Mid Year Review of Stock Positions

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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 10

Photo  Flckr user Jamie Vatanhah

The BBC has an excellent post of brown shirted Iranian government forces riding on there motorcycles and shooting into a crowd here or a women from inside Iran describes what’s happening to BBC here

NYT lead story has Government publicly admitting that there were more ballots than votes cast in 50 Iranian cities here here The usual sources still provide the best description of what’s happening . Also add the live NYT blog the Lede

Read Scott’s worthy description of Iran’s/US past history in his post on the right side of blog.

The Obama Debate

Frank Rich editorializes its Obama’s Make or Break Summer here (See Sunday’s blog) Bob and D already staked out there positions. Here they are.

Bob – I am feeling badly betrayed by Obama. His health care reform is nothing that will help and his reforms for Wall St look like they were written by Wall St. He has not kept his promise on Don’t Ask, don’t tell and his Justice Dept is defending DOMA. His energy head is pushing for Govt.subsidies for Nuclear Power,but not for renewables. He refuses to prosecute the High Crimes and War Crimes of the Bush administration. I am angry,ashamed and I feel betrayed! Maybe Nader was  right! Obama is not going to give us health care ,or green energy. He is giving us endless war,a fascist state and new nuclear power plants. At least Bush never pretended to represent us,but O did. Damn him to hell!

D – Bob, I can understand people being frustrated with Obama, he hasn’t done everything I want too. But sometime you you get what you get and your cup is 1/2 full. I hope it fills up more over the course of the next 4 years. Some of the Positives that Obama has helped create -

1) As Barr said under Bush we got Ahmadinejad, Under Obama we got the Cairo speech, Lebanon election and the Green Revolution in Iran
2) We don’t have a right wing radical nominated to the Supreme court, we have Sonia Sotomayor
3) Laws expanding children’s health care funded by a cigarette tax
4) science means something again and we passed stem cell research
5) Abolishing torture, ordering Guantanamo closed and a fixed timetable for Iraq withdrawal.
6) A big stimulus bill/taxcut to get the economy moving again.
7) Moving toward better lower cost heath care for more Americans
Keeping the economy from crashing and a stock market rebound
9) Money in the stimulus for green jobs and education.
10) The new respect the US has gained from other countries around the world.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	-0.19%	up
NASDQ	+1.09 %	up
S&P500	+0.31%	up
Russell2000	+0.64 %	-

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Both the NASDQ and the S&P moved higher in above average volume.  However Friday was what is called a "quadruple witching day"  This means either a whole bunch of stock traders were riding around on their broomsticks in audition for the new Harry Potter movie or a whole lot of options expired.

Bottom Line – Increased volume NOT a fact on Friday.

Major event – Fed Meets this week

Technicals & Fundamentals

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 dollar in the short term and the BDI in the long term

$USD -  The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went down-0.34% .   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

Fundamentally its hard to understand why the dollar is rising, because we are printing to much $ and have s large stimulus package. Still other countries and traders are buying dollars. Lots of different ways to spin this – one is there is still confidence in the US economic system.

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 4073 to 4070 . The BDI is more a long term indicator. The chart pattern shows that the BDI has reached a critical resistance level its high of the year.  This could either be a double top chart pattern (bearish) where price fails to move higher or we may break out to new highs. Time will tell.

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

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.  But one Economist who called the whole stock meltdown in the first place Nourille Roubini see a "significant market correction" LINK His reasoning is oil prices and interest rates are rising too rapidly.

If these do continue to occur, what started out as an over bought technical retreat could turn into a full scale test the low bottom.  So in future Investors will keep an eye on interest rates and continue to watch oil prices.

This week fearless forecast – Another down to flat week.

• Holding onto long term positions FXI ,
• PBW/GEX (sold 1/2 of GEX and waiting for dip to buy similar amount of PBW – then will sell other 1/2 of GEX and buy PBW.  PBW is just a better preforming alternative energy ETF
• IFN Bought a small amount India ETF.

Personally, have not reinvested in the other positions that Investors411 held – QLD ( 2x NASDQ) EWZ (Brazil) & XLF/UYG (financials) Waiting for more of a dip.

