Steve Christ - Angel Publishing

Afghanistan's Biggest Bank Hopes to Join the Troubled List

According to the FDIC, the government's list of problem banks is now at its highest level since 1993.

In all according to the most recent data, 829 banks are now at the risk of failure, up 53 from the 755 from the first quarter of this year.

That's on top of the 118 banks that have closed this year including the 45 closings during the most recent quarter.

That's troublesome since the FDIC fund set aside to potentially bailout these troubled institutions is itself already $15.2 billion in the red!

But as bad as that is that's not exactly the banking story that has me so worked up today

Instead, it's the prospect of bailing out the biggest bank in Afghanistan that has me so irked today that I can barely type out this rant.

After all, everyday I ask myself what exactly in the hell is going on over there. First it's our blood and now it's been suggested that we donate even more of our treasure.

Either way, I'm certain that this stone age paradise will never be worth any of it.

As for the story it is by Andrew Higgins and Ernesto Londono entitled: Karzai's brother calls for U.S. to shore up Kabul Bank as withdrawals accelerate

“As depositors thronged branches of Afghanistan's biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in beleaguered Kabul Bank called on Thursday for intervention by the United States to head off a financial meltdown.

"America should do something," said Karzai in a telephone interview, suggesting that the U.S. Treasury Department guarantee the funds of Kabul Bank's clients, who number about a million and have more than a billion dollars on deposits with the bank.

Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan and holds the accounts of key Afghan government agencies. The collapse of the bank would likely spread panic throughout the country's fledgling financial sector and wipe out nine years of effort by the United States to establish a sound Afghan banking system, seen as essential to the establishment of a functioning economy.

Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks, too. He said Kabul Bank is "stable and has money" but cannot withstand a stampede by panicked depositors.

"If the Treasury Department will guarantee that everyone will get their money, maybe that will work," said Karzai, who holds 7 percent of the bank's shares, making him the third-biggest shareholder.

Karzai, who spends most of his time in Dubai - where he lives in a waterfront villa paid for by Kabul Bank - rushed to Kabul on Wednesday to join efforts to salvage the bank.

Treasury officials have said they have confidence in Afghanistan's Central Bank, which ousted Kabul Bank's top officials earlier this week and has sought to stabilize the bank's finances.

But those moves may have spurred a panic: Depositors, said people familiar with the situation, yanked at least $90 million from Kabul Bank on Wednesday and the hemorrhaging of funds accelerated Thursday.

"Yesterday was not too bad, but today is worse," said a Kabul Bank insider. "It is a very bad situation."

This is absolute madness I tell you.

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Jim Rogers: "They are printing too much money..."

Here's the latest word from legendary investor Jim Rogers. As usual Jim is as bearish as ever and long commodities.....

However, that is not to say Rogers is loading up on the short side.

In fact, Jim says:

"They're printing so much money that I would not be short. I have no shorts. In most of my life, I've always had a short of 2, or 3, or 16... because I'm afraid they're printing so much money that stocks will go to 20,000 or 30,000. Of course it will be in worthless money, but it could happen,"

Roll the tape....

Great stuff, Mr. Rogers.

But seriously, the Dow could go to 30K??

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Art Cashin Eyes 1066 on the S&P

As the summer winds down, here’s the latest from CNBC’s Art Cashin.

With the Labor Day holiday looming and light volume likely, Art expects a volatile week.

Either way, the payroll number on Friday promises to a big one—as usual.

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It's like getting a piece of the automobile market back in 1908.

And not just Ford either. We're talking about the market as a whole. Oil, rubber tires, road construction... the whole nine yards!

Click here to learn more.

Intel CEO Bodyslams Big Government

Here's a thought to start off your weekend.

People that can do—do. People that can't do—only work to get in their way.

Thats' the bottom line in this piece as Intel CEO Paul Otellini explains why Big Government isn't the answer.

From CNET News by Declan McCullagh entitled: Intel CEO: U.S. faces looming tech decline

“Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be "an inevitable erosion and shift of wealth, much like we're seeing today in Europe—this is the bitter truth."

Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: "I think this group does not understand what it takes to create jobs. And I think they're flummoxed by their experiment in Keynesian economics not working."

Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses.

"They're in a 'Do' loop right now trying to figure out what the answer is," Otellini said.

As a result, he said, "every business in America has a list of more variables than I've ever seen in my career." If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions "the wrong way, people will not invest in the United States. They'll invest elsewhere."

Take factories. "I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States," Otellini said.

The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don't impose. (Cypress Semiconductor CEO T.J. Rodgers elaborated on this in an interview with CNET, saying the problem is not higher U.S. wages but antibusiness laws: "The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn't want you there and demonstrates it in thousands of ways.")

"If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here," Otellini said. But instead, it's the second highest in the industrialized world, making the United States a less attractive place to invest—and create jobs—than places in Europe and Asia that are "clamoring" for Intel's business.

