buying rampage. You can’t call it a parabolic climax buying spree because of the lack of volume. Then again the BB/HFT have shatted all the former technical rulus about volume.

Because support levels have fallen, any small dip will now probably be bought into by non Black box traders.

Both the dollar and the BDI have clearly reversed their trends.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Updated over weekends Investors411 holds ONE position in SDS at this time

Sticking with overall strategy. But its looks more and more like a trade.  Looks like the original SDS (Short ETF trade) is going to loose $)

Instead of catching a downside move in a bear market , its turned into a downside move in an overbought bull market. This also makes the chances for success less and you have to be a more nimble trader instead of investor.

Strategy - From Monday - The same as before – “If/as US major indexes become more overbought the more ETF’s that sort the market will be purchased. Starting out with SH. Then the higher above 60 the MO goes, the more SDS (200% short the S&P 500) and other even 300% short ETF’s will be used the higher the MO goes.  See POSITIONS section at top of blog for more. Therefore what is happening is a series of trades (Short ETF’s) the more overbought the market becomes.

The same entry/exit strategy applies. Considering dropping exit/entry point to 4 instead of 5%. See Friday’s Investors411 for more. The following trades were made Friday.”

SDS (ETF the shorts the S&P 500 at 200%) was bought at 32.50 Nibbled with just a 2% of portfolio position.

From Yesterday

EWZ (Brazil) an ETF Investors411 owned for years is again outperforming and is a buy the dip opportunity.

GLD - (Gold) has come down off its high and any further dip Investors411 will buy.

Paul & Monitor in the comments section and several of you privately are anxious to reinstate the June 2 2010 YOUR Stock List – Using the old list as a starting point – will try to put a list of a dozen stocks together to buy on a dip.

Right now EWZ is the leading ETF candidate.

Long Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Obama’s Victories

It may be over the top  to call the events of yesterday Obama victories (credit/blame should be spread), so lets call them birthday presents.

Bottom line -  We should have done better, but it could have been a whole lot worse.

• The BP oil gusher in the Gulf looks to be completely capped. Also, victory for oil industry who now proves they can stop leak at 5,000+ feet.
• SEC gets record settlement against shadow bank GS, legislation to prevent what GS did is included in financial reform legislation, but GS wins by preventing a whole lot of bad PR by going to trial.
• The biggest birthday present is the Financial reform bill passes congress. (Senate, 60 -39)
• Another big victory is Republican leadership, like in health care, promising to repeal it all instead of saying well keep this part because its good and eliminate that.

Here’s the lead NYT editorial on Financial Regulation. Some relevant points.

• “Since January 2009, the financial sector has spent nearly $600 million to weaken reform” – they scored many victories.
• “the margin of victory was really about partisan politics and not the bill’s content.” Majority of blame here is on Republicans, but NYT does not mention Democrats are not without partisan transgressions.

Investors 411 has beat the drum for a tougher bill and it to be more inclusive of transparency in government agencies. However, we got more out of this than we did out of health care legislation. Both are steps in the right direction that need amending.

The next big battle is who heads and is on the board of resolution authority and consumer protection. Geithner is opposing Elizabeth Warren as the new head of Consumer Protection Agency. Warren is perhaps the #1 hero in the accountability, transparency and reform of Wall Street.

YOUR Comments

Sorry I’ve run out of time. However Ewanapat has a fabulous link to a controversial article on Ron Paul/David Stockman . This continues the debate over Barney Frank & Ron Paul stated by SE

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!

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

Technicals, Fundamentals & Analysis

Mantra for week “Earnings Season begins this week. - How markets react to news has usually been the key. If a stock shrugs and goes nowhere on good earnings news you know there’s trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.”

