John Mugarian's Dynamic Growth

Happy New Year!

Are you ready for the new bull market? Well, you need to be patient, but here it comes!

I hate to start the year with a cynical phrase, but when it comes to the news that controls your thoughts and emotions, I want to start you off with a quote from the former comedian George Carlin;

"It's all B.S. folks, and it's bad for ya".

Hidden deep within the pages of the Wall Street Journal this weekend was this headline;

U.S. Aims to Fill Oil Reserve

You know what this means don't you? Yep, higher oil prices in the months ahead.

Here are some other Carlinism's to prepare for;

1) Your Federal Government is calling for a 10 cent hike in the gasoline tax.
2) Obama "collectible" coins and plates are being sold on TV. 12 months ago this guy was a virtual unknown. Now he is being promoted as the savior.

Like I said a couple of months ago;

"I am convinced the market and economy will drastically improve over the next two years. The last two years of Obama's first term should be great. Like I said on October 27th, "It doesn't matter who becomes President. In fact, Gecko, the GEICO lizard could be the next President, at the end of 4 years he would look like a hero, and be re-elected for a second term."

"No matter who is in the White House, the economy will be back on its feet sooner than anyone had ever imagined. With the ingenuity of American business, and the spending habits of consumers, the U.S. Economy will emerge stronger than ever."

Clearly the "Man behind the Curtain" loves Barrack Obama, and the man behind the curtain is the Bilderberg Group.

3) What's it say about a nation that is about to confirm a comedian (Al Franken/ D- Minn) for the U.S. Senate?

The bottom-line in all of this is "We are not in Kansas anymore". The market and business environment has become a kill or be killed culture. Greed and dishonesty are everywhere. This being said, we have to adjust to the current culture and play the stock market game with the same intellectual principles.

Corporate executives, hedge funds, and Wall Street crooks seem to care about only one thing...How much money they can put into their pockets. We must play the hand we are dealt. In other words, two can play that game!

Now that we know where we stand, let's get started by assuming what will happen in the months ahead;

1) Gas and oil prices will rise.
2) Gold prices will rally.
3) Treasury yields will rise.
4) The U.S. Dollar will decline.
5) China will resume their pace of growth.
6) Government stimulus will work.
7) Home prices will stabilize by mid-year.
8) Pent up consumer demand will lead to better spending numbers toward year end.

Assuming the following events occur, we will make the following adjustments to our portfolios;

Here are our Top 10 ETF's for the week of January 7th:

New Buys:

GLD: SPDR Gold Shares
USO: U.S. OIL FUND ETF

New Sells:

KBE: KBW Bank ETF- Not Rated
VTI: Vanguard Total Stock Market ETF

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

Here are our Top 10 Fidelity Sector Funds for January 2009

New Buys:

FSENX: Energy

New Sells:

FSVLX: Home Finance

1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking

You'll have to excuse the lack of frequency in my "Journal" posts lately, I've been fighting a sciatic nerve problem. I am now standing up at my desk instead of sitting. Along with medication and stretching, hopefully the problem will be resolved.

Okay, here we go!

I have several areas to cover this week, so lets get started.

Hidden away deep in the pages of the WSJ two articles appeared on different days. The first article had a headline that read, "U.S. Aims to Fill Oil Reserve", and the second headline read, "China Accelerates Filling Up Its Oil Reserves".

I've been saying for quite sometime that the "Go Green Gang" cannot accomplish their goals with oil prices at current levels. In addition to the above WSJ articles, did you happen to notice the recent jump in gasoline prices lately?

According to a recent Lundberg survey, the average price of gasoline rose nearly 12 cents in the past three weeks.

To get a jump on the next move for oil, last week we added the USO: U.S. OIL FUND to the ETF portfolio. In the Fidelity Sector Fund portfolio, we added the Select Energy Fund (FSENX).

While oil prices may not reach their 2008 highs immediately, I believe oil prices are heading higher, and by 2012, they could takeout the 2008 highs.