Chris Marangi, associate portfolio manager at Gamco Investors in Rye, N.Y., said Tuesday: "Capital is agnostic. It doesn't have a religion. It doesn't have a philosophy. It goes where it finds the highest returns." The problem, Marangi said, is that many other "countries have a more friendly regulatory regime than we do."

You don't have to have an MBA in business from Wharton to understand that one.

Great stuff.

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BP Changes Oil Forever... and Hands You a Shot at 508% Gains

Thanks to the catastrophic Gulf oil spill, the oil industry is being transformed before our eyes.

Oil is about to make a huge move back onto land... and these 3 small American companies are already in prime position to lead the charge.

Find out how you can piggy bank their good fortune all the way to 508% gains by July 2012.

Beat Big Pharma to the Profits on A Breakthrough That's Bigger Than Penicillin

Right under the nose of the drug giants, this small American company has developed the genetic key to eradicating the world's deadliest diseases -- influenza, malaria, HIV, and many of the major killer cancers...

Get in on this tiny stock before news of their breakthrough "cell-shock" technology gets out -- and your chance at 1000 times your money is gone forever.

Nanotech Stocks: The Wave of the Future

As I wrote earlier this week, nanotech is the wave of the future.

And just as plastic, the PC, and the Internet changed the market forever, nanotechnology will do the same... and bring early investors huge returns in the process.

Even members of Congress are on to the fact that nanotechnology will designate the future of science, technology, and investors' fortunes...

In a 2007 report released by the Joint Economic Committee entitled “Nanotechnology: The Future Is Coming Sooner Than You Think,” Uncle Sam had this to say about the nascent industry:

Enhanced abilities to understand and manipulate matter at the molecular and atomic levels promise a wave of significant new technologies over the next five decades. Dramatic breakthroughs will occur in diverse areas such as medicines, communications, computing, energy and robotics.

But here’s the kicker... Members of Congress also said:

These changes (nanotechnology) will generate large amounts of wealth and force wrenching changes in existing markets and institutions.” (emphasis mine)

That’s why the development of this technology is widely seen as the next Industrial Revolution; the latest major upheaval brought about by vastly improved technologies.

And as we said before, all of the major players now recognize this: the Department of Defense, the Department of Energy, M.I.T., Intel, and Genentech are just a few of those working to harness the power of engineering on the nanoscale.

Understanding nanotechnology

To cash in on this undeniable trend, first you must understand the basics.

A nanometer (nm) is one millionth of a meter, impossibly small and previously practically unobservable. But with the development of new instruments, the nanosphere has been unveiled.

Technologies such as scanning tunneling microscopy, magnetic force microscopy, and electron microscopy now permit scientists to observe events at the atomic level, allowing the industry to bloom.

Even so, the workings on the nanolevel are hard to comprehend. For instance, one nanometer (nm) is the basic unit.

(For comparison, human blood cells are 2,000 to 5,000 nm long; a strand of DNA has a diameter of 2.5 nm; and a line of 10 hydrogen atoms is just 1 nm.)

That means that since we can manipulate matter as small as 1 nm, we can also work within structures like cells, DNA, and molecules in ways that have never been possible before.

Think about it...

Before nanotech, human blood cells were impossible to manipulate.

But with the emergence of this technology, there's now a great deal of room within those same cells.

That means individual cells — and ultimately their functions — can be altered by man using these new technologies.

That’s how fundamentally disruptive this technology is.

Because at those levels, man, in essence, becomes creator.

By being able not only to manipulate the basic building blocks of matter — but even being able to create new blocks themselves — practically anything is possible to envision and produce.

Nanotech: the sky is the limit

Think about that for moment — anything is possible to envision and produce.

Now that’s radical.

This is some of what it could mean to you:

• Nano-enabled molecular computers that could store trillions of bytes of data in the size of a sugar cube. (That’s practically the sum total of everything that we know!)

• The ability to replicate anything from the ground up at the atomic level: diamonds, water, fuel, and even food could be fabricated using nanotechnology. (Think long and hard about that one...)

• Nanorobots that could be programmed to attack the structure of cancer cells and viruses, rendering them harmless.

• Custom designed therapies based on a patient’s individual DNA.

• “Smart dust” that could be strewn over an area to sense the presence of human beings and communicate their locations.

• Computers that might operate by reading the brain waves of the operator.

In other words... The stuff that was once considered science fiction is now a real possibility.

But there's even more...

Because as these technologies accelerate, the growth rate of nanotech becomes almost infinite. This point is called the singularity, and from this point forward, human society is incomparably different from what it is today.

In other words, new and intelligent machines will begin to produce discoveries that are simply too complex for humans to make.

Ponder that one if you will... Because if you do, you’ll know exactly what I’m talking about when I say the next industrial revolution is close at hand.

But before any of these quantum leaps become reality, the industry must grow from its current humble beginnings.

The singularity, in other words, is advancement in a future world that's not even on the radar screen yet.

Needless to say, reaching that point will require the passing of numerous nano-milestones.

4 nanotech stocks to watch

In the meantime, here are four companies to watch as the nano-revolution begins to unfold:

Harris & Harris Group Inc. (NASDAQ: TINY): Harris & Harris traditionally invests in early-stage companies, which means that this company is able to get in early on these groundbreaking opportunities. Not surprisingly, along with microelectromechanical systems and microsystems, the company is heavily involved in nanotechnology.
FEI Corp. (NASDAQ: FEIC): FEI Co. supplies products and systems that enable research, development, and manufacturing of nanoscale items. The company offers focused ion beam (FIB) equipment, scanning electron microscopes (SEMs), transmission electron microscopes, and DualBeam systems, as well as CAD navigation and yield management software. It is, in many ways, a “pick and shovel” nano-play because it manufactures the devices that allow product developers to peer into the nano-world itself.
Arrowhead Research Corp. (NASDAQ: ARWR): Like Harris & Harris, Arrowhead is a holding company that operates a portfolio of companies commercializing innovative nanotechnologies. They include Unidym, a developer of carbon nanotubes, and Calando Pharmaceuticals, a company working on a novel nano-enabled drug delivery device.
A123 Systems Inc. (NASDAQ: AONE): Fresh off of its $428 million IPO, A123 makes high-energy density of lithium ion batteries featuring its patented NanophosphateTM technology. With more than 2,000 employees, AONE is using nanotech to create the next generation of power storage devices.

But no matter how you decide to invest in nanotech, one thing is for certain: It won’t be long before this monumental trend begins to take Wall Street by storm.

It’s that powerful.

It’s just one word right now... But someday, nanotech will change your life forever.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

Masamune's Secret Metal

Six centuries ago, a Japanese sword master accidentally dropped some into the steel he was making... creating the first ever true Samurai Katana blade.

Today, it's the cornerstone of a $987 billion-a-year industry.

Find out how you can bank up to 2682% as one tiny mining company taps into one of the world's last remaining untouched deposits.

Home Depot and Lowe's Adjust to the New Normal

Like any party that went on about five hours after it should have ended, the housing bubble has delivered up quite a hangover.

Because for a large portion of the market, those “big gains” in equity turned out to be pretty short lived.

And when the price of homes suddenly turned south, quite a few people woke up worse off then when they started.

But I guess it was fun while it lasted. Granite counter-tops, Hummers, trips to Mexico, and your own cement pond out back.

Boy those were the days... too bad they had to end.

In that regard, here's another story on the “New Normal”...

From Bloomberg by Chris Burritt entitled: Caulk Replaces Show Kitchen at Home Depot. Lowe's

Dyane Townley craves new kitchen counters for her home in Greensboro, North Carolina. Husband Jeff, a Honda Aircraft Co. engineer, wants a bigger back deck. With money tight, the Townleys are putting those dreams on hold

Many Americans, having splurged on show kitchens, spa bathrooms and surround-sound media rooms during the housing boom, are doing the same. Spending on home renovation for the 12 months ending Sept. 30 will fall 25 percent to $107.7 billion compared with the same period in 2007, according to Harvard University’s Joint Center for Housing Studies.

The pullback is hurting companies large and small — from Home Depot Inc. and Lowe’s Cos. to building contractors and interior design shops.

“There are still consumers putting in new kitchens,” Robert Niblock, the chairman and chief executive officer of Lowe’s, said in a telephone interview. “But they’re doing it because they’re going to be in their homes longer. That’s the change from the go-go days.”

The highest unemployment rate since 1983 also is making Americans cautious about fixing up their homes, said Niblock, 47. Many homeowners are painting, caulking and re-carpeting, he said, and many are doing it themselves.

The Townleys, still trying to sell their previous house in Savannah, Georgia, are typical. They re-carpeted and repainted much of the inside of their blue, four-bedroom Greensboro home.

“Anything we can do ourselves, we do because it’s cheaper,” said Dyane, 34. “We aren’t splurging on anything right now.”

An illusion and nothing more. That's all it amounted to.

Sad but true....It's funny how the times change.

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Gold's "Louisiana Purchase"

Not long ago, the world's largest uranium giant practically gave away billions of dollars worth of gold to one small exploration company... for only $250,000!

Before their next set of drill results are posted, find out how this rare opportunity could easily triple your money by September!

Click Here For Your Free Report Now!

Rosenburg: Depression not Recession

According to a report this morning, the Spectrem millionaire investor confidence index fell to its lowest level in more than a year as wealthy U.S. investors worried about politics and unemployment.

The Spectrem Millionaire Investor Confidence Index fell 11 points in August to -18, its lowest level since June 2009, when it fell a record 18 points to -20 shortly after the S&P 500 index hit a 12-year low.

Meanwhile, the Spectrem Affluent Investor Confidence Index which measures the outlook of households with $500,000 or more in investable assets, fell 4 points in August to a mildly bearish -20, its third-straight monthly decline.

“The millionaires' decline is particularly troubling since it suggests millionaires, typically more sophisticated than the broader affluent population, are reverting to a bearish frame of mind." said George H. Walper, Jr., President of Spectrem Group.

So what do all these folks know that David Rosenberg doesn’t know? Apparently not much.

