Investors & Traders- One way to quickly skim the stock section of Investors411 to see what’s happening is to count the number of Bearish, Neutral & Bullish signals. These are short term trend indicators. If all capitals are used BEARISH or BULLISH put far more emphasis on that forecasting tool. Reading The Tea Leaves will give a daily overview. The Long Term Outlook at the bottom is a forecast of where we will be in 3 to 6 months.

Obama Poll

The Good News Message

Two days ago it was the bad news, today its the good news. Overall you have to wonder Why can’t Obama get the good news out?

  • Today’s GM IPO (see below)happens and 2 weeks ago it had the best in the auto industry quarterly report. is certainly evidence that the loan by the taxpayers worked. Yes bondholders got a bigger haircut than others involved, but a rebound (think sales in China like other car companies) in such a short time is outstanding.
  • Remember we did not fall off an economic a cliff When Obama took office and even the CBO worried about the second Great Depression.
  • TARPTwo years later, the big Wall Street banks have fully repaid the government with interest, and TARP, in the end, could generate a profit”  Problems exist, but big progress has been made.
  • Nobody knows – The number of illegal immigrants declined last year by 800,000 (11/15 Time mag. pg.29) last year under Obama
  • The $780 billion dollar stimulus plan contained a $288 billion tax cut for working Americans. Who knew? In Sept a poll showed 8% of Americans knew there was a tax cut. (see 10/28 blog post)
  • Obama did get some restraints placed on Wall Street – who even knows what they are?
  • Heath care reform contains many positives like closing the donut hole in medicare for seniors, additional coverage for young adults at home and much more. Why have the positives not been articulated. Who even knows what they are?
  • Health care reform according to the non partisan CBO will save 10′s of billions over a decade & a trillion over 2 decades according to the non partisan CBO (see 10/28 blog) Yet Dems ran away from this legislation.
  • Obama entered with a jobless rate per month near -750,000 and this month it increased to +150,000
  • Obama,Dems, and a handful of Republicans passes a A $17.5  billion small business jobs bill on 3/18 and $42 billion Small Business Jobs Act bill on 9/27.
  • The stock market Benchmark S&P 500) is up from a low of 666 to 1179. Amazing +77% gain off the low – yet Investors seem to hate Obama.

So you tell me why can’t the message get out?

A special thanks to one of my daughters for help with the above.

Do Dead Cat’s Bounce?

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

Index Percentage Volume
Dow -0.14% down
NASDQ +0.25% down
S&P +0.25% down
Russell 2000 +o.34% -

Technicals, Fundamentals & Analysis

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

US Stock Markets -

Today, investors411, is using a real stock market term  Dead Cat Bounce with a ? instead of Neutral

Major US markets being oversold and confronting a major support level when nowhere in light, below average volume.= Dead Cat Bounce?

The CRB (commodities)  After a major fall 4 of the last 5 days commodity prices were confronted with a support level (50DMA) and stopped falling yesterday = Dead Cat Bounce?

Big news of the day is the GM IPO. It looks good The GM rebound is a real positive (yea bond holders got screwed)This might suck up some of the volume for stocks, but a successful IMP from GM would be = Bullish

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar took a breather yesterday after a sharp run higher and fell -0.16% yesterday. = Dead Cat Bounce?
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Fell  another  -1.40% yesterday. Major support recently broken, but rate of decline is decreasing = Bearish/Dead Cat Bounce?
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] rose somewhat to -67.71 but is still clearly in oversold territory  = Bullish
  • 10 Year Treasury Bond (TNX) [Bonds compete with stocks for Investors. Rising TNX also signals inflation. Rising yields bad for stocks]After breakout two days ago fell -2.20% back and leveled off yesterday = Dead Cat Bounce?

Reading The Tea Leaves -

Do dead Cats Bounce – NO. You can tell I’m a dog person. The chart above shows what a dead cat is – a short small rally in the middle of a longer meltdown, Oversold markets, confronted by major support levels have flattened or rose a bit.  The question is – is this the bottom or the start of a small dead cat bounce?

Three paths in descending order of preference.

  • Yes the bottom -TJX (Target) had a great earnings report and outlook. Oversold markets & 50DMA support levels hold. GM IPO energizes markets
  • We’re in for an acceptable 5 to 10% consolidation after a nine week bull run with a S&P support level of 1130. (SPX now at 1179)
  • A double dip recession is out there and Investors will soon realize the horror as foreclosures rise, Europe falls apart

The problem here is – if you combine choices the more bearish choices #s 2 & 3, are larger than #1.

The GM deal with a potential strong Christmas season and QE2′s print & dump could swing an oversold market.

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).

  • EEM –  position bought at 45.23 yesterday.

Traders. Yesterday we had a better potential for a short term trade. But the same senerio of an oversold buy the dip exists.

Investors. The MO goes below -60 buying becomes an option. Twice in the last 3 years the MO has reached -130. So you could loose out especially if there is a double dip recession. So I started small and nibbled on a little EEM (emerging market ETF) A  position at 45.28 Willing to accept a 7 or 8% loss on this. If we keep going lower I’m going to add some more EEM and country specific ETF’s on dips. (See POSITIONS Section of blog.

I think the chances of a double dip recession are remote, but a flatline US economy coupled with (right now over heated) growing emerging markets is more possible.

I hope the change to from CAUTIOUSLY BULISH to NEUTRAL was premature and this is NOT a dead cat bounce.

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.” -

Paul’s having computer issues and has been off line for a while

Longer Term Outlook - NEUTRAL

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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