Next, we got news that former Treasury Secretary Robert Rubin resigned as Citigroup adviser (?). Rubin collected millions at Citi which was just a license to steal. Citigroup is rumored to be in talks with Morgan Stanley to combine its brokerage operations. The brokerage business has bee dying for quite sometime. I advise you to get the heck out of Dodge while you can. I saw this coming years ago.

In reality you do not need to house your brokerage account with a Wall Street firm. This includes the banks who bought the brokerage operations of Merrill (Bank of America), A.G. Edwards (Wachovia/ Wells Fargo), Morgan Keegan (Regions Bank), J.C. Bradford/ PaineWebber (UBS) etc... The conflicts of interest are just too huge. My advice is do it yourself or find a quality independent rep. This is a major step towards leveling the playing field for investors.

Going forward, you need to be patient. I'm convinced that the Obama Administration will be engaged, and change the public sentiment from negative to positive in the weeks and months ahead.

VP Dick Cheney made a stupid comment the other day in the WSJ. He was defending the Bush Administrations handling of the economy saying that "no one saw this economic downturn coming". Oh, really Dick? Then why in 2006 did President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

I think they knew it was coming, and here is an article I wrote on the subject on November 2, 2006.

Here are our Top 10 ETF's for the week of January 12th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

Here are our Top 10 Fidelity Sector Funds for January 2009

1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I received my weekly issue of Barron's today, and I was pleased to see that the guru's on the infamous Barron's Roundtable were collectively bearish.

If you have been around this business as long as I, you go out of your way to look for reliable contrarian indicators. The group encompassing the "Roundtable" is known for their myopically bullish tilt. Oh, but this year, they are singing a different tune.

My early training as an investment adviser lead me to the conclusion that consensus views are rarely right, and when too many people are moving their deck chairs to the sunny side of the boat, it is often wise to seek a spot on the other side, and wait for the sun to come to you.

A year or two ago, "The Knights of the Roundtable" were singing the Asian investment tune. Now that we have a repeat of the "Asian Flu" stock market crash of the 1990's, the historically bullish group is taking an emerging market beating. No word in Barron's on last years bullish Asian bets.

Yesterday, the stock market continued to work off its short term overbought position. The financials led the retreat as Bank of America sold off on fears the bank will report a loss and cut its dividend.

Today, the Dow and Nasdaq traded in a fairly narrow range, but energy stocks rebounded as the price of oil rose for the first time in a week. Saudi Arabia said it would produce less oil than its OPEC quota, and remember the U.S. and China are once again adding to their petroleum reserves.

The CBOE Volatility Index (VIX) is getting back into an attractive buying range. The index has now risen 25% from its January 2nd low.

The S&P 500 has given back more than a third of its advance from the November 2008 lows and is approaching near-term support in the 860-850 area. My guess is we will hold, but if we don't, the next level of support is around 815. A break below these levels could set the stage for new lows.

For now, A Bearish Barron's may mean a Bullish market!

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Oh, how perfect would it be? The stock market sells down near the 2008 lows just prior to the Presidential Inauguration, and then, the skies open up, hopes emerge, and the stock market mounts a huge rally.

The wooing of the American people is well under way. Consumers are seeing ads for Obama coins, plates, t-shirts, posters, and just about anything you can imagine. The media loves this guy, and his success is almost assured.

I hate to bring this up again, but I have to reiterate a quote from the former comedian George Carlin;

"It's all B.S. folks, and it's bad for ya".

I have very little doubt that the stock market and economy will drastically improve over the next two years.

Much has been made of the January Barometer (so goes January, so goes the year). We are still a few weeks away from months end. Lucien Hooper, a Forbes columnist and Wall Street analyst in the 1970's had a better indicator for the markets.

Hooper found the December Barometer to be more reliable than the one in January. Hooper found that if the Dow’s December closing was violated, then look out below. In 2008, the Dow’s December low was 8149. On December 31st, the Dow closed at 8776. As of 10:13 cst the Dow sits at 8152.

Let's see how January goes.

Today, the markets opened lower on concerns of more losses in the banking sector, and lower consumer spending. The good news however is mortgage applications were up 17%. This means lower mortgage rates for consumers, more disposable income, and more fees for lenders. No word yet if those new mortgage applications had anything to do with working off the bargain real estate inventories.