True to form, Rosenberg is as bearish as ever….

From CNBC by Jeff Cox entitled: Economy Caught in Depression, Not Recession: Rosenburg

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

"False premise," Rosenberg said. "And guess what? We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Rosenberg points out that the "overall economic malaise" has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts.

"How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."

Like or not, that is the reality.

And no matter how many times you try to slap a happy face on it, the economy and the markets are as tenuous as ever.

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Wind Farm Construction is down a whopping 71% for the year...

But this $1.00 wind energy company landed a $600 million deal for a new wind farm!

And thanks to a little-known California law, you can get a piece of this action if you get in before the end of the year!

Click here

Used Home Sales Crash in July

Here's a perfect example of what happens when Uncle Sam steps out of a the housing market.

Absent the fairy dust, it starts dropping again...

Take a look:

Absent the chart, here are dismal details....

From Bloomberg by Courtney Schlisserman entitled: Sales of U.S. Existing Homes Drop More Than Forecast

“Sales of U.S. previously owned homes plunged 27 percent in July, twice as much as forecast, evidence foreclosures and limited job growth are depressing the market.

A tax credit of up to $8,000 boosted sales earlier in the year, pulling forward demand and indicating additional advances will prove difficult. Mortgage rates at record lows have provided scant relief to the industry as unemployment hovers close to 10 percent, foreclosures hold near record-highs and the economy cools.

“This is a devastating reading on the U.S. housing market,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto. “There’s such an inventory overhang, it shows there will be pressure on prices” in the months ahead.

The pace of existing home sales is the slowest since comparable records began in 1999. Purchases of single-family homes dropped to a 3.37 million annual rate, the lowest since May 1995.

Sales last month fell in all four U.S. regions, today’s report showed. Foreclosures accounted for 22 percent of total purchases in July, while short sales made up another 10 percent, the NAR said.

Purchases will be “soft for at least two more months as the housing market works through the effects of the end of the tax credit,” Lawrence Yun, the group’s chief economist, told reporters at a press conference.”

Of course, if Lawrence had the courage to tell the truth here he would have used two years in that thought not simply two months.

I'm mean does he really think that a 12.5 month supply is going to be over come by Thanksgiving or is he just whistling past the grave yard?

Something tells me the priest is in the hallway again...

That number was so bad it even made my jaw drop when it crossed the wires.

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Our Four-Year Study’s Shocking Results!

How would you like to get paid for every single car, van, truck, or motorcycle made — not sold, made?

It doesn’t matter what happens to a company’s share price, either. As each one rolls off the assembly line, you make money.

After a four-year intensive study, our very own Luke Burgess uncovered how you could do just that… without ever leaving the comfort of your home.

All the details are right here for you in his latest, free report.

Nanotechnology Investments

Mr. McGuire: I just want to say one word to you — just one word.

Ben: Yes sir.

Mr. McGuire: Are you listening?

Ben: Yes I am.

Mr. McGuire: "Plastics."

Ben: Exactly how do you mean?

Mr. McGuire: There's a great future in plastics. Think about it. Will you think about it?

Ben: Yes I will.

Mr. McGuire: Shh! Enough said. That's a deal.

In the 1967 film The Graduate, it may have been the shapely legs of Mrs. Robinson that caught the eye of young Ben Braddock...

But it was Mr. McGuire's sage advice that piqued the interest of the investment world.

Cliché or not, old man McGuire was definitely on to something.

Plastics, after all, were still relatively new and hardly as ingrained and ordinary as they are today. In those days, products made of glass, metal, and wood still dominated manufacturing.

But as history would later prove, McGuire's advice was both prophetic and wise. Plastics, as he suggested, changed everything.

Since then, of course, investors everywhere have been looking for that same type of sage advice; hoping to find riches by staying ahead of the curve. And in the 80s and 90s, they managed to find it — with "computers" and then the "Internet."

But since those days, the markets have been all ears, hoping to come across the next big thing — the game changer that could be expressed in a single word.

In essence, they've all been left wondering Where have you gone, Mr. McGuire?

Just one word: Nanotech

My guess is that if Mr. McGuire were to offer his advice today, his one word wouldn't be "plastics"; it would be "nanotech."

Like plastics, computers, and the Internet before it, nanotechnology will change the world in ways that we can't even imagine now. That's how powerful the nano-world will become.

And like the paths of those earlier "big ideas," nanotech is just beginning to roil the surface — giving investors another chance to beat the crowd.

So what exactly is nanotech?

On the face of it, it is simple; but in actuality, it is complicated to the point of being breath-taking. In short, nanotechnology is the ability to create structures and materials at the atomic level, one molecule at a time.

That means that in the near future, we will be able to custom design structures literally from the ground up, molecule by molecule, creating a quantum leap forward in medicine, materials, electronics, food, and fuels — practically everything we know of.

Nanotechnology is gonna be big.

That's why U.S. corporations have invested an estimated $2.75 billion in nanotechnology R&D — 50 percent of which was spent by the electronics and information technology sector; 37 percent by the materials and manufacturing sector; 8 percent by the health care and life sciences sector; and 4 percent in the energy and environment sector.

