Recession or Depression, Thoughts and Commentary

There is much to talk about, and many recommendations within this commentary. As the market corrects in coming weeks or days we see a number of buying opportunities.

For Conservative investors, consider:

Evergreen Investments Large Company Growth Fund

7.6% in Google, 7.4% in Amazon, 6.8% in Visa, 4% in UPS, 4.5 % in Oracle. Are just part of the top holdings that had it reach 63.07% growth last year, with a 5.38% year average.

This is a great mutual fund for a new subscriber that wants to buy a well diversified stable fund.

Now some “facts”

· 4100 executives, directors, and analysts chose these 10 as the most admired companies:

1. Apple

2. Google

3. Berkshire Hathaway

4. Johnson and Johnson

5. Amazon

6. Proctor and Gamble

7. Toyota

8. Goldman Sachs

9. Wal-Mart

10. Coca-Cola

· The total household debt in 2009 was 13.5 trillion, doing a proportionately good job to our national debt.

· Christopher Hayes in Fortune sounds just like Floyd, but nicer:

“In the past decade nearly every pillar institution in American Society—whether it be GM, Congress, Wall Street, Major League baseball, the Catholic Church, or mainstream media—has revealed itself to be corrupt, incompetent, or both.

And at the root of these failures are the people who run the institutions, the bright and industrious minds who occupy the commanding heights of our meritocratic order. In exchange for their power, status and remuneration, they are supposed to make everything operate smoothly.”

From Floyd: Simply put, we believed the fucks were in charge and were protecting us. We will now, and being fought all the way by the above, have to reform our institutions to reconstitute a more reliable and democratic form of authority.

However, Hayes says, “scholarly research show a firm correlation between strong institutions, accountable elites, and highly functional economies, compared to mistrust and corruption (what we have now) that creates mistrust and corruption, meanwhile, feed each other in a vicious circle.”

If our current crisis continues we risk a long and ugly process of “de-development: higher levels of corruption and tax evasion, and an increasingly fractured public sphere, in which both public consensus and reform become all but impossible.

In fact, a recent ad tells us “Achievement very rarely happens while doing yoga on a hilltop at sunset”.

Then, what is achievement?

Wilbur Ross: “I think a big opportunity is coming in the municipal bond market. Even if it doesn’t default, some state or local government will come close enough to scare everyone to death. That will be a wonderful buying opportunity”

Any of the Vanguard Municipal Bond Funds, either by your state and tax exempt, or general grade bonds, should be considered for their low fees and “index” management.

Are you shocked by Wall Street’s role in the now known Greek Debt Debacle? You shouldn’t be. This is how the big banks grind out the profits, on falsified financials and hiding data. After they did this Goldman and the boys actually placed bets that the debt wouldn’t be paid.

Remember this when you realize that 80% of the bills and cabinet posts Obama has tried to build or get through are NEVER EVEN VOTED ON, but held in some form of evil GOP filibuster to make an administration look as if they have done little right, when in reality they are thwarted by those (the GOP) that actually care less about their country NOW, but more about being the majority again in 2012.

We believe there are deep value opportunities in insurance stocks, which were beaten down because of their exposure to the subprime crisis, and commercial real estate. Many of these companies used to trade at 1.5 to 2.0% times earnings, but now trade at .75% of book value

Principal Financial Group, Des Moines, Ia, is a well run, conservative insurance company with no dirty hands that have touched it.

· We would recommend PFG at market with a PNF stop loss of 18.50 to 20.00, or double buys at these support lines for a long-term hold.

PFG will be held in our core portfolio.

Students of the future should be studying Africa, the new frontier for growth. More companies are cultivating change by making sure their investments are inclusive and sustainable in Africa.

They are figuring it out.

Bankers remain upbeat about the economic outlook for Africa a year after a drop in demand for commodities hit it. Longer term the need for commodities Africa holds will shift cycles in the laws of supply and demand.

Africa comprises 20.4% of the Earth’s landmass, and GDP growth keeps Africa in a positive relation to BRIC nations.

In the world of mobile telephony, Africa is the last great growth frontier, where penetration rates are 40 to 50%. MTN Group (MTN), which trades on the South African exchange, and over the counter as MTNOY. This is fast growing, cheap, risky value stock. Value stocks are typically not risky, but MTN faces the rivals of a burgeoning and confusing African economy, which we think is also the next international growth frontier

· MTNOY is so unknown it’s not yet even listed as a Pnf Chart, but it is not unknown around the world. It showed a 70% growth last year, and currently trades at $16.14. MTNOY is a value, long term play, we recommend in any speculative portfolio, using a 25% trailing stop loss.

