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When Will The Stock Bubble Burst?

Here’s my read of the tea leaves on YOUR  most asked question

First, stocks crashed because our banksters ran an over leveraged casino capitalist banking system that caused a stock meltdown in 2008/early 2009.

It’s important to realize how little was done to fix this problem. In fact, unlike our last huge savings and loan’s crisis (circa 1980) when over 1000 banksters went to jail, NONE directly associated with this crisis went to jail (Bernie Madoff was indirectly related)

Instead the banksters got a huge TARP loan, the ability to borrow money at almost 0% interest,  quantitative easing and other perks from our government and the Fed bank. This package deal is in the trillions of dollars.

No jail time, a few weak rules, and a tsunami of fresh capital. The shadow bankster’s, and their politicians are that powerful.

So basically the same corruption continues to grow.

Matt Taibbi in the Rolling Stone has a must read piece on this – Why Isn’t Wall Street in Jail (Warning – Some appropriate graphic language in editorial, but he goes case and point through the whitewash)

Rolling Stone photo

Our shadow banksters along with a huge deficit is the foundation of the problem.

Stock Bubble – Tomorrow



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

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Index Percentage Volume
Dow +0.50% up
NASDQ +0.76% up
S&P 500 +0.63% up
Russell 2000 +1.02% -

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

BUBBLE-ICIOUS -  Investors411 term for the stock market – We are all riding on the outside of an ever expanding/manipulated stock bubble.

  • Bubbliciously, once again stocks rallied in below average volume. NASDQ was a bit above average.
  • Mantra #1 – till it no longer works - still endorsing the concept that the Fed POMO [scheduleis and will be the key factor in keeping a long term rally going. Another term for this is quantitative easing or QE #2.
  • Mantra #250% to 70% of the volume on US stock exchange is soaked up by High Frequency Trades chasing imbalances in trades. This means 30% to 50% of volume is made up or real or valuation investors.
  • You can NOT compare, use many technical tools, or historic data to evaluate this market because it is being manipulated higher by our Fed or central bank.
  • Two significant reasons allow the Fed to keep the liquidity tsunami flowing - Housing prices are hurting & Unemployment figures are high.
  • “Understanding Inflation and Why Little is Good for Equities & The Economy” by Jeff Miller

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Shorter Term Forecasting Indexes

  • The Dollar (USD) [Any daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] Dollar fell  yesterday  -0.45%. There has been the start of a  short three week bullish dollar,/bearish stocks pattern.  - For stocks yesterday was bullish but the new developing pattern is a problem = Neutral/bearish
  • McClellan Index(MO [The very rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks .] Fell to to +27.22. Over the last three months the new parameters seems to be +/- 30 as an overbought/oversold level. Note: the +30 barrier has become a very strong resistance point. Stocks outlook = Bearish/Neutral

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openingimage

Bulls Remain Undaunted – Photo from Dave’s Daily

Reading The Tea Leaves

The same Old Song – A manipulated US stock market is moving higher on stimulus, low interest rates and quantitative easing. Financials and stocks have received unbelievable support from our government and the Fed.

The MO  has worked very well over the last few months as a short term forcasting tool. The MO has made +30 a significant barrier. (see chart) So if our manipulated stock market gets too far above +30 I’d start exercising more caution.

The dollar correlation has not been as exact, but has roughly worked. So unless we see the dollar dropping significantly, we should see stocks consolidate today.

Longer term-  As long as housing prices are hurting and unemployment is high the Fed should keep flooding liquidity into the market. This greatly benefits the big shadow banks that have not had to reform the casino capitalism that had and now continues to make them rich.  All of this is bubble-iciously good for stocks.

What to watch today

UUP - (Tracking ETF for dollar)

Remember - The dollar is a contrarian indicator. Bad dollar = good stocks

AAPL –  The tech general broke out to a new high and continues to trade above those levels.

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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).

Current ETF Positions. (oldest held positions listed first)(see comments section where all trades are first announced)

  • UWM (1/2 position, took 5+% profits already) Up @ 10%
  • REMX (1/2 position, took 5+% profits already)  Up about 8%
  • DBC Up about 1 %.  Of the group of commodity ETF, I think RJA is the best. Therefore, going to sell this position in any small rally.
  • RJA Up about 2%.

Commodities are being driven higher by inflation fears in emerging markets. The Fed’s POMO program/QE#2 is a/the major driver of this.

Considering an even higher leveraged ETF for small cap stocks TNA (see below)

UCO -(2x oil prices)  Wait till it consolidates lower  and returns to pre Egypt crisis levels or below.

REMX (Rare Earth ETF) – Really believe this a good long term holding. Considering buying more on a dip today

DGP – (ETF is 2X gold) .

DBC – (Commodities ETF) For a more complete list of commodity ETF’s see POSITIONS listed at top of blog  DBC is tilted to energy. Perhaps preferable or a good alternative would be *DJP that is more agriculture and metals or RJA (all agriculture)

RJA (Agriculture commodities Index)An  ETN, not an ETF.

UWM (2x small cap stocks) TNA (3X small cap stocks) Would add TNA on dip

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.“ (YSL#4 is under construction.)

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!


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