What's more, over the past 10 years, venture capital (VC) investments in U.S. companies developing nanotechnology have totaled $5.03 billion — accounting for 86 percent of the worldwide VC investments in the new sector.

Then there's the $12 billion the U.S. government has chipped in over the last ten years with its National Nanotechnology Initiative (NNI)...

Just two words: Nanotechnology Investments

That type of massive spending, naturally, has already managed to find its way into the marketplace.

In fact here's a run-down of how the nanotech economy is already working to help boost GDP and deliver new and improved products to the market place.

They include advances in the following areas according to a recent government assessment delivered in March:

Energy/fuels/environment — Catalysts and catalytic processes that depend on specific nano-scale structures to steer chemical reactions contribute to a significant portion of the U.S. gross national product (GNP). The catalyst industry and those industries that rely on catalysis exploit this nanotechnology to provide a wide variety of products, such as liquid fuels and plastics, and to contribute to a cleaner environment, such as through the use of catalytic converters to remove pollutants from automobile exhaust. Additionally, materials for high-power, fast-charging batteries used in many cordless power tools incorporate advanced electrodes whose capabilities depend on deliberately-engineered nano-scale architectures.

Medicine — Several nanoparticulate formulations of conventional drugs are being used in the treatment of cancer and infectious disease. A number of nanotechnology-based imaging agents and therapeutics that target tumor cells and arterial plaques are in clinical trials. In addition, nanotechnology-based detectors form the core of a number of new diagnostic instruments that are better than previous generations of instruments at detecting minute quantities of important biomarkers of disease.

Materials — Carbon nanotubes are currently being incorporated into high-strength composites and woven into yarns to produce significantly lighter and more conductive wires and electrical harnesses.

Consumer products — Nano-scale materials and particles are being used increasingly as ingredients in cosmetics, sunscreens, and food products. The small sizes of the particles confer various properties, such as high sun-blocking power with translucency in sunscreens, stain resistance for fabrics, and self-cleaning properties and better color features for paints.

The National Science Foundation has predicted sales of nanotech-related products would reach $1 trillion by 2015 and provide at least 800,000 new jobs in the U.S. alone (to support that figure).

And with over 160,000 employees now working in the nanotechnology sector — and a 25% annual growth rate — those figures will likely become reality over the next five years.

All of which, of course, will create an environment of opportunity for both workers and investors alike in the near future and beyond — as plastics did so long ago.

Mr. McGuire, of course, would have seen it coming from a mile away...

In Part Two of this piece on Thursday, we'll take an even deeper look at nanotechnology and the story behind two companies utilizing it to build a better bottom line.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

P.S. It may sound like we're beating the same drum over and over here, but it's true: Technology is still our ace in hole. That includes the biotech sector, where M&A activity has reached a fever pitch. In fact our research has led us to a radical biotech stock that could be one of the sector's biggest winners... To learn more, click here.

How to Get the Last Flu Shot You'll Ever Need...

Hate the lines, the sickness, and the painful jabs? Consider that a thing of the past.

We've recently stumbled upon one under-the-radar biotech firm that's about to create the last flu vaccine we'll ever need.

It's no pipe dream -- they've already had success in early test trials...

And once these guys breakthrough their Phase III trials, we could see them bringing early investors returns of up to 1000%.

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Connecting the Dots

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

One name I'll never forget from my college days is Ed Ballard. Ballard was a journalism professor of mine.

He was a grizzly old fellow that entertained us with wild stories about the happenings around the U-desk. And if you looked close enough, you could almost sees the ink stains on his wrinkled hands.

An old school newspaperman, I think journalism might have been something of a foreign word to him.

Of course, we didn't know it at the time, but he wasn't the only dinosaur in the room back then — we all were in a way, pounding out our stories in a symphony of clacking keys and ringing bells.

Twenty five years later, it's not just the typewriter that has disappeared; but newspapers themselves. Nudged aside by the Internet and the 24-hour news cycle, the business is in a state of terminal decline.

"Progress"... perhaps.

I've Uncovered A Photograph that Could Hand You $36,950 by this Time Next Year...

I don't blame you if this sounds far-fetched...

In fact, if I hadn't met the man who traveled 1,400 miles to track me down — just to hand me a photo — I wouldn't have believed it, either.

But once you take a peek at the snapshot, as well as the three reasons it could make you rich, I have no doubt you'll change your mind.

But I have to tell you, there's no screen in the world that can replace the feel of a newspaper in your hand and the ink it leaves behind. Buggy whip or not, that's something younger folks will never quite understand.

And lost along with the daily news in print is the work of editorial cartoonists that could cut through all of the nonsense in a way a video never could — or ever will.

The most famous of them was undoubtedly Thomas Nast, widely recognized as the "Father of the American Cartoon." A German by birth, his muckraking style single handedly brought about the downfall of Boss Tweed — all via the power of a finely sharpened pencil — not with words, mind you; but with powerful drawings that gave voice to the unspoken realities.