• 2nd Weak volume flat day in a row = Mildly bearish
• Stocks rallied into close = Bullish
• BP seems to have fully cap oil spill = Bullish
• GS settles with SEC, pays record $550 million fine, but avoids prolonged bad PR = Bullish
• GE reports lowers forecast. Down @2% in pre market trading - Bearish
• GOOG reported earnings and was down @4.5% in pre market trading (7:45 EST) = Bearish
• BAC reports and is down @4.5% this AM = Bearish
• Fin/Reg is over. No ore questions what will legislators do. = Bullish

You can check pre market trading here – Just type in ticker symbol

Significant Indexes-

• McClellan Oscillator (MO) fell to +43.48 [+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. The Black Boxes have not allowed the MO to rise above 80 since 3/09.  Now close to overbought position = mildly bearish
• US Dollar –  The dollar fell a massive -1.04% yesterday [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, have used the inverse relationship of the dollar as a key part of their trading system. This inverse relationship is part of their algorithmic system. There was a delayed reaction the last time the dollar fell over 1.00% – The next day we had an almost 3% rise in stocks.  For stocks =BULLISH
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China. BDI is in free fall from a high of @4200 to 1700 yesterday. This is a huge -60% drop in almost 8 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a much decreased -0.53% yesterday. The decrease could be the start of the BDI finding a bottom – a bullish sign, but too early to tell. Fundamentally the 60% drop is very BEARISH

Reading Tea Leaves

From yesterday “is Black Boxes push markets slightly higher. Reasons – dollar probably continues to fall  & momentum higher at close yesterday.”

Today – Yesterday’s huge drop in the dollar gives bulls something to rally on. See analysis of events above. Is the BDI turning? – another sign of hope. The MO is at 43 and there is some wiggle room till 60 and a lot of distance to major resistance at @80. Bad earnings news from giants GE, BAC & GOOG will hurt budding rally.

Wow  - an enormous amount of cross currents impact US stocks differently. Looks like a roller coaster rally. Watch UUP the ETF for the dollar – if it keeps falling stocks go higher.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Updated over weekends Investors411 holds ONE position at this time

Same strategy still holds. Our one small short position SH seems to be in some danger today. Short term  traders may  get in trouble with short positions today.

Fatwa Against Vuvuzela

Anyone who watched the World Cup in South Africa over the last few weeks knows what a Vuvuzela is. Perhaps we are all Muslims now. The UAE issued fatwa # 11625 against vuvuzela’s whose beehive sound is too noisy at soccer matches.

Congratulations to Spain for their 1-0 victory over Holland.

YOUR comments

I received an email that contained the following statement over the weekend - “After clearly demonstrating Friday how Bush’s tax cut did nothing in raising net tax revenue next to Clinton. After factoring in inflation and population growth Bush has lost us revenue by 2009. Then you make a the completely contradictory statement ‘There are cases where cutting taxes can raise tax revenue.’ Why? “

Because its true and a well recognized fact by most economists. – However there is a balance between lots of different factors and  obviously you can’t collect no taxes and expect revenues. Maybe it will help to think the Obama Tax cut in 2009 It gets no press because a Republican did NOT make it. This works especially for almost every middle class American. Here’s how it can in the long term raise taxes.

• You cut the taxes of a working American (Say under $100,000) That person goes right out and spends the money especially those well below the arbitrary $100,000 a year figure. They buy something and this generates money and t from sales taxes to income taxes. It bounces some folks up to higher tax brackets because their busisnesses grow. They spend more. Bottom Line – money flows faster and this generates tax revenue.
• It also used to generate jobs. Lower taxes would create more demand and jobs would grow creating more taxpayers. However globalization has virtually killed that. If corporate taxes or payroll taxes decline a bit it does almost nothing to create jobs in the USA. These jobs go to China or another faster growing emerging market country where you can get the job done at 1/4 the price.

Right now the S&P 500 companies are sitting on a mountain of cash $1,800,000,000,000 If they wanted to they could generate millions of jobs in the USA They are simply far more interested in spending this money where it will make them more money and that’s in emerging markets.

The New BRIC’s

The term BRICK’s has been used for years to denote the faster growing big emerging market economies = Brazil, Russia, India, China and sometimes South Korea.

