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We the People? or We the Wealthy People & The Giant Corporations.

Iraq

Still in chaos following elections almost 8 months ago. Pro Iranian Mullah Sadr has joined one side giving the side of former president and Sadr a clear advantage. Longest time any country has taken after election to form government.

We The Corporation

On Feb. 22 in a 5 to 4 vote the Supreme court  struck down federal regulations that restrict the amount of money corporations can put toward political advertising during elections.

  • Now, any corporation can legally give millions to a candidate while YOU are restricted financially.
  • What’s worse - Any millionaire can for a nominal fee form a dummy corporation by incorporating and directly give hidden money to a candidate or attack add group.

Money is the mother’s milk of politics and obviously this ruling puts both corporate power and individual wealth above the voice of we the people. Yes democracy has changed as both major parties have been lavished by corporate buying power. This holds especially true for what Tom Friedman termed the Tea Kettle Party.

History is full of wealthy oligarchies falling to people power. The 20th century is a great example of the rise of democracies. It is disheartening to see the world oldest running democracy move in the opposite direction.

Yet, at some point  in time people stop thinking  “about what happens one or two steps ahead” (from mathematician John Paulos – see blow) and wake up. Example – Tea Kettle platform (Tea Party) A tax cut for the wealthy, more foreign wars, and cutting taxes on huge corporations is going to decrease the deficit for our kids.

Warren Buffett says it best – “It’s class warfare, my class is winning, but they shouldn’t be.” Source for this & other Buffett quotes.

Firefighters and Homeowners

The comments section always has some of the best editorials and news. Paul R on the privatization of fire departments.

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 -0.72% down
NASDQ -1.11% down
S&P -0.80% down
Russell 2000 -1.45% -

Technicals, Fundamentals & Analysis

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

US Stock Markets -

Stocks fell primarily because of the rise in the dollar. (see below)

John P Hussman PhD is a mathematician who predicted the recession. He often comes up with some interesting mathematical models for what’s happening. His Oct. 3rd newsletter

His view -”To some extent, I view current market conditions as something of a “Ponzi game” in that valuations appear neither sustainable nor likely to produce acceptably high long-term returns, and speculators increasingly rely on finding a greater fool.”

Hussman Quotes mathematician John Paulos on human nature and stock markets - “people generally worry only about what happens one or two steps ahead and anticipate being able to get out before a collapse… In countless situations people prepare exclusively for near-term outcomes and don’t look very far ahead. They myopically discount the future at an absurdly steep rate.” Undoubtedly, we have periodically missed returns due to our aversion to risks that rely on the ability to find a “greater fool” in order to get out safely. But it is important to recognize that speculative risks are not a source of durable long-term returns.”

With the extremely light volume and the dominance of market manipulators (BB/HFT’s etc) Investors411  is taking the position that these guys have a pretty good call on what’s happening. Therefore, a cautious approach based on the MO, the dollar, the BDI and major support resistance levels seems prudent. (see below).

The one differing point of view with Hussman is that emerging market are increasing becoming stronger and are more able to fend for themselves. Therefore the US can catch a cold economically and stocks can still rise. Just hope we don’t get the flu or worse.

Earnings season starts Thursday with Alcoa reporting and bloom next week.

Significant Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar rose  +0.45% Monday.  We had the biggest rally in the dollar in over a month. Today will act a confirmation of the rally. We could see a reversal of the trend.  For stocks falling dollar trend is = Bullish
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China & emerging markets] Rose +1.06% Monday.  An 8 week bull run, then a two week fall. Now consolidating for last few sessions = Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.]   Fell to -7.92. Still lots of room to move higher or lower. Location= NEUTRAL

Reading Tea Leaves

From yesterday – “Hard to see any serious stock reversal with the dollar continuing to fall. The BB/HFT’s algorithms seem to be set to buy the dip.” - The dollar have its biggest single day rally in a month and this reversed stock market mo jo. A one day reversal is obviously NOT a trend.

Traders – The market manipulators have been “buying the dips”- like yesterday’s fall of the MO into negative territory. Those who are looking for a safer entry may wait till -20 on the MO or more.

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)

  • EWS (Singapore)  One of several foreign ETF’s that have broken out and starting to get over extended.
  • USO (price of oil/commodity). Exploded through resistance level and nearing 5 month high. Part of this is tied to dollar falling.
  • SSO (2x what S&P does)  Still held onto last 1/2 of SSO. But will place another 2% trailing stop loss today.

Traders – Will continue to use/ buy SSO & TYH on dips if MO falls to @-20. For concepts on individual stocks see Paul R.’s always enlightening comments on right side of blog.

InvestorsEWS and USO are getting over extended from their base. I like to sell 1/2 the position and let the rest ride as long as I have @ a 10% profit.  Will buy back in at next dip. I am looking forward to building a larger position in both. Will add other foreign ETF’s along with UCO (@2x USO on bigger dips) See Positions section.

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

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