For good measure, Nast even gave us the images we conjur up today when "Santa Claus" or "Uncle Sam" worm their way into our brains.

That's the power of a sketch, now lost to a culture in which print newspapers are entering extinction. In the age of the Internet, we simply don't come across them the same way we did when we used to read the paper cover to cover.

These days, one of my favorite cartoonists is still Michael Ramirez. About his Pulitzer Prize-winning art Ramirez says: "An editorial cartoon is not just a funny picture. It is a powerful instrument of journalism, sometimes sharp and refined, its message cutting quickly to the point... ”

Much like this cartoon penned by Ramirez — short and to the point, it called the recovery out onto the carpet earlier this week:

But let's face it. If you are willing to connect the dots, you didn't need to see this particular drawing to come to the same conclusion.

Like a thousand points of light, the dots that make up this picture are scattered everywhere you look.

Here a few of the more recent ones:

I could go on and on... but you get the picture. There are enough little blue links out there to rival the Atlantic Ocean.

That has given way to a rising tide of voter anger that threatens to sweep the two-party system from its status quo moorings. Love or hate them, the Tea Party folks haven't exactly sprung from the ether.

On top of that, I don't think they are going away this time, which makes them an even greater force to be reckoned with in the future.

After all, as Sam Adams once said: "It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds."

And like Ross Perot before them, the Tea Partiers are working the same fertile ground left behind when the two-party system drives the bus off the cliff.

As for Ross Perot, that “giant sucking sound” of lost American jobs he warned about has certainly come home to roost — and is one of the reasons the recovery we seek has been so illusive.

After all, people without jobs or enough income don't buy much “stuff,” now do they? The people buying stuff is what keeps the whole thing afloat — and I do mean the whole thing.

So here we are, left to sit on the couch like a bunch of over-40 has-beens, drinking beer and reliving our glory days, while a bunch of young upstarts work to erase our names from the record books.

It's kind of pathetic when you really think about it... But that's what has come to pass for "progress."

So whether you are right, left, or somewhere in between, remember that in November when all of the talk about recovery begins to fade.

After all, we're not just citizens; we are heirs to the Revolution. Shaking things up once in awhile is our birthright.

At least that's what Mr. Ballard told me.

Below are a few this week's best investment ideas from the pages of this week's top-read articles in Wealth Daily and our sister publication, Energy & Capital.

Enjoy the weekend,

Steve Christ
Editor, Wealth Daily

Alzheimer's Drugs: The Good, the Bad, and the Prospects: This Stock is Up 50% for the Year
Publisher Brian Hicks brings readers the latest developments in the fight against Alzheimer's — and a game-changing stock that's up 50% for the year.

DNA Vaccines: The Winner Behind the Only Flu Shot You'll Ever Need
Wealth Daily Editor Steve Christ examines the H1N1 swine flu panic and explains how scientists are working to prevent a greater tragedy. According to Steve, this is a market that's “just heating up”...

Nuclear Start-up Companies: Several Billionaires are Investing in Nuclear
Editor Nick Hodge discloses how billionaires get richer: they invest in young nuclear companies.

Energy Efficient Lighting: Why this $2 Company Could Land a $416 Million Military Contract
Editor Jeff Siegel reveals a $2 microcap that's in line to land some major deals with the U.S. military.

U.S. Oil's Big Potential: A Different Way to Play the U.S. Oil Comeback
Energy and Capital Editor Keith Kohl takes a look down the road, offering readers a strong investment strategy and warning about another.

Must-See TV: The Monumental Gains Behind the Mongolian Oil Patch
Energy and Capital's Christian DeHaemer shares his insider intel in this new video explaining why Mongolia is about to ride the Chinese oil-craze into a golden age.

The Hindenburg Omen: Oh, the Humanity!: A Chart Pattern Worse than the Omen
Editor Steve Christ take a look at the Hindenburg Omen and describes a chart pattern that might be even worse.

Going Long Uranium: Say Hello to the Easiest Gains You'll Make this Summer
This one's for the books: Top metals investor Greg McCoach explains how one company's multi-billion dollar goof just created the easiest gains you'll make this summer.

2010 Conference on the Future of Housing Finance: The Fate of Fannie Mae and Freddie Mac
Wealth Daily Editor Ian Cooper investigates Tuesday's 2010 Conference on the Future of Housing Finance and what it could mean for economic stability.

The Pension Gap

Here’s a train that just keeps on chugging down the tracks. When it gets here it will run us over…

From Bloomberg by Dunstan McNichol entitled: Pension Cuts Won't Cover a $3 Trillion Bill in U.S., Study Says

“Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions even if lawmakers eliminate cost-of-living increases and raise the retirement age, according to an academic study.

“Even if states uniformly eliminated generous early retirement deals and raised the retirement age to 74, the unfunded liability for promises already made would still be more than $1 trillion,” Joshua D. Rauh, associate professor of finance at Northwestern University’s Kellogg School of Management in Evanston, Illinois, said in a statement.