"The Hedge"  SDS and QLD is basically flat since it was introduced.  For more see Position s section at top of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

WHAT’S UP? – Many Thanks to posts from d , E Wanapat, & JB on how to follow the coup/revolution in Iran. Great stuff! “Neither Free or Real” from the NYT – Intent & Twitter break news while networks/cable sleep  Day #3 of Coup in Iran – Important Summers/Geithner editorial – Outlook for stocks and more

Dorm Room Door in Iran’s Ishfan Technical University

“Neither Free or Real”

The NYT headline editorial entitled “Neither Free or Real” about the elections in Iran.

It is essential that Obama recognize the plight of the young revolutionaries in Iran. This view is held by most from the far right Weekly Standard to all the liberal blogs following the “green revolution.“

Huge kudos and Thanks to those of you who listed sites that readers could go to to witness the videos of the violence, brutality and oppression  by the dictators in Iran . You can follow what’s happening live by going to those sites or on suggested Twitter sites. The videos are in many cases horrific and brutal. See posts on left hand side of blog.

Brutalized Iranian protestor – Both photos from Andrew Sullivan’s blog

Some Significant Points

• There is a huge reform movement among the Iraq people who genuinely desire freedom. This is a majority of the Iranians. Unfortunately the dictators have all the guns.
• This coup by holocaust denying dictator Ahmadinejad (fronting for militant Iranian Mullahs) was well planed down to the details of the Interior ministry surround the place the count the votes before elections were closed.
• News coverage by networks and cable TV is slow and out of focus compared to the internet. While watching the brutality happen CNN’s Larry King was asking Ahmadinejad questions about his kids.
• Most likely, in the short term, Iran is going to move in the direction of N. Korea. Editorial analysis here
• Lots of decent coverage on internet that you all sent in. Perhaps the best is Andrew Sullivan’s blog The Daily Dish He writes for the Atlantic magazine. Their weekend wrap up of what happened can be found here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index	Percentage %	Volume
Dow	+0.32%	down
NASDQ	-0.19 %	down
S&P500	+0.14%	down
Russell2000	+0.14 %	-

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Technicals & Fundamentals

Breakout is not an accurate description of what’s happened to the market.  We have “INCHED FORWARD”  There is no real conviction in the volume behind the move higher. Yes markets have remained above “breakout levels” for about a week, but it seems like a very hesitant bunch of investors waiting for a massive counter attack.

The situation in Iran is not going to help markets. Asia & Europe down 2% as I write

Obama is going to lay out his concepts of regulations on financial markets and that also is  probably not going to be bullish for the stocks. This happens on Wednesday. Obviously some kind of regulation is needed to keep the greed of unregulated free markets from self destruction.

Larry Summers & Tim Geithner have a  must read for investors in the Washington Post entitled “A New Financial Foundation” Geithner and Summers have often been treated negatively in this blog, but the outline in decent. It makes the Fed the systemic risk regulator & all derivatives are “subject to” ( not – will be) regulations.   The devil is in the details.

This is all going to be a huge mess in front of congress. Lots more as this gets worked out this summer.

Reading the Tea Leaves

Expect a tired low volume market to retreat this week.

The battle over regulations on a unsupervised shadow banks will probably halt any short term rally.  The medicine is going to taste bad, but unless confidence in the financial system is restored we have no real long term stabile economic future. Right now we (the taxpayers) are socializing the risk while they rap the gains.

Technically – The BDI is bullish, and is a good long term indicator of the trend. How the dollar moves is now the most critical factor behind current     stock movement. Dollar rising = stocks & oil prices dropping.  Another reason to expect a down week.

Significant forecasting tools/Indexes for stock markets

$USD - Repeated statements in brown – The dollar is the index to watch You could write a book on the dollars influence on everything but for us the bottom line right now is – When the dollar goes down -stocks and oil prices go up and visa versa. Dollar is up in pre market rally and up a significant +0.97% Friday

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. + 0,64% in weak volume Friday

WTIC – Oil prices down -0.99% Friday

BDI - The Baltic Dry Index measures the flow of goods (world trade). Stated before -  This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism) 24 up days in a row, 6 down day in a row, & now 2 day rally. Bullish sign.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING