CEO for Lehman Brothers, Richard Fuld, testifies in front of the Committee on Oversight and Government Reform in Washington

Head of Lehman Brothers Dick Fuld

Friends and Enemies?

What countries do your fellow citizens look at favorably and unfavorably? Gallop Poll has some fascinating results with Canada on top and Iran on the bottom. In black and white, over the top terms – who are out top 3 friends and top 3 enemies? Interesting - 90% is the largest rating up or down.

D’s blog comment

As always check out the comments on right hand side of blog by Popeye, PaulR, D, & Doggie’s Mom on Israel and stocks. One comment is something I think or hope we all share by D -

I’m so sick of those who are blinded by their emotions and stereotype one side as all evil and the other as all good.

Seeking Alpha

Three of you last week sent me editorials/articles from this financial site.  THANKS Reality is money makes the world go around – or at least influences everything from politics to religion. One particular man to follow is Jeff Nielson – read The Plutarch nation about the huge and growing division between rich and poor in the USA – How great the tax cuts are for t he wealthy and how small they are for the Middle class.

Lehman Brothers

Turns out that Lehman Brothers was lying about how much money they had and their accountants (Ernst and Young) backed them up according to a 2200 page report. Lehman’s collapse set off the 2008 meltdown. Seeking Alpha currently has 3 stories on this, but this  Dylan Ratigan video best explains how “the crooks” scammed the world through “repo transaction ” One of the Greatest crimes in history.”

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 +0.12% up
NASDQ -0.03% down
S&P 500 -0.02% up
Russell 2000 -0.09% -

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

Technicals, Fundamentals & Analysis

See PositionsStrategy , and Overview for changes made over weekend. (No changes this weekend)

Flat day in weak volume. Volume has NOT confirmed the move higher over the last few weeks. Cutting this section short to answer YOUR QUESTIONS

  • What exactly is going elliptical? I really wish there were a clear set of exact rules to follow. Basically, its when a stocks moves too high too fast in big volume – it runs out of buyers and collapses because there is no one left to buy. This can also happen with sellers and going down too fast. This can happen interday (for day traders to use), but most of you are longer term traders than that.  Look at the charts of 3 stocks that have just gone elliptical. IMAX, C & CNAM (the later went elliptical @ a week ago. Common characteristic three or four days of a 20+% move higher in HUGE volume. Usually the bigger the climb & volume the worse the drop afterward. First off going elliptical is almost always a time to sell.  The harder question is when to jump back in. (tomorrow)
  • Are TYH and other ETF’s that do 2 and 3 times what a market basket of stock do dangerous to hold overnight? See PaulR’s always astute market comments on the right side of blog. Short answer is YES. If you look at the “candlestick” chart of TYH over the last 6 months you will find several times is opened @3+%lower and one time in late November it opened @5% lower. This puts it in the same category  as “high beta” (hot stocks) stocks like Citigroup. Citi’s chart shows a  few more days it fell over 3+% and one time in December plunged @7% overnight. There is a big risk in both.
  • SolutionFirst learn more about the technical aspect of investing. Second you can mitigate the risk by buying less.  Say you think technology is going to go up so you buy QQQQ (basically a tech ETF that mirrors tech.) THY does roughly 3X what QQQQ does. Therefore, Invest 1/3 the money in TYH that you would have in the QQQQ. It’s then almost the exact same risk in total money and you have 2/3 of your capital earning interest or for another investment. This is called leverage. And as many of you know there are a zillion other ways to mitigate risk through leverage. Some good (like this if you don’t go & over leverage your whole portfolio) and some that can get you and the world in a whole lot of trouble.

Significant Indexes

  • McClellan Oscillator fell a again to +51.09 yesterday. We are still under +60 or Overbought territory. StockCharts has a better version of the McClellan chart ($NYMO) LINK. Two weeks ago week the NYMO reached a high of 75.33. Interesting fact here NYMO is falling as stocks slowly melt up.  This is probably due to the fact that this Oscillator takes into account volume that is declining.
  • BDI - The Baltic Dry Index, which measures the cost of world trade (also a good indicator of how China is doing since they are huge exporters/importers) has exploded higher in the last few weeks. After flattening for a few days it is again starting to explode higher = Bulls rule
  • USDThe Dollar 0 Friday the dollar -0.58% and broke through a support level.  In the past there has been a strong correlation between a falling dollar and a rising US stock market. = Bullish sign

Positions

The  Positions Section = latest buys and sells – (Revised positions last weekend) - These are positions I actually own

Over the last few days several of you have sent emails with many interesting new stocks RINO, CTRP & explosive CNAM are three I’ll add to tomorrow’s watch list.

From Friday Shorter term traders – Bought a 10% (Of portfolio) position in TYH at 151.50. Put stop at that 151.5 and may sell 1/2 for 3 to 5% gain hopefully today. TYH closed at 154.99 – Sold 1/2 TYH at 156,oo for +3% gain Friday AM

Long Term Outlook = CAUTIOUSLY BULLISH

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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