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China

For well over a decade the big government, tightly managed, Chinese capitalist system has kicked ass.

Their GDP in past quarter was above 10% and its projected to stay near that lofty range.  It has obviously outperformed the casino/free market capitalism of the USA which has brought us a tech bubble and a financial/housing bubble. Both led to two major worldwide meltdowns. It has also outperformed the more socialist models in Europe, that adopted US shadow banking for their own.

China’s growing because money is flowing into a growing middle class while that same middle class is shrinking in  the USA.  In fact every democratic and capitalist economy from India to Brazil that is outperforming ours is growing their middle class. Perhaps China can manage to slowly cool down. Perhaps not. If the Chinese bubble bursts, so will economies around the world.

The problem here is this one party state that does not foster Democracy.

Elections

Primary Day in a dozen states across USA. Some results

  • Most under reported is Prop 14 passed in California – “will give every voter the same ballot in primary elections for most state and federal races, except the presidential contest. The two candidates with the most votes would advance to the general election, regardless of party affiliation.” - Interesting.
  • Blanche Lincoln won in AK. There was a progressive challenge that fell short. I love Lincoln’s derivative bill and hope it passes congress.
  • Harry Reid got who he wanted to win in NV – The Tea Party candidate that wants to store nuclear waste in Nevada. He had little chance against her opponent in polls.
  • For more see Huffington Post

Robert Kuttner

Scorecard on Financial Reform

This week/today we get to see what financial reform will look like when it is voted on. Many of what was necessary will be stripped. The Banking Showdown by Robert Kuttner is an excellent source on this.

Your Comments

Some Great threads going in comments section. See comments on right side of blog

  • Paul R educational insight and others on stocks. – continues
  • Jim J., John S. & Popeye on Israel – Looks like they settled on an International group should look into incident. Perhaps so, but Israel will never agree.
  • Yankee Bob and others on BP – Got caught in a BP on line 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 +1.26% up
NASDQ -0.15% up
S&P 500 +1.10% up
Russell 2000 -0.13% -

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

Technicals, Fundamentals & Analysis

US markets looked over the cliff, decided not to jump and backed away in increased, above average volume = Bullish

US Markets rallied into the close = Bullish

From Yesterday – “There is two interday lows that were lower this year – the lowest at 1040.78 (see chart) This is the line in the sand major support level for most technicians. Breaking this could open the DANGER WILL ROBINSON DANGER DANGER Floodgates. For right now it’s holding = Bullish

We went down to the line in the sand for the second time since it was established as the yearly low in February. It held. Technicians call this a triple bottom and get excited. Fundamentally this held because the dollar fell. That’s what to focus on. But the fact that it held = Bullish

Financials was one sector that led this rally (+2.09) Weak financial reform likely outcome in congress. Materials was the other sector (+2.27) = Bullish

Significant Indexes

  • McClellan Oscillator rose yesterday to -28.47 [+60 or above = Overbought = sell. -60 or below = Oversold = buy]. StockCharts has a better version of the McClellan chart ($NYMO) LINK. –  & Investopedia on –  How the MO works. We are a bit overbought, but basically = NEUTRAL
  • US Dollar –  The dollar fell -0.34% [Anything over +/- @0.50 is significant.] Mantra - right now The Dollar Rules is very important. Massive breakout to new high is bullish for dollar and for bearish for US stocks. That big breakout Friday was confirmed by Monday’s +0.25% gain. The dollar fell yesterday so stocks rallied.

Reading the Tea Leaves . From yesterday-”Expect central banks to intervene and BUY the Euro to stop the growing panic….Would expect some sort of relief rally today after two days of significant price declines and strong support level in front of us. But watch out later in week.”

Strong volume behind yesterday’s rally  and a -28.47 on the MO (we are a bit oversold) indicates a rally is getting started and has some room to run.

Bottom LineThe Dollar Rules. This rally will hold as long as whichever (probably a combination of Swiss, German US, French, Chinese? etc.) keeps buying/propping up the Euro.  Short term trend = Bullish

However the long term trend is still dollar up and Euro down – For stocks = Bearish

Positions

The  Positions Section = latest buys and sells  - These are positions I actually own – Updated over weekend.

Traders – Conventional wisdom says that stocks that held up best while others got toasted are the ones to invest in if markets rally – be it for a day, two a week. But sometimes those high beta stocks from YOUR Stock List that are down the most take a big initial first step. Those from YOUR Stock List still above their 50 day moving average and turned with the markets yesterday may be worth a trade today.

  • VCI
  • SNDK
  • SAM
  • BIDU

I’m perhaps too emotionally involved, but IMAX looks good and their seems to be a good lineup or 3D movies this summer.

Financials – No real reform = Bullish

  • XLF – Investors could nibble here.
  • UYG – (2X Financials)
  • FAS -(3X Financials)

Still holding VIC, ESRX & SDS (may take profits in SDS) – Today considering positions in FAS (short term) & UUP (longer term) The later mirrors the dollar and also may be good for Investors to nibble

Long Term Outlook = CAUTIOUSLY BEARISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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