Yesterday, Fed Chairman Ben Bernanke said the government is considering buying troubled assets from banks, and the European Central Bank and the Bank of England are in the process of helping their banking system as well.

Crude oil prices look as if they are putting in an important bottom.

Until we get closer to the day of "atonement" (Presidential Inauguration), continue to expect a very testy market.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Well, it was another interesting day in the most corrupt financial system in the world.

The day started out pretty normal after news broke that Bank of America is asking for more government aid to buy a shyster brokerage firm. If I were BAC's CEO- Ken Lewis- I'd back out of the Merrill deal and let them go tits up.

Another group of shysters (CitiGroup) announced they are basically insolvent and want to break up the company.

In my book you are either a shyster or a loan shark if you charge more than 10% for a credit card while the fed funds rate is at a half a percent. Of course the people who allowed these rates to be legal (only for a chosen few) are shysters too (congress- law makers).

The news media keeps tripping over themselves regarding another shyster- Bernie Madoff. A shyster Judge in New York said that Madoff could remain free on bail as long as he stays in his Manhattan penthouse apartment. The media wants to know how many fund of funds were involved in funneling money into his Ponzi fund. All they need to do is follow the trail and they'll see a trail of blood running fro, Palm Beach to New York.

I could go on and on (Lehman, Bear Stearns, etc), but you're probably as sick of this as much as I.

As far as doling out punishment, I reiterate that we need to ship these characters off to China and let them handle it. We may have laws here in the U.S., but they obviously are not severe enough to deter the crimes.

China executes their financial criminals;

9:44 a.m. ET Sept. 14, 2004 BEIJING - China executed four people, including employees of two of its Big Four state banks, for fraud totaling $15 million, the Xinhua state news agency said on Tuesday, amidst a high-profile campaign against financial crime.

Wang Liming, a former accounting officer at China Construction Bank in the central province of Henan, worked with others to steal 20 million yuan ($2.4 million) from the bank using fake papers, Xinhua said in a report on its Web site. An accomplice, Miao Ping, was also executed.

A nation of laws, justice and decency would allow someone like you and I to walk down the streets of any major city without fear of being beaten, robbed or killed by gang members. What we are dealing with now is a white collar gangs, and gangs that rule the streets of many inter cities.

As a kid my grandparents would take me all over the City of Detroit. The place was clean, the people were nice, and we had no fear of being robbed or murdered. Today however, Detroit (and many other cities as well) is a cesspool of filth, crime, and only compares to a downtrodden third world country.

In short, "We Don't Live in (America) Kansas Anymore".

Today, the stock market put in a mini-capitulation. The set-up is in place for an Obama rally next week.

The Dow was down as much as 205 points on concerns that Bank of America need more government money to pay for its rescue of Merrill Lynch. Citigroup sold off on rumors the government may step in and take over the bank.

Apple Computer shares closed down after CEO Steve Jobs said he was taking a leave of absence because of health reasons.

The mood is clearly as gloomy as it gets. This is a great point of entry for President Obama, and may mark the end of the nations pessimism. Let's see what happens in the weeks ahead. Is there a major mood change coming?

To say the events over the past 18 months are bizarre would be an extreme understatement. What does accurately describe the situation is Warren Buffett's famous quote;

"You don't know who has been swimming naked until the tide goes out..."

In every mania, or can't miss bull market (stocks, real estate, or tulips), you'll find liars, crooks, and con men. Since the year 1999 to present, we have seen these people show up in the last two bubbles.

Oddly, the bubble of 2008 has yet to uncover any of the above. That so called bubble may not have been a bubble after all. I am talking of course about the huge run up in oil prices.

According to some of the research I follow, the supply and demand equation has not changed. What has changed is the price of oil, but not the demand.

The price of oil has dropped over 70% since the peak in June 2008. While the price of crude dropped dramatically to reflect a dramatic deterioration in the economic outlook, the drop in demand worldwide does not accurately reflect the difference in price.

The new bubble, in my opinion, is the bubble in economic and stock market pessimism. Everyone seems to have a gloomy outlook or opinion. Those who are mildly bullish seem to always temper their opinions with caveats.

It's easy to get caught up in the moment of popular opinion. This happens in economics as well as social situations. Clearly, the majority are most pessimistic at market bottoms, at precisely the wrong time. Of course, the majority is right when the gloom is thick, but they, like momentum traders, eventually have their hats handed to them when the tide eventually turns.

In times such as these it's important to tune out all the rhetoric and opinions, and rely on a method we all know well- listing the positives and negatives. Here's my list;

Positives:

Monetary Policy
Valuations
Energy Prices
Inflation
Fiscal Policy (coming)
Geopolitics (coming & improving)
Sentiment (changing)

Negatives:

Liquidity
Economic Activity
Corporate Earnings

2008 was an ugly year, and various asset classes were torn apart reflecting a depression when in reality we are going through nothing more than severe recession. Here are some asset classes performance in 2008;

Large Cap U.S. Stocks: -37%/ Worst Since 1931
Small Cap U.S. Stocks: -34%/ Worst Since 1937
High Yield Corporate Bonds: -26%/ Worst On Record
Real Estate Stocks: -38%/ Worst On Record
Emerging-Market Stocks: -53%/ Worst On Record
Treasury Bonds: +14%/ Best Since 1995

Frightened investors have fled to Treasury Bonds setting the stage for the next bubble. Jim Rogers was recently quoted that " anyone chasing the rally in government bonds is making a "terrible mistake."

Today, Barrack Obama has taken the oath to become the 44th President of the United States. He was greeted with a 200 point decline on the DJIA over the health of the financial sector.

Here's a tip Barrack. Get rid of the mark to market accounting rule and watch what happens.

Here are our Top 10 ETF's for the week of January 20th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

Here are our Top 10 Fidelity Sector Funds for January 2009

1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Addendum:

Alert**** Bank of America insiders just purchased sizable positions in their stock- See List

Here we go again. On August 31st, I posted an article entitled; "Wal-Mart: Sorry Merrill, you're wrong again!"

If you click on the Wal-Mart story above, I gave my reasons why I thought the stock would do well.

Today, another snot nose analyst (Jason Feldman-UBS) decided he wanted to join the "I don't know what I am doing crowd" as he lowered his short-term rating on General Electric to "sell".

With the stock trading at multi-year lows, Feldman said they were "placing a short-term
Sell rating on GE to reflect what we believe is additional downside risk over the next few
months".

Now that I have a few years under my belt, let me make a few observations. GE is now in the kill zone (buy zone). At these levels the stock is clearly in the accumulation zone. If the stock goes lower, you add to your positions.

With the stock now trading below $13, the RSI (Relative Strength) numbers are all flashing "buy". Check out today's below "30" list on RSI7.com.

Even if GE AAA rating is reduced to AA, and talks of a dividend cut are valid, now is the time to step up to the plate and build a position. If it goes lower, great!

I don't know if GE will go into the single digits or not. Anything is possible when your dealing with one of the most corrupt financial markets in the world. What I do know is this is a major conglomerate with business spread broad and wide.

Return on Equity

1999: 26.32%
2000: 27.37%
2001: 25.99%
2002: 23.82%
2003: 21.00%
2004: 17.52%
2005: 14.89%
2006: 18.79%
2007: 19.49%

Price/Book:

1.1

Insider Activity

2008-11-19/ Larsen Ralph S Director- Buy 30,000 at $14.76 - $15.83 per share.
2008-11-13/ Immelt Jeffrey R Chairman and CEO- Buy 50,000 at $16.41 - $16.45 per share.
2008-11-13/ Neal Michael A Vice Chairman- Buy 50,000 at $14.99 per share.

Former Chief Executive Officer of the New York Stock Exchange, CEO of Merrill Lynch, and another Blue Blood from Goldman Sachs was fired today by Bank of America's CEO Ken Lewis.

I wish I could have been a fly on the wall when Lewis found out how dire the situation at Merrill really was. Obviously he was mislead. Here's what Mr. Lewis probably wanted to say to Thain, and his other Blue Blood brother, Treasury Secretary Hank Paulsen.

"Well you scumbag pieces of s***. All you Goldman guys are a bunch of suck*** crooks. You, and the rest of those crooked investment banks in New York should have gone tits up years ago. You people have been taking advantage of investors since the markets began. If you didn't have every politician in Washington in your back pockets, you would be facing a firing squad for treason. Same goes for the former Goldman guy that just left CitiGroup. You crooked bast****.

Thain, your out. Get the hell out of this building before I have you thrown out of the 34th floor window."

Now I'm just guessing that this is what Ken Lewis wanted to say. I sure as hell would have said it.

As to how to handle these and other investment crooks in New York, here's what the Chinese did to a guy who was responsible for the tainted milk scandal that killed six children. What do you think should be done to the crooks that almost bankrupted the U.S. economy?

Today, the DJIA closed down 105 points after being down as many as 271.

The tone was set after Microsoft and Nokia reported earnings that weaker than expected.

December housing starts dropped to their lowest level since 1959. First-time claims for unemployment benefits matched a 26-year high.

It looks as if Tim Geithner will be confirmed as Treasury Secretary after today's Senate vote.

Bank stocks began to show a positive tilt after Bank of America's Ken lewis, and JP Morgan's Jamie Diamond spent millions buying their company stock.

Tomorrow, we wait for GE. Could the bad news be taken as good news?

Can it get any gloomier? For those who follow the markets historically, you know that Bear Markets have five stages of grief:

1) Denial
2) Anger
3) Negotiation
4) Depression
5) Acceptance

I happen to believe we are current towards the tail end of the market downturn, in the 4th phase which is depression, and quickly approaching acceptance.

Along with this five stages comes three stages of how to profit from the stock market;

1) Buy/ Accumulate
2) Hold
3) Sell/ Reduce

With the Dow Jones Industrial Average down 43% (8025/ down -6099 points) from the 2007 highs (14124) I am of the opinion that we are currently in a major buy or accumulation stage. In 2007, when the DJIA was at 14124, we were in the Sell/ Reduce stage. It is never wise to get completely out of the market, but reducing your holdings during periods of euphoria makes sense.

As I thumb through the Wall Street Journal daily, I am amazed by the barrage of negative headlines. Two years ago, you couldn't find a negative headline. The lessons here are very simple. When all the headlines are positive, sell. When all the headlines are negative, buy.

Simply put, good times don't last forever, and neither do the bad. So, there are basically two scenarios that could unfold at anytime.

1) We here the words "the worst is over". The news will still be bad, but buyers will enter the market on a feeling that things will not, or cannot get much worse.

2) Massive amounts of cash waiting on the sidelines decide stocks are too cheap and should be bought.

Both of these events took place on March 11, 2003 when the DJIA didn't retest their October 9, 2002 lows, but instead sold within 200 points of those lows creating a massive reversal, and a 3-4 year run to the upside.

The 2002-2003 market mood was very similar to the one we outlined above. The markets mood went from depression, to acceptance, nobody panicked, and the market reversed its trend.

As is the case today, and was the case in 2002-2003, and again in 1997, the DJIA reverseed its downward trend after breaking below 7500.

Panic Lows:

April 11, 1997: DJIA 6358
October 9, 2002: DJIA 7286
November 20, 2007: DJIA 7506

Here are our Top 10 ETF's for the week of January 26th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) EEB: Claymore ETF BNY BRIC
6) DDM: Ultra Dow 30 Proshares ETF
7) GLD: SPDR Gold Shares
8) IYF: iShares Dow Jones US Financial Sector
9) PGJ: PS Golden Dragon China Fund
10) SSO: ProShares Ultra S&P500 Trust

Here are our Top 10 Fidelity Sector Funds for January 2009

1) FSCHX: Chemicals
2) FBIOX: Biotechnology
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSPTX: Technology Portfolio
6) FSCSX: Computers & Software
7) FSCPX: Consumer Discretionary
8) FNARX: Natural Resources
9) FSENX: Energy
10) FSRBX: Banking

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

You've heard all of the terms before; support, resistance, "Mr. Market". What does all of this mean and who decides whether a support level is penetrated, or a resistance level now becomes a support level?