Now a new acronym for mid level countries leading the globalization GDP growth – CIVETS - Columbia, Indonesia, Vietnam, Egypt, Turkey, & South Africa. LINK

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!

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

Technicals, Fundamentals & Analysis

Mantra for week Earnings Season begins this week. – How markets react to news Will be key. If a stock shrugs and goes nowhere on good earnings news you know theirs trouble ahead. Remember Black Box algorithms  dominate even more as volume declines.

We had another rally (mostly in post 2:00 EST trading) in decreased volume. 40% below average. These Black Box rallies can go on for a while in low volume  Mom & Pop investors have long since left the market.

While its difficult to understand collectively what the black boxes will do, we do have two signs indicating a reversal should be ahead.

• The BDI (see below)
• The MO is near overbought levels.

Here’s the bulls case for good earnings For stocks –  Bad economics can be balanced out by good earnings

Significant Indexes-

• McClellan Oscillator (MO) rose a to +53.14 [+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. This index is on the boarder of being overbought = almost Bearish
• US Dollar –  The dollar rose +0.14% Friday [Anything over +/- @0.50 is significant.] The dollar is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up to 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. The big move was breaking the support level two Friday’s ago which set up the rally for stocks. The swings in prices are smaller and therefore right now = Less Relevant
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  1902 Friday. This is a huge -55% drop in 7 weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a decreased -1.92%Friday. Rate of decline is slowing – perhaps a good sign. but overall still = BEARISH

Monday’s Fearless Forecast - Even the black boxes have not been able to push the MO over +80 for over a year. The economic news from employment in the USA to world trade & China (BDI) is not good. We seem to be running into an economic wall that even the Black Box traders will have difficulty penetrating.

The earnings surprise would have to be HUGE to penetrate over +80 on the BDI. So I’m shorting any significant rally and expecting a down week. Were still in wait and see mode. See Positions

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own - Updated over weekends – Investors411 holds NO position at this time. (see below)

Short Term Traders - Those of you who love risk could nibble on the Direxion funds that short markets 300% (see POSITION Section at very top of blog) Some ProShares also do 300%.  I’m waiting till the +53.14 on the MO turns into over +60.

Caution – last time I waited for -54 to become -60 and missed last weeks rally.

Monitor didn’t – see comments section of blog. Also check out the in depth technical analysis of the BDI and other indexes that The Critic sent in

Investors – Sill waiting for the market to reach overbought levels (Close to +60 on the MO) but no cigar yet. The further ovesold the better. See list of ProShare that short market 200% in POSITION Section of blog. You can start to nibble when/if we get over +60 on the MO. The higher the better. Remember this may be only a trade that lasts a week.

The probability of making $ on a short (ETF that shorts an index of sector) is getting better.

Lets say there’s a 200 point rally in the Dow today – you can bet the MO will be  close to +8o or above.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Economic Whirlpool

Yesterday, Andy Grove described the scaling process as the reason American jobs may never return.

• Even if we had another internet revolution those jobs would go to an educated emerging market country. In fact the environmental green jobs are going there now.
• Grove himself points out his solution may/would lead to a “trade war.” Jsovjani (in comments section) accurately reminds us it was “one of the major causes to the Great Depression.” It would also lead to inflation.

This puts us in an economic whirlpool-The kind that forms when you let the water out of the tub. The USA is traveling in ever shortening economic circles leading to the dark hole or drain. China ( as well as other countries) obviously employs tariffs, manipulates its currency and severely restricts foreign ownership. We simply go on taking it on the chin for decade after decade.

Winners

• The people in emerging markets that get jobs and improve their economic situation (yes sadly often slave labor)
• The power and money oligarchy in the USA that profits from globalization.
• The politicians that can pit anyone who is foreign or different against whites for the diminishing # of jobs in the USA (think TTP’s)
• The concept of a strong (dictatorial) central government  and tightly managed capitalism (tariffs, monetary policy, censorship, foreign restrictions, etc.) – China’s communist party
• Global companies that find cheap labor abroad.

