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Apple

Once again AAPL has hit a grand slam for is earning report. Apple is the 800 lbs. gorilla in the room and probably now beats out Exxon as the world’s #1 company. It is also the company most responsible for keeping the worlds economy afloat.

Their major new growth is, of course, in emerging markets. So Apple to meet the demand has to hire new workers? Guess where 100,000 new jobs were recently added? CHINA

Intel co founder Andy Grove has correctly identified the problem and calls it “scaling.”  Apple is simply opening outlets where the new growth is fastest and the labor by far is cheapest. Any US start up when it comes time for major production is going to do the same. It the mega trend of globalization at work.

John S writes in the comments section – “Perhaps as a country we’ve missed the boat.” He may be right. It is almost impossible to reverse this mega trend of globalization. But we can at least try to make a difference and lives better for our fellow Americans.

The progression goes like this.

  • Globalization makes moneyed class in America rich.
  • Jobs go abroad.
  • USA – middle class suffers.
  • Corporations gain power in USA and average Americans loose power (democracy)
  • Chinese, one party state (oligarchy/dictatorship) gains power over both American companies (think Google) and its people the more it grows economically.
  • US becomes more dependent on China economically.

Flying above the 800 lbs gorilla is the 1,400,000,000 people Chinese Dragon. We should be teaching Chinese in all our schools to get ready for the future.

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 +0.74% flat
NASDQ +1.10% up
S&P 500 +1.14% up
Russell 2000 +1.82% -

Technicals, Fundamentals & Analysis

The High Frequency/Black Box traders turned an almost -1.5% loss into a gain  of +0.75% yesterday. Volume was again , below average.

Fundamentals were bad – GS, IBM & TXN had disappointing earning, & economic news was not good. Yet the markets rallied on the bad news all day & into the close = Bullish

AAPL hit another  earnings grand slam after the market closed yesterday. Up +2.57% yesterday and was up over 4% in post market trading last night. = Bullish

Bottom Line –  High Frequency/Black Box trades that make up the majority of trades on US stock markets have shattered many former rules of traditional technical analysis. What used to happen is a week now takes place in a few hours in significantly lighter volume. Some conclusions

  • The MO has basically worked as a predictive tool. +/-60 is not the exact overbought/oversold level market turn, but a useful rough guideline for when to be long or short.
  • The Black Boxes, because of their size, stick to trading ETF’s and major liquid stocks. AAPL is their darling.
  • At different time the algorithms Black Boxes use change.  Example – The religiously followed the dollar for weeks then switched away.


Significant Indexes-

  • McClellan Oscillator (MO) rose to +49.90 [+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. = NEUTRAL
  • US Dollar –  The dollar  rose +0.28% [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. Earning have trumped this indicator for now & we have consolidated for last two days. = NEUTRAL
  • 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 1761 . This is a huge -59% drop in 8weeks.  Often a leading indicator for stocks. Here’s a 3 year chart of BDI for context. The BDI rose for the first time in 8 weeks the BDI rose Friday.  Last two days also saw small rallies. At long last the BDI seems to be finding a bottom - a bullish sign, but still too early to tell. Fundamentally the -59% drop is very BEARISH

Reading Tea Leaves-

The MO is again approaching oversold territory. It is the currently the most significant of the indicators considered.

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

From Monday – “SH – The ETF that shorts the S&P 500 was bought at 51.45… 1/2 of SH was sold for 53.02 for +3% profit.  Letting the rest ride and will sell when conditions on MO near oversold.” The stop/loss on SH was removed and replaced at @3% below what it was bought for 49.95.

As the MO approaches oversold territory will again consider ETF’s that short the market.

Strategy - The same as before – 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.

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