Apple (AAPL) has hit new highs of 226.60. Those of you that joined us on our January 2011 $300 Call Leap on Apple have been pleasantly surprised already.

Holders of the stock in our portfolio have been handsomely rewarded.

This is a $300.00 stock. Buy it on any dips, or as the “world is falling” and hold.

They will have failures, successes, but Apple has CASH, brains, and thinks out of the box. They are innovators.

As an example, with Microsoft I think (control, alt, delete). They are a manufacturer, and less of an innovator.

“What has always distinguished a recession from a depression is that a stock market drop may signal a recession, but it is the collapse in debt that signals a depression” -keyturningdates.com

Do NOT Trust Facts

So many of our subscribers have requested the "more lengthy" OEX and BCO commentary, outlining the week, that we're changing our format to so accommodate.

You will see more commentary, more "definition" of the market, and more of Floyd's thoughts for the week with the Monday commentary from now on.

For example, our concern with the banks may now, in lowered mode, actually restrain the market from last year’s exuberance. Further, many Americans are now paying down credit card debt (a house of cards ready to tumble) over paying their mortgage in their "upside-down" home values.

To the experienced trader reading here I am “watching” to short the financial sector, and perhaps consider a Proshares Short REIT Fund. We are watching market conditions.

Floyd believes there is MORE downside possible in both residential and commercial real estate that coupled with finance as a languishing sector may flatten the market from any growth.

At the same time, as the gambler, I am certain that American exuberance and lack of execution (look at Congress) will continue. This actually may falsely prop the market up in some ways.

Make specific note that when using a .50/2 ratio on the Dow we can see we are a Bollinger Band top, above the moving average, and the next market tops are 10,650 and 10,700.

Using the theoretical Dow (exponential average, which is much more accurate) we believe we have seen market toppings in Friday's run up, and further upside will be predicated on "trigger news", like Greece and the Euro, or copper or oil exploding.

We have adjusted our Dow projections from our normal 21-day cycle this week. We typically project movement that could occur in up to 21 market days, but we sense from the excellent accuracy we've had in our recent Dow projections, we may be in a shorter cycle for the Dow in such movement for some time.

Study our current Dow projections on the website.

Large moves are very possible. The Euro is in deep doodah, the largest gainers in the stock market last year was Bank of America at 345%, with a close third with JP Morgan Chase at 169.3%

I've yet to find even a Republican that can explain how what uprooted us to near depression became the winners of the next year.

Our Congress, and it seems the goal of half in Congress, is simply to get nothing done, allow no votes, so that they can gain power again.

At times I am a loss for our stupidity as a nation, so spend my time "getting my share" back in trading options as I watch the fraud be perpetuated.

If you'd like to know the fraud, email me.

I like to use 30 day moving averages, and also adjust my Pnf charts, and I know some professional traders that use Fibonacci based numbers of equally weighted averages but personally find that charting to see an 89 day simple moving average can “take much of the noise” out of the market.

Netflix we believe will continue to dominate the market, and have gained enough market share to be a strong buy as a core market trade.

Buy NFLX at market price and set a 25% trailing stop loss. Use PNF stop loss lines to your risk tolerance level.

"We're paid - well paid - to cheat countries around the globe out of billions of dollars. A large part of our job is to encourage world leaders to become part of a vast network that promotes U.S. commercial interests. In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire - to satisfy our political, economic, or military needs. In turn, these leaders bolster their political positions by bringing industrial parks, power plants, a and airports to their people. Meanwhile, the owners of U.S. engineering and construction companies become very wealthy." - Confessions of an Economic Hit Man

I tire of our incessant “fear of the debt HE is creating” when for 8 years no one seemed to question the deficit increase by the nana-second.

Paying off what we owe seems prudent. But it could also wreck America’s economic future.

The U.S. has to invest and spend to build a future, to help re-create a workforce, and for now, debt is the only means to that ends.

Capitalism will NOT work by itself, as the Libertarian’s think, as capitalism itself does not work. We do not have a liberated “free trade”, but a country really controlled by less than 15 companies.

Much is often discussed that the DJIA moves contrary to the movement of the USD.

We do not believe the USD leads the DJIA, or the movement of the markets. When good fundamental data comes through, the Dow disassociates itself from the movement of the USD.

Remember, what we are often taught is not even the truth, so we lead our thinking and premises to conclusions with false information. Do NOT trust facts.