Losers

• The USA economic growth and jobs.
• Companies that hire US workers andplay by the rules.
• Democracy in both the USA and China. (more on this most important factor later)

Bottom Line – China is the big winner Look how easily they are manipulating a trans national company like Google out and their own BIDU in. The looser is the USA that fears its own shadow and becomes ever more dependent on China’s restrictive capitalism and one party system for its own economic well being. Maybe the Intel CEO is right. Shouldn’t we at least take some further steps to combat “scaling” in the USA

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!

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

Technicals, Fundamentals & Analysis

Mantra for week - Fundamentals rule. Old fashion fundamental earnings analysis dominates as earnings season kicks off big time next week. ”Double dip recession” has become an investment mantra starting in Europe and now echos worldwide.

Reading the Tea Leaves – To analyze what happened in the US stock market yesterday I’d have to read the minds of millions of people including those big Black Box traders who control 80% of the market. For forecasting future price moves, yesterday’s, below average volume trading was both irrational and  irrelevant in the longer term.

In the short term, you could say traders saw an oversold market so they bought. Prices got too high and they panicked and sold. The black box traders who follow currency (dollar vs. Euro) saw a falling dollar and bought in the last 1/2 hr. giving most US indexes a gain for the day.  Most relevant data is rally did not last long = bearish

Here’s What’s Important

The BDI’s (see below) increased its daily decline through its support level is the most significant economic indicator/forecast out there.  What this is saying is that world trade is drying up. More specifically trade of emerging markets – China. Those of you who have followed Investors411 for years know that emerging markets/globalization has been leading world wide growth.

If you look at the 3 year of the BDI below, you’ll see what technical analysts call a triple top, a broken support level and a red line that is descending almost vertically. This s NOT good. The BDI is at @2100 and in the depths of the 2008 meltdown it was at @600 so there is still a long way to fall before we reach that level.

Nevertheless, without the interdependence of world trade [globalization & I realize globalization has its bad, good, & ugly] we face the danger of recession part 2. The BDI says YES worldwide recession part 2 is coming.

Significant Indexes -

• McClellan Oscillator (MO) rose a bit to -45.22 [+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. .= Still NEUTRAL, but close to oversold
• US Dollar –  The dollar rose a significant -0.62% Friday [Anything over +/- @0.50 is significant.]  Mantra - right now is important  to stocks – Dollar up = stocks down and visa versa. The Black Box traders, that make up 80% of all trades, have used the inverse relationship of the dollar as a key part of their trading system. Two weeks ago a -0.62% move in the dollar would have meant an easy 100+ point move in the Dow. This could/will change, but right now dollar is = Less Relevant
• BDI - The  Baltic Dry Index (Measures cost of shipping – Higher costs good = more being shipped = Bullish. Also good proxy of China) BDI is in free fall from a high of @4200 to  2217 yesterday.( This is a huge -49% drop in 6+ weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI fell a massive -4.02% Monday. Rate of decline increased as it broke through its support level. = BEARISH

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own - Updated over weekends – Investors411 holds NO POSTIONS at this time.

Investors – Investors411 recommends no long position at this time. Wait for the MO to fall below -60. The further the better. (see past Investors411). Remember – Since 4/23 US markets have formed a bearish pattern of lower lows and lower highs. Hopefully, we will be buying at a low, but the 5 to 7% guideline (sell 1/2 for a 5% gain) because of the bearish trend.

Traders - There is some space to make a trade with a short ETF like SDS. The best read of the tea leaves is because the BDI is rapidly sinking & markets according to the MO are not yet oversold some room for a short exists. So I’d short any rally in stocks.

Answer for Monitor’s Question – I believe Paul R is away till Monday. The 5% rule is really a 5% guideline. Happy you made $$$ and I usually set a stop/loss at the price I bought it for.

Long Term Outlook =CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING