Irene

3irene

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Rick Perry

Rick Perry Polls

Rick Perry, like an oncoming hurricane,  has taken a double digit lead over Mitt Romney in two polls. (Gallop & PPP) This destroys Romney front runner “inevitability” status and he better do more than be a cardboard investment banker or he’ll get washed out.  Obama’s next.

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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

The Dead Cat Bounce

Index Percentage Volume
Dow +1.29% low
NASDQ +0.88% low
S&P 500 +1.31% low
Russell 2000 +1.39% -

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Technicals, Fundamentals & Analysis

Shorter Term Outlook.

day/days/week

  • Repeat from yesterdayGold got so far over extended above its 50 & 17 day moving average it just had to blow off some overbought steam and fall… an overbought gold position falling triggered the algorithms of the High Frequency Traders, that dominate our stock market, into selling. A big chunk of the $ coming out of gold went to stocks. Also oversold financial stocks added to rally.
  • Can’t repeat this often enough - HFT’s are what moves the markets, not your traditional traders. They majority have long since left the building. Any competent analysis of market direction has to focus on HFT’s.
  • Steve Jobs resigns from Apple (now the world’s largest company) is front page headline even in NYT “He Can’t Meet His Duties.”
  • The McClellan Oscillator (MO) rose to +26.39 (-30 somewhat oversold, -60 oversold, -90 OMG oversold)( +30 somewhat overbought, +60 overbought and +90 OMG overbought)  = Neutral/a touch bearish
  • Why the MO has worked so well for Investors411 - It’s Simple #1 – clearly established lines for oversold and overbought #2 It can also be read technically as a chart – Example: Higher highs and higher lows indicate a direction #3 a combination of 1 & 2. Example: When bears rule its harder for the MO to get more overbought and visa versa for bulls.
  • A simple MO trading strategy. Since the outlook is CAUTIOUSLY BEARISH right now we probably won’t get as overbought as oversold. A very rough guideline – MO gets close to/over +30 – start to think about selling. MO gets close to/over -60 start thinking about buying.
  • Reading The Tea Leaves –  We probably need at least a bear market before the Fed acts more forcefully. We are @ 4 to 6% away from that right now. When the silver bubble popped it took four days to unwind. Like silver gold has had some fundamental issues behind its fall (some raising of margin rates to buy gold from major exchanges), but the fall is mosly technical with the extra cash finding its way into stocks.
  • We’ve had a stock bounce based on money flowing out of gold. Technical analysts will tell give you  ONLY the fact that markets were way oversold. But fundamentals matter. Both the Shanghai Gold Exchange (now twice in a month) and this must have leaked out – now the CME has raised margins (+27%) on the amour of gold you need to have to buy.
  • US stocks sure has all the feel of a dead cat bounce – The Low volume transfer of assets from overbought gold and financials to stocks . The CME group raising margins, after the bell yesterday, may drive more HFT’s from gold to stocks, but the higher the MO goes the harder it is for US equities to climb. Also first hurricane in a decade to hit NYC not bullish.

Longer Term Outlook

weeks, month, months

  • RepeatMay 20th forecast still stands. The May 20th summer forecast has come to pass and now we wait to see the Fed’s next move. Add to this Europe is a whole lot worse than previously thought back in May.
  • RepeatReading Tea LeavesI believe we need another 5 to 10% on the downside before the Fed will intervene more strongly (QE #3 or something else) Perhaps this will come at the end of the week when there’s a meeting in Jackson Hole Wyoming. LINK After the rally yesterday I see less of a chance that the Fed makes a move – So still CAUTIOUSLY BEARISH

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Paul’s Corner

How many shares do you buy? 1000, 5000, 500, 100? While I wish I had the buck$ to buy a big block of stock, like many I don’t have the funds or the guts to by a big block. So what can you buy or what’s more important, what’s safe to buy considering your available funds and the volatility of the market?

Tony Oz is a well know technical trader who lost shirt a few times by buying an incorrect amount of stock in a volatile market. He produced and offers for free a neat position size calculator.  Ron Brown from HGSI produces a variety of instructional videos for trading. I asked him several days ago if he had a video available on how to use Tony Oz’s position calculator. He didn’t have one available but after a bit of discussion explaining that it would be a good guide for HGSI users and members of Invesrtors411.com, he graciously produced one yesterday

LINK to video

This is a great presentation and one you all should view and download for future reference.

This sort of cooperation from HGSI is why I love the product. Where else can you get such powerful software and personal assistance?

As I mentioned a few days ago HGSI has some very good search and sort screens. One of  my favorites is called “The Best of Woodward and Brown”. I won’t go into the specifics but it usually presents you with a list of 10 best performing growth stocks during the day. Here is Tuesdays list, notice three YSL stocks.

AKRX,CF,ZNH,CPSI,CROX,CVV,HANS,SIMO,SPRD,TAM

Remember, you are responsible for your investment decisions, and I am not. Please do your diligence, and please take ownership for your actions because I‘m sure not going to.

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Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

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NLY - Annaly Capital Mgt. Ultra high dividend stock – It’s been shaky, but so far NLY has held up reasonably well through current stock market slide. NLY is the only position in Investors411 hypothetical portfolio. Easily outperformed S&P 500 over last couple months and 14% dividend is added bonus.

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD (Long Gold ETF) Gold is falling like a stone. See reasons above. When the silver bubble popped, a couple months back, it took four full days to unwind. Think gold will hold up a bit better, so just going to start to nibble a little on dip today and add more on further dips.

Disclaimer Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on about half of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I also ow SDS & TZA (ETF’s that double and triple short the market) as hedges. .

Sold call options on GLD yesterday at $3.80. Shoulda sold them a lot earlier and taken bigger profits, but since this was NOT a covered call I didn’t want a loss – One of Investors411′s mantras is don’t turn winners into losers. Calls and Puts are NOT part of Investors411′s Hypothetical portfolio

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Long Term Outlook (for US Economy)

BEARISH

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Long Term Outlook (for US stocks)

CAUTIOUSLY BEARISH*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

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