Rathunas Capital

The market is selling off. Fear has spread fast about the debt crisis in Europe. I am sitting on the sidelines watching the panic. Everyone should not be in the market right now. The VIX is way to high but there is very good economic news about the US economy soI am sure it is confusing and doesn’t seem logical. The stock markets are not logical and run on emotions. Fear and greed rule.

Right now at 2:30PM EST the DOW is still under 11,000 and the VIX is over 25. This is a bad sign that the fear of the EU is affecting the mood here in the US. When fear is rampant dont try and challenge it. It goes against logic at times and you just got to go with the flow.

So right now you can sell everything you have or hold on to what you got and not buy anything. I am in cash and waiting to see what going to happen.

The fears of the Euro tumbling is driving up the US Dollar. This fear is now spreading across the world. At this moment the DOW is down 255 points. President Obama is talking about job growth and how he has kept this as the primary focus of his administration. This is not true. He wanted to get Healthcare reform done at any cost. Any ways the DOW is under 11,000 and if it closes under 11,000 this will be very bad for the short term. I will post something after the close to see what are next direction will be.

Today was what I expected. A pretty nice recovery from Fridays sell off. The EU announced over the weekend they have reached a deal with Greece for their bailout. This now keeps Greece from defaulting on their treasuries that are soon to mature this month. With that said the EU is not out of the woods but this helps the US market looking better and better to world investors. These events of good run ups and then a pull back will continue to happen through the summer. The other news is US manufacturing rose and this is very positive. This shows that business is back and there is growth. Stay in this market and buy US stocks.

I knew Ford would keep coming through as the winner for the automakers. With their debt restructuring before the fall out of General Motors and Chrysler put them in a much better position. Excellent timing on their part. Now Ford releases great sales numbers today that sends the stock higher again. I will admit I was looking at buying a lot of Ford when it was at it’s low of $1. What stopped me from loading up on Ford? I will never buy a domestic vehicle for the rest of my life. Domestic vehicles are built unreliable and the unions have tarnished the company. Their labor costs are so high and the labor they use are inefficient. Yes Toyota is having their issues with safety and this is contributing to the sales boost to domestic automakers. This will hurt Toyota for awhile to come also.

In order for you to be a buyer of F they need a better dividend yield. Yes I see this stock going to $20 but I have to believe in the company and the products they sale. You might think differently and more power to you as a investor. Believe in what your money is in.

Over the weekend I spent some time researching for some new tools, widgets and plugins for the website. I added a tool which helps with search engine optimization. This will get us noticed by the search engines and get more readers. Also in our new arsenal is a tool which will find companies and add stock quotes to them. Example Windstream Communications. More information the better for us. Any news regarding our stocks in the fund will be posted to the upper right. You will be up to date on our investments.

There will be more and more to come.

We know the fed injected billions of dollars into the economy the stave off a huge meltdown. Well with more and more positive news coming out about the economy is coming out of the woods. With the large amounts of fed money in the market and especially the banks this poses a big threat of inflation. To many dollars chasing to few items.

Just like the fed saying they have many tools to put money into the market they have many tools to take money out of the market. Without having to raise the fed rate they plan to use things like reverse repos and deposit facility. These are things the fed does without raising alarms in the mainstream media. Everyone is so focused on the fed rate because most people do not know about repurchases. The Fed is very smart and sneaky about not rocking the boat to much.

Some other key things that draws the cash out of the market and make it less liquid.
1: Not buying anymore mortgage back securities. This helps increase the yields for mortgages for home buyers.
2: Selling preferred or common stock shares of banks. While this takes cash out of the hands of investors and the Fed can simply write off some extra zeros from their balance sheet.
3: Raising the discount window rate. Making it a little bit more expensive for banks needing a boost of cash for over night lending. This higher rate costs the banks more and will come out of the system.

This really could be positive for the markets and the economy. It has to be done with moderation and done at the appropriate time. I am looking forward to following the Fed in action. This could be one of the most interesting moments in economics.

Take a look at that close on Friday at 11,008. This is a very good example of how support and resistence levels play kep roles in the market. When the market hits those key numbers it sends an immediate signal to everyone to start buying or start selling. The more times the support has been touched and bounces off the strong the support level is. If the support level has been violated it will show the market has no confidence and the market will fall. 11,000 is a big support number like 10,000 or 12,000. Those who cover the markets make a big event out of it and help psychologically stick these numbers in our head. Remember when the DOW first broke the 10,000 market several years ago? They had huge parties over it and it was plastered all over many forms of media.

I will tell you when a stock or market breaks below a support level pretty easily. Watch out! A stock falls three times faster than it goes up.

With the US market ending the day at the very bottom makes me concerned. There is a lot going on this weekend. Its just people hedging before the events. Greece bailout is number one this weekend. If there is no solid detailed plan the markets across the world will nose dive. The immediate response will be panic but for the US it would be another buying oppurtunity. Like I posted before that while the EU is having their issues we can benifit from this. This is a global economy and money can flow more easily between markets. This would be a flight to safety for institutional investors in other countries. I will be watching this event all weekend. Another kicker for the EU. Monday is a holiday for some countries and makes it a long weekend. Long weekends add to the stress of traders on Friday afternoon. This means one more day your money is tied into trade and is not available to you.

Over the weekend BP and state government officials of Louisiana will be battling the large oil spill in the Gulf of Mexico. This is really bad timing for offshore drilling in the US. Very recently the president was allowing new offshore drilling for some states. This was a very big boon for oil companies. Now this pressure from the government to look into this accident will not help. Energy stocks related to crude oil, Nat gas, and methane will be under some pressure resulting from this. Flight to saftey could be green energy stocks.

Doing some research today and looking for some new stocks to add to the portfolio. I have come across this little gem Windstream Communications WIN. You may have noticed the commercials on TV or seen their green work vans around town. I see more and more of this company every day and while doing one of my stocks scans this one comes up very high on my list. The fundamentals for WIN look great and their dividend yield is awesome for a S&P 500 stock.  The pricing and advertising also looks good for their residential and business clients. Looks like a very strong company and potential threat to AT&T for LAN lines. And we all know companies that could be a threat to larger companies could be acquired by the larger company. This stock is a BUY.