It's all very easy if you know who Mr. Market is.

Support and resistance levels are predetermined. They are determined by the infamous Mr. Market who has the ability to control program trading. Massive amounts of stock can be bought or sold by just pushing a button.

Mr. Market is obviously the computer trading programs owned and operated by large institutional investment companies. By simply pushing a button, the can set off a massive selling panic, or create a euphoric buying climate.

So, who are these guys? Who is, Mr. Market?

As thousands of employees continue to get laid off, there are a group of people who run a virtually unregulated and uncontrolled business that allows them to ruin lives and wiped out 401k's with one push of a button.

In uncertain times (like today), big time button pushers can trade the markets, make huge profits, and at the end of the day, the market foes nowhere.

Here is an 2006 article by Brett Steenbarger that explains this type of trading- TraderFeed.

Here is an article about a program trader at the bank Societe Generale in France that caused a large drop in the equity markets, and caused a $7.2 billion loss- CNN.

Here are some of the more influential program traders in the U.S.;

Goldman Sachs & Co.
Merrill Lynch
Credit Suisse Securities, LLC
Barclays Capital, Inc.
Morgan Stanley & Co. Inc.
Deutsche Bank Securities
UBS Securities, LLC
JP Morgan Securities, Inc.
Citigroup Global Markets
RBC Capital Markets Corp
CIBC World Markets Corp
Nomura Securities, Inc.
BNP Paribas Brokerage

One conference call to these firms from the Treasury Department can fix all that ails us. One massive stock market rally that holds its gains, can set off a fireworks display that would make shorts run for cover, and attract cash from the sidelines as well.

In past bear markets, this is how a new bull market phases got started.

Since January of 2008, program have favored the sell button over the buy. This game is getting a little old, and they have gotten the gloom level about as high as it can get. Now that no one believes the stock market or the economy can recover anytime soon, they may be in the mood to change the trend.

Yesterday, Caterpillar (CAT) said it would eliminate 20,000 jobs, Home Depot (HD) said it will shed 7,000 jobs, Texas Instruments said it would cut 3,400 jobs, and Pfizer (PFE) said it will cut its dividend in half.

American Express (AXP) reported a 79% drop in fourth-quarter profits, but this was better than many had expected. Verizon's (VZ) earnings came in as expected.

Timothy Geithner was confirmed and sworn in as Treasury Secretary.

Gold prices fell back under $900 an ounce, while crude-oil futures were trading around $46 a barrel.

For now, staying long, looking for more bargains, and waiting for the big boys to push the "buy" button.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

Please don't be fooled by what you hear from the media, or our government. The so called Obama Plan to create a bank run by the FDIC has been in the works for quite some time. Former Treasury Secretary Hank Paulsen has known about it, and so has incoming Treasury Secretary, Tim Geitner. The only people who were kept in the dark were...you and I.

With all of the hoopla surrounding the election of Barrack Obama, there was no way the powers behind this guy would allow him to fail. I said it in October, and again in November, that at the end of Obama's first term will look like a hero, and the nations savior.

Don't look for much crazy liberal stuff coming out of this administration until the economy recovers. After the recovery, and in his second term, the craziness will begin. In fact, if Obama was a stock, I would begin shorting him four years from now.

You need to understand that the same people who owned G.W. Bush, own Obama. That's it in a nutshell. The rest I'll leave to your imagination (Bilderberg/ Ron Paul).

I always have faith that out of despair and ruin, plans are always devised to dissolving the crisis. Along with the cures come consequences. At this stage of the game I am not sure what the consequences will be. I have a hunch, and here are a few thoughts;

1) Everyone knows that bailouts lead to more debt. After an initial recovery in the economy and stock market will come a declining U.S. Dollar, and massive inflation.

2) The effects from a dollar collapse will lead to higher interest rates which may be one reason why Paul Volker was added to Obama's administration.

3) The objective for G.W. Bush as laid out by the "One Worlder's" was the Security and Prosperity Partnership (SSP)/ North American Union meeting with Mexico’s Vicente Fox, and Canadian Prime Minister Paul Martin in Waco, Texas.

