The China Trend

Pew Dec 9th 2009 poll showed American’s believe China is more powerful economically than the USA. 44% of Americans believe China is “larger economically.” It’s NOT, by a wide margin, but its growing a whole lot faster.

Perception is often far more influential than reality. Threat’s why our culture spins & manufactures the news instead of reporting it. Bottom line here is China sneezes and the rest of the world will catch a cold. They used to say this about the USA, but times are changing.

There is one major problem in China’s future and that is when will China’s housing bubble burst? When this happens everything from politics to economics across the world will take a hit.

The good news is there has not been shadow bank massive over leveraging of China’s housing problem.

The bad news is 65 million new vacant apartments and the above housing graph. For more see this LINK

Bottom Line – When this bubble bursts everything from stocks, politics, employment, to even your houses value will feel the impact.  This is the #1 DANGER WILL ROBINSON, DANGER DANGER that hangs over the world’s economy today. You could argue that  a phony opaque financial system is a bigger bubble, but that’s hidden from the perception of most Americans.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary


Index Percentage Volume
Dow +0.42% up
NASDQ +0.75% down
S&P 500 +0.55% down
Russell 2000 +1.36% -

Technicals, Fundamentals & Analysis

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

Same Mantra for the month -The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Stock futures retreated Tuesday (today) as investors grew a little more cautious ahead of the Federal Reserve’s meeting and after China’s economy showed some signs of slowing down.” – from AP

If your an Investors411 reader, you know the BDI dropped 60% over the last 3 months – Of course China’s imports dropped. However we have seen a recovery over the last two weeks in the BDI.

Significant Indexes

  • The Dollar rose a heathy +0.38% on Friday. Now sitting again directly on its support level = Neutral
  • The Baltic Dry Index (BDI) is accelerated its move  higher = Bullish
  • McClellan Index – (MO) Check out the link to the new chart. Lots more data. [Basically longer term  - the rough guideline is over +60 = overbought market = sell or short stocks & -60 = oversold market = buy stocks.] MO rose to +40.12 = Neutral

Reading Tea Leaves

From Yesterday – “There is a 5 week bullish trend. Benchmark S&P 500 at 1121 and every stock analyst watching the resistance levels around 1130.”  Yesterday the S&P closed at 1127.79.

Yesterday was “Magic Monday” where the breakout was supposed to happen. It didn’t and that’s probably going to make the BB/HFT traders anxious.  We tested the 1130 SPX number and the Bearish algorithms of the BB/HFT’s kicked in.

May be wrong, but yesterday sure looked like a day that the bulls legs got weary.

I’ve mentioned “wiggle room” for the MO in the past week or so of up dates. This exists still on the upside, but it comes more into play if the bulls are in charge. The distance to the downside (-60 is a lot further away than +6o) for the MO at +40.12 is far greater

Short term traders who are experienced could trade the wiggle room, but long term investors simply wait for an MO below -60. Be patient it will come.


The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions .

  • EWZ (Brazil – 10% of portfolio position) Bought at 69.80. Currently at 71.12. – 3 times its been up close to 4% in the last few trading days, but has failed to make the 5% profit figure originally projected to take profits. Sold 1/2 for 71.22 yesterday for a measly +2% profit. There is still some hope of building the remaining EWZ into a long term position, but its fading.
  • TYH (3x technology – 2% of portfolio position) Bought at 31.76 Currently at 32.26 Considering selling this position ASAP

In trading, one major key is to cut any potential loss and let your winners ride.

Long Term Outlook - NEUTRAL


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