He presented the paper yesterday to the National Bureau of Economic Research’s State and Local Pensions conference in Jackson Hole, Wyoming.

The study of 116 U.S. retirement plans for teachers and government workers showed that as of June 30, 2009, they had $1.89 trillion in assets to cover $3.15 trillion in liabilities, Rauh said. The research used the typical fund’s assumption that investments will earn about 8 percent annually. That is a gap of $1.26 trillion — more than double the shortfall of a year earlier, according to a study by the Pew Center on the States.

Using more conservative investment assumptions, such as the rate of return on U.S. Treasury zero-coupon bonds on June 30, 2009, the liabilities are $5.28 trillion, Rauh calculated.

“Assuming states don’t start defaulting on their bonds and other debts, it seems that taxpayers will be footing most of the multitrillion dollar bill for the pension promises that states have already made to workers,” he said.”

Isn’t government just wonderful?

I guess the rest of us can work until we drop dead so “civil servants” can retire early.

I’ll say it again, the status quo cannot possibly be maintained.

Have a great weekend—if you can afford to be off.

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Super-sized 'McMansions' Meet Reality

First the Hummer and now the McMansion, how do they expect us to survive?

From CNBC by Cindy Perman entitled: Death of the 'McMansion': Era of Huge Homes is Over

They’ve been called McMansions, Starter Castles, Garage Mahals and Faux Chateaus but here’s the latest thing you can call them — History.

In the past few years, there have been an increasing number of references made to the “McMansion glut” and the “McMansion backlash,” as more towns pass ordinances against garishly large homes, which are generally over 3,000 square feet and built very close together.

What sets a McMansion apart from a regular mansion, according to Wikipedia, are a few characteristics: They’re tacky, they lack a definitive style and they have a “displeasingly jumbled appearance.”

Well, count 2010 as the year the last nail was hammered into the McCoffin: In its latest report on home-buying trends, real-estate site Trulia declares: “The McMansion Era Is Over.”

Just 9 percent of the people surveyed by Trulia said their ideal home size was over 3,200 square feet. Meanwhile, more than one-third said their ideal size was under 2,000 feet.

“That’s something that would’ve been unbelievable just a few years back,” said Pete Flint, CEO and co-founder of Trulia. “Americans are moving away from McMansions.”

The next thing you know granite counter tops and stainless steel appliances will become passe.

Oh, the humanity....

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The Hindenburg Omen: Oh, the Humanity!

Lighter than air, the Hindenburg floated to its destiny over the Lakehurst Naval Air Station.

In virtually an instant, the picture that has since been burned into everyone’s brain began to unfold...

Suddenly bursting into flames, the great ship was completely destroyed.

And ever since that fateful day, the mere mention of the Hindenburg has carried with it a certain sense of the ominous, portending disaster.

That’s why, when I came across a reference to an obscure technical pattern known as The Hindenburg Omen on the blog Zero Hedge, my interest was piqued.

To top it off, I stumbled upon this particular article on Friday the 13^th...

"The Hindenburg Omen" strikes again

First identified by Jim Miekka, the Omen plays on the logic that the bulls and the bears can’t possibly both be right — which, in an odd way, describes where the markets are stuck right now.

This scenario is triggered by the divergence of the number of stocks making new highs versus those making new lows.

In other words, the absence of uniformity in sentiment creates the condition of the Omen.

The traditional definition of a Hindenburg Omen has five criteria (per Wikipedia):

The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
The smaller of these numbers must be greater than or equal to 69 (68.772 is 2.2% of 3126). This is more of a checksum than a rule. This condition is a function of the 2.2% of the total issues.
The NYSE 10 Week moving average must be rising.
The McClellan Oscillator must be negative on that same day.
New 52 Week Highs cannot be more than twice the new 52 Week Lows (however, it's fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.

Meeting these conditions, the occurrence of all five criteria on one day is often referred to as an unconfirmed Hindenburg Omen.

A confirmed Hindenburg Omen, meanwhile, occurs if a second (or more) Hindenburg Omen occurs during a 36-day period from the first signal.

According to the data, this resulted in an unconfirmed Omen last Thursday — a mere one day after nearly triggering it the day before.

On Wednesday, only 67 stocks hit new lows as opposed to the required 69.

Ever since then, the Street has been abuzz with references to fiery crashes.

So what does it all mean?

Probably not much on the face of it... Prior Omens have come and gone without causing much of a market stir.

But looking back at the historical data, the technical signal has indeed been present in every NYSE crash since 1985.

That being said, here’s the rest of the historical breakdown in the aftermath of a confirmed Hindenburg Omen:

A 77% probability of 5% move to the downside;
A 41% probability of a panic sellout, down 10-15%;
A 24% probability of a stock market crash, down greater than 15%.

And here’s another stat that might just give you goose bumps... According to Barron’s, the Hindenburg Omen appeared in June 2008 when the Dow was trading at 11800 — a mere three months before the big September crash.

A chart pattern worse than the Omen

Whether obscure or not, this is one signal to watch — especially if Thursday’s occurrence is confirmed. After all, the gulf between the bulls and bears has never been wider.

