Bears Rule

The World Has Changed

We, had a huge shadow financial meltdown in the USA. A massive fiscal response that held up markets worldwide and prevented the second Great Depression. Now, the PIIGS in Europe, who like the USA created massive over leveraged debt, are melting down. The contagion is spreading worldwide.

The root cause, obviously is no checks and balances on casino capitalism which has led to over leveraged massive debtor countries (including the USA) falling even further into debt and continuing their huge opaque financial structures We have not yet fixed the too big to fail or over leveraged problem in the USA. Some consequences from the changing wolrd:

  • GDP worldwide is going to fall
  • Jobless rate in USA and other debtor nations going to grow.
  • If casino capitalism or “free markets” continue to run wild the situation will worsen.
  • BP disaster is just another example of unregulated casino capitalism and no government enforcement.
  • Democrats are in Huge trouble because they lack a coherent national leader who backs Main Street.
  • The EU is structurally damaged as is the USA
  • The core issue of too big to fail shadow financials could rip the financial structure of the world into another Great Depression.

KISS & Too Big to Fail

Giant over leveraged shadow banks are FDIC Insured. Shadows take your $, plus printed $ from the Fed & invest it in opaque, over leveraged shadow investments. Once you allow this over leveraged situation to occur on a debtor nation (latest example Greece) putting Humpty Dumpty back together again is a nightmare.

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!

Index Percentage Volume
Dow -3.60% up
NASDQ -4.11% up
S&P 500 -3.90% up
Russell 2000 -5.09% -

Investors411 record – 5 years of beating benchmark S&P 500 and almost all major US indexes

Technicals, Fundamentals & Analysis

Huge decline in significant, increased, above average volume. This looks like the beginning of a parabolic move down. Similar to the one in 2008.  Another day of selling like the last and you’d have technically a climax sell off. Then maybe some stabilization. = BEARISH

Far more than the 200 DMA has been broken on the benchmark S&P 500. Virtually all technical trend lines that show bull market momentum have fallen for all major indexes. = Bearish

Sell off accelerated into close and European markets again lower this AM. = Bearish

Dow is now off 10.5% from highs. Historically a 20% correction = a new Bear market

Today is a confirmation day of yesterday’s fall.

It’s going to take a while to sort out things in Europe and many are betting that the debt Crisis will sink the European Union. Problem in a nut shell is China, Germany & petro countries are big exporters and the rest of the world is over leveraged creditors.

Significant Indexes

  • McClellan Oscillator fell to record lows -136.21 yesterday.  [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO)LINK. - This is OVERSOLD territory. = Bullish  Hate to say this, but once the trend broke this index has become less effective.
  • US Dollar – Yesterday the dollar fell to $85.81 Down a significant -0.54% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important . . Obviously European & other Central Banks are stepping up to buy the Euro.  Looks like this will stabilize the Dollar/Euro relationship at least for now. = Bullish.
  • VIX- The “fear” index is at 45 and back in Oct. 2008 it reached 90. We have a ways to go before we reach 2008 fear levels.

Stock markets are totally ignoring their record oversold conditions and the drop in the dollar. Major trend lines have been broken. Bad reactions to good news is a powerful warning sign that the worst is yet to come.

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own

Have not had a chance to update the positions section of blog yet. Will update last weeks trades over weekend. All losses under 10%, some gains but its not pretty.

Sold remainder of UWM & ICON at yesterday’s open. Also 1/2 of ESRX & 1/2 of IMAX at open yesterday – most for losses (except IMAX). Positions below. Everything else has been sold last week or this week.

Positions  -

  • 2% IMAX
  • 1.5% ESRX

Just on a technical basis, another massive sell off in increased volume & Investors will buy back IMAX & perhaps ESRX or another stock that has held up well over the meltdown.

From yesterday – Any close below the 200DMA on the S&P 500 will change outlook to CAUTIOUSLY BEARISH We came close yesterday.

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

  • Share/Save/Bookmark