4) The objective for Obama, after an initial economic and stock market recovery, is to deal with the problems of runaway inflation and a collapsing dollar (second term).

5) Obama's cure for massive inflation, skyrocketing interest rates, and a dollar collapse will be the end of our national currency, and the introduction of the new North American currency called the Amero.

6) The Amero will be hailed as the cure for what ails us.

As ridiculous and impossible as all this sounds, the same thoughts went through the minds of the citizens in Europe prior to the introduction of the Euro. There will be opposition, and plenty of upset people, but the massive pain induced by a collapsing dollar and massive inflation will have many Americans begging for a cure.

The cure the "One Worlder's" have in mind is a new currency. They always seem to get their way by spreading fear among the American people. In order to control people, the tactics used are keeping people scared, and demoralizing them. In order to keep them scared and in-line, they must have a massive amount of debt, and so far, the idea has worked.

I am just speculating that these events will take place during Obama's second term. I am hoping it doesn't happen any sooner.

On October 19, 2008, Vice President Joe Biden made the comment;

“Mark my words. It will not be six months before the world tests Barack Obama like they did John Kennedy. We’re going to have an international crisis, a generated crisis, to test the mettle of this guy. And he’s going to need help because it’s not going to be apparent initially; it’s not going to be apparent that we’re right.”

I hope he didn't mean the currency problems would begin that soon.

So, as an investor, how do you play the events above if they unfold as we think;

1) You sell your stocks over the next four years during the secular bull run.
2) Call a company like EverBank, and begin positioning yourself in foreign currencies like the Swiss franc, and other currencies.
3) Here is a blog that follows the comments from the famed investor, Jim Rogers. Rogers has moved out of the U.S., and has plans to move all his dollar denominated assets into other currencies and assets.

The key to successful investing is not to be blindsided, or played as a fool or a sucker. Despite the massive amounts of information on the internet, don't you find in odd that not all of the information you need is included?

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

As the market continues to attempt to get up off of the mat, the bear continues to pound the poor bull with a series of hooks, and uppercuts. Attempting to guess where the market is technically is an attempt at guessing where the magician is hiding the rabbit.

This said, a market without leadership constantly disappoints. Magically, with help from the media, pessimism has re-emerged convincing investors that lasting damage has occurred to the major indexes.

If the historical pattern hold true, stocks can be expected to move higher six months prior to a bottom in economy. Pessimism is now widespread, as the AAII survey of individual investors remains above the more optimistic readings that we saw earlier in the month.

The real contrarian tales continue to surface daily on our TV sets, and radios. Adds encouraging the public to buy gold and sell stocks continue to pound the airwaves. News talk shows are telling people to stock their pantries with food, and get ready for Armageddon.

While the negative tone can last as longer than we would like, we need to understand that the bullish tone last much much longer than it should have as well.

I find it amusing that lenders are surprised that consumers cannot afford to payback their credit card debt and mortgage payments. I am actually enjoying watching these scumbags squirm after they gave exorbitant credit limits to people who didn't have the propensity to payback the loan.

I was trying to council an 80 year old man whose only income was a $1400/ month social security income. You may not believe this, but he had over $2000 on 8 different credit cards along with an $18000 debt on his personal credit-line.

The credit card culprits were the following;

1) Two (2) Bank of America credit cards with a credit limit of $3500/ card.
2) Two JP Morgan Chase cards with a credit limit of $3000/ card.
3) One Discover card with a credit limit of $3500.
4) Two Mastercards, 1 being an AARP card with a credit limit of $3000/ card.
5) One Visa with a credit limit of $3000.

These loan sharks know when they do a credit check what a persons debt/income ratio is before they extend credit. Now they are scrambling to get consumers to pay what they owe after extending excessive credit in hopes to receive the minimum payment along with a 20% plus interest rate. What scumbags!

In the end, they had to be complete morons to believe they would ever get their money back. Did they really believe people were honest enough, or honorable enough to payoff these loans? The same goes for lenders who issued no money down mortgages.

So, to you idiot lenders. Here's what you should do. Go get some TARP.

