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Why The Bull Are Stampeding?

Massive Manipulation & Economic Mega Tends.

History

  • Globalization mega trend provides cheap and now educated labor force. Energy rich (mega trend) countries benefit from rise in prices due to dwindling supplies and growing globalized demand.
  • To keep up with emerging markets US financials (shadow banks) cheat and over leverage the system. US consumers also encouraged to acquire massive debt. Instead of calling this keeping up with the Jones’s call it keeping up with the Wong’s.
  • System wide  meltdown for countries believing in casino capitalism - commonly called free market capitalism.
  • Attempts to bring transparency to markets failed. Attemps to make too big to fail over leveraged shadow financials go out of existance – failed.. At best weak guidelines set in place. Another opaque financial system begins to build.
  • Some Americans realize that jobs are going overseas and and a wealthy oligarchy and major US companies are making a ton of $ off this system, that also brings lower cost goods to USA.  No jobs, Gordon Gecko’s in control,privatized gains & socialized risk, Main Street screwed, 1 ib 7 Americans now in poverty – everyone angry.

Now

  • China as well as some other emerging markets manipulate their currency. Paulson/Bush & Geithner/Obama throw hissy fits, but do little/nothing. Why - because major US industries and industrialist are making a killing (From WalMart to Apple to Caterpillar) off of slave/cheap labor in emerging markets that are manipulated to stay low relative to USA. They make $ off of China’s manipulation.
  • US Fed dumps trillions of dollars to financial institutions in USA that further finance casino capitalism. This too is obvious currency manipulation. Dollar falls (less valuable because more $ are printed) and stocks move higher.
  • Most recently added – Fed dumping or printing money scheme is the PMOC (see below) Fed promises to do whatever it takes to keep US economy primed.
  • Potential Gridlock in congress means shadow system that benefits Chinese dictators, Oil rich countries/dictatorships, a wealthy oligarchy continues. Manipulated by fear, vanishing American middle class is for the most part clueless as to what’s happening,

Stocks

  • The return to casino capitalism and flood of money into US markets means manipulators (hedge funds, BB?HFT’s, Sovereign wealth funds etc.) are overjoyed.
  • Retail investors sense another bubble building, but don’t understand what’s happening. Why are jobs not coming back? – Obviously they are going abroad.
  • Stocks of the big companies/industries that profit from abroad and emerging markets soar because the manipulators are pouring money into them.

Bottom Line - We retail investors are just insignificant players in a massive attempt to manipulate the forces of globalization and dwindling energy supplies. Of course another bubble is building. Manipulation now has long term consequences. As long as you understand how the money flows you can invest accordingly.

Thanks, for the complements on the market calls this weekend. All I’m doing is watching money flows described above.

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 +1.86% up
NASDQ +2.33% down
S&P +2.12% up
Russell 2000 +3.42% -

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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

Another massive rally in weak below average volume, which is also well below last years volume.  The rally is real but it is being run by BB/HFT’s, Sovereign Wealth Funds, Hedge Funds and other manipulators. It’s also being juiced by our Fed that is and promises to PRINT or “do whatever  it takes to keep the economy going.”

The single most important new factor to look at is our Fed’s PMOC pouring more and more $$$$$$$ into the economy. Another 3.8 billion last Friday.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar fell  -0.77%,  The inverse correlation between the dollar & stocks seemed to have broke down earlier this week, but Friday made up for all that.  Trend for stocks = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Fell  - Friday. 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 rose  to +11.14 yesterday. Location= NEUTRAL

Reading Tea Leaves

The MO – is our #1 forecasting & when to buy/sell tool. Even after a the huge rally Friday the MO is still just above zero and just below its 50 DMA at 15+. Clearly Neutral which gives the bulls room to run even higher.

Thursday the MO reached -20 and , as predicted, this was a major support level.

The Dollarbroke down though major support last week. Even though the daily inverse relationship between a falling dollar and a rising US stock market did not match up the weekly did. It was a/the primary cause behind the bulls taking charge..

Tea Leaves – It the past year whenever the dollar has taken such a large move up or down it usually takes a few days to consolidate or move in opposite direction.  This time I’m not so sure.

Here’s the Bull’s formula – Fed prints/pumps money into economy. Huge financial institutions get that $ for almost nothing. Lots of the $ goes to stocks and eventually ends up abroad.  The more $  that get printed the more it forces dollar down and this too makes stocks go up. (US goods cost less abroad) Bulls run till we get overbought.

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)

Longer Term positions -

  • EWS (Singapore) 2% trailing stop loss on 50% of position/ 4% trailing stop/loss on the rest.
  • USO (price of oil/commodity).
  • SSO (2x what S&P does- this ETF is more a trade that may turn into an investment) I now have a 3% trailing stop on this trade.
  • TYH (3X technology) Bought at market open for 33.48. For today have stop/loss at 33.49.

I would be buying some of the individual stocks on YOUR Stock List, but just do not have the time. See Paul R’s comments.

Also as someone just wrote in this AM buying most of or the whole list of ETF’s or YOUR Stock List (also consider high dividend stocks) is a way to go instead of picking a few from the lists. (more on this later – see comments section of blog)

I know everyone just wants to buy and hold for years. Just can’t recommend holding for longer than a cycle of the MO (McClellan Oscillator).  Mostly a cycle from oversold to overbought (@-60 to +60) lasts from one to three months. Sometimes shorter.

Remember, we are now in a bullish cycle and therefore, elevated the buy/sell criteria a bit on the MO. (see past investors411) Watch the dolar and its invese relationship to stocks.

Traders

From Friday – “This is again one of those no guts no glory moments.” Bulls still in charge and have lots of room according to MO to move higher. Buying dips of stocks/ETF’s that are not too overbought on dips.

Investors

From Friday – Those of you with little exposure to stocks “may want to nibble.” You can still nibble on the dip if willing to accept risk.

Long Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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