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Did You Know?

Almost 12 million people have viewed Did You Know (Again thanks to HG for the heads up on the Video) on just how fast the world is changing. The entire video screams how important EDUCATION is. Just one example from video.

• There are more “honors” students in India than there are students in the USA. The CEO of Honneywell stated on CNBC that the best engineers in the world were in India. Over the weekend a former chair of the Economics department of a major university in Boston told me that 80 to 90% of the PhD candidates in economics at his school were foreign students

Bankruptcy

In one sense you have to admire Ben Bernanke. Our Fed chair is manipulating everything at his disposal, including an attempt at changing public opinion (a 60 Minutes Interview) to keep a bankrupt country afloat.  It comical and tragic that those who created or are oblivious to the imbalances that caused a worldwide “Great Recession” can recognize the problems in Europe but ignore them here.

The Bottom Line is if Bernanke and the Fed’s smoke, mirrors and manipulation do NOT succeed were all toast.

There are lots of  people out there with doomsday scenarios who document and state - From Zerohedge.com

The fact is – we are beyond any fix. Things like cutting government spending will only increase unemployment. We are bankrupt when: What we take in with taxes doesn’t pay the bills. When we borrow and that and the taxes still don’t pay the bills. Now we counterfeit so we don’t default.

Game over!

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

Flat day & light volume for US stocks. – The NASDQ has joined the Russell 2000 and both are now broken out & trading at yearly highs

WikiLeaks founder was arrested in London this AM – so look for BAC stock (his next target) and all shadow banks to rally today.

A Most Important reminder to Investors and Traders

When trading gets light the Black Box/High Frequency Traders dominate more. They do NOT trade on valuations & fundamentals like markets historically used to do. They use arbitrage and buy discrepancies within stocks,sectors & markets. We take risk. Their risk is like “taking a shotgun and shoot fish in a barrel.”

On heavy trading days they make up over 50% of the volume and on light trading days over 80% of the volume. (CNBC’s Jim Cramer figure is 80%)

Bottom Line – Trading rules have changed. Best example – volume used to be the #1 confirmation behind any sector/index price move. It now maters little and why Investors411 uses the MO as a forecasting tool is because it doesn’t use volume. There are much less pure traders and investors in stocks today, but our size is still considerable.

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Reading The Tea Leaves -

The FIX is in (See last Friday’s blog) - Today the Fed will be buying another $6 to $9 billion in bonds from its 21 primary dealers ( aka shadow banks or the ones that got trillions in loans after 2008 meltdown) Its by now is no longer a secret that they will (wink, wink) take that money and go long the market. The BB/HFT’s that the Shadow Banks & hedge funds use have already adjusted their algorithms for a fresh supply of money today.  Many other investor/traders now realize what’s happening, they will probably front run this stimulus to stocks that usually starts about 2:30 PM EST.

CAUTION – Time to start to pay attention to MO getting too high. We’re not their yet, but keep an eye on it. Also too many people are catching on to the 2:30 Fed stimulus money is coming into the market train.

Positions

• EEM - (Emerging Markets ETF)
• UWM – (2x small cap stocks ETF) (1/2 this position was sold)
• UCO – (2X oil ETF)
• UWM – small cap stocks -
• UWM – Bought more yesterday at 39.75
• DGP – Bought at 42.49 (see comments section of blog for buys& sells)

Still view any dip as a buying opportunity because of the Fed’s market manipulations. When the MO gets closer to overbought I’ll stop buying.

You’d really love a dip this AM to buy, but I doubt you’ll get the chance.

Why so much UWM? – Small caps are leading the breakout. YSL – is also  full of small and mid cap stocks.

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.” – I’m sure Paul will remind you yesterday and since its inception YSL is kicking butt

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!