T- Too
A- Asinine
R- to Render
P- Payment

Today, the Dow and S&P 500 gave back all of yesterday's gains, and then some. The number of Americans receiving unemployment benefits soared to record levels while Eastman Kodak and Allstate lost money and cut jobs.

The Commerce Department said that new home sales dropped to the lowest level since they began keeping records in 1963.

Despite all the gloom, the Obama administration is close to implementing a plan to buy up toxic assets from banks' balance sheets, which will in turn jump start lending again.

I have not spoken to one person who is optimistic about the future of the economy or the stock market. This is why I am bullish.

"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

I am reading several books right now. The one that currently has my interest is "The Snowman", a book written on Warren Buffett, with the help of Warren Buffett.

In the book, Buffett talks about his days as a stockbroker, and how the many conflicts of interests (them versus us) really soured his view on the industry. In particular, Buffett points out how brokerage firms become market makers and trade for profit against the client.

For example. We know someone pays a commission when you trade a stock, but if the firm is also a market maker in the security, some big money can be made for the firm on the spread. The difference in price a firm pays for a stock, and the price an investors pays can either be narrow or huge.

This got me thinking.

After reading several books on the subject, and talking with my friends in the industry, I finally figured out how Wall Street can give away such big bonuses, and make such exorbitant profits during bull markets.

As Wall Street firms moved from being brokers to trade against the investor for their own accounts, I learned something about the system.

In the book, "Wall Street Meat", written by Andy Kessler, the book reveals how much influence Wall Street firms have with how much news influence (positive as well as negative) they have with the media. They can put out positive and negative news (true or not) which eventually influences investor sentiment and behavior.

Why do they do this? To make a profit, a huge profit.

So, if a Wall Street brokerage firm has the ability to influence investor sentiment and behavior, while at the same time trade against the investor for their own account, don't you think there is a built in profit potential here?

Let take the above example and apply it to today's market.

In today's "Daily Report" from Bill Cara, Bill in his CTAB trader "Commentary" honestly lays out how the Wall Street Gang plays the game;

Just like a big ocean liner, the stock market needs time to change directions, to transition from obvious Bear to obvious Bull. Large syndicates or pools of money need time to accumulate positions, their lines so immense that multiple brokers are used to complete the order, and many sell-offs needed to buy into weakness. These buyers have a vested interest in obtaining the shares at the best possible prices with as few investors on board as possible, so stories have to be floated (sorry, I mean broken by responsible reporters) in major media outlets in order to create fear, panic, hopelessness, and finally apathy so they can acquire such large amounts of stock.

Bill has been around the block more than once, and this guy knows what he's talking about.

Now, let's get to the (massive) profit side of the equation.

A Wall Street firm who can trade against the investor for their own account, as well as influence investor sentiment and behavior may be using the current market environment to accumulate a huge position in blue chip stocks.

For this discussion, we'll use Blue Chip Stocks A&B.

1) Blue Chip Stock A

-widely held, and highly liquid.
-24 month high /$41
-Current Price/ $12
-Accumulate massive position
-Unwind position as market maker from own account at $$20-$40 over the next 3 years.
-Built in profit- HUGE

2) Blue Chip Stock B

-widely held, and highly liquid.
-24 month high /$62
-Current Price/ $117
-Accumulate massive position
-Unwind position as market maker from own account at $35-$60 over the next 3 years.
-Built in profit- HUGE

You can tell that this proprietary trading is taking place when you read or listen to the quarterly earnings reports of the Wall Street firms. I urge you to do this, in particular look at the revenues generated from "Trading and Principal Investments."

So, how do you play this game?

1) Have the TV on mute when watching the financial channels.
2) Make up you ind if your an investor or trader.

a) trader trades monthly, weekly, or daily
b) investors buy and hold for 2-4 years.

3) As Bill Cara says above;

Just like a big ocean liner, the stock market needs time to change directions, to transition from obvious Bear to obvious Bull. Large syndicates or pools of money need time to accumulate positions, their lines so immense that multiple brokers are used to complete the order, and many sell-offs needed to buy into weakness.

This is how you play the game.