And while I know that all of that sounds a bit crazy, it does seem to jive with the a chart that I have been watching for months now.

It’s the weekly chart of the Dow, and it's more worrisome than any Omen. Here's why...

The chart seems to be forming the final leg of the head and shoulders top we have been warning Wealth Advisory subscribers about for months now. It's one of the reasons we were selling stocks as the DOW revisited the 10700 level.

Take a look:

So what does a classic head and shoulders top look like?

As depicted above, the classic head and shoulders top looks like a human head with shoulders on either side of the head. It's what's known as a topping pattern.

The first point (1) — the left shoulder — occurs as the price level in a rising market hits a high and then falls back. The second point (2) — the head — happens when price levels rise to an even higher high before retreating back to support at the prior low. The third point (3) — the right shoulder — occurs when price levels rise again but the market loses steam, failing to rise above the head.

The key to the pattern, however, is the neckline formed by the previous support, since the pattern is complete when the neck line is broken.

This occurs when the price level falls from the high point of the right shoulder and moves below the neckline. Technical analysts will often say that the pattern is not confirmed until the price closes below the neckline — it is not enough for it to trade below the neckline.

Calculating the downside target then is just a simple matter of the math. To figure it out, you subtract the high of the head (roughly 11200) by its distance to the neckline of 9700.

That gives you a figure of 1500 points. You then subtract that same 1500 from the 9700 neckline to arrive at your new downside target.

Hindenburg Omen aside, what this all means is if completed, the DOW would fall as low as 8200.

Oh, the humanity!

Food for thought as we head into September and October.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

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Buffett Loads Up on Johnson & Johnson (NYSE:JNJ)

If you have been following the news lately than you know it hasn’t exactly been a stellar quarter for my favorite company Johnson & Johnson (NYSE: JNJ)

First there were recalls of tens of millions of bottles of Tylenol and other well known brands. Then there was the long-term closure of one of the plants that produced the drugs.

But even after factoring in the $200 million in lost revenue due to the recall-related plant closure, Johnson & Johnson still managed to increase both revenue and earnings year over year.

According to its second quarter release, through the first half of the year, adjusted earnings are up 3.7%.

That's one of the reason's why the Oracle of Omaha himself loaded up on shares of the health care giant earlier this year, boosting his holdings to over 41 million shares.

From Bloomberg by Andrew Frye entitled: Buffett Restores J&J Holdings as Berkshire’s Cash Haord Climbs

“Berkshire Hathaway Inc. increased its Johnson & Johnson stake, repurchasing shares that Chairman Warren Buffett sold in the financial crisis to fund investments in firms including Goldman Sachs Group Inc.

Berkshire raised its stake in the New Brunswick, New Jersey-based drugmaker by 73 percent to 41.3 million shares from 23.9 million on March 31, according to a regulatory filing yesterday listing the company’s U.S. equity holdings at the end of the second quarter.

Buffett, 79, uses earnings and premiums from Omaha, Nebraska-based Berkshire’s insurance units to invest in stocks and bonds and acquire companies. In 2008, he slashed his Johnson & Johnson stake and spent $14.5 billion on fixed-income securities issued by Goldman Sachs, General Electric Co. and Wm. Wrigley Jr. Co. Buffett said last year that he sold Johnson & Johnson shares to ensure Berkshire had “more than ample cash.”

“This kind of tells me that he’s comfortable with the cash position now in Berkshire,” said Gerald Martin, a finance professor at American University’s Kogod School of Business in Washington. “He’s starting to building back up in the investments he wants to be in — Johnson & Johnson and, of course, the new Fiserv” stake, Martin said.

Berkshire’s earnings have helped replenish a cash position that dipped to $25.5 billion at the end of 2008 from $44.3 billion 12 months earlier. The company reported its first profit decline in five quarters for the period ended June 30 as derivatives bets suffered and equities fell. In 2008, Buffett stepped in to buy debt from to New York-based Goldman Sachs and GE when most money managers and banks retreated.”

The Oracle of Omaha strikes again.

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Biotech brings cure to cancer — and 10,000% gains to investors

Americans currently have a 41% chance of developing cancer during their lifetimes. But while this number may seem dire, there is hope on the horizon...

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Notes From Recovery Summer

For what its worth, the latest quarterly AP Economy Survey shows a gloomier mood among economists over the last three months. As a group, their outlook is for weaker growth and higher unemployment.

Yet for some reason there is a glimmer of hope among them that a double dip recession can be avoided.

According to the survey, a majority of the 42 economists polled believe the recovery remains on track. Why?...I’m not sure.

Taken together their forecasts include:

Economic growth the rest of this year and early next year will weaken, to less than 3 percent. From January through May, the economy grew at roughly a 3.5 percent pace.
The unemployment rate will be no lower at the end of the year than it is now at 9.5 %. A majority think it will be 2015 or later before the rate falls to a historically normal 5 percent..
Nearly two-thirds of the economists view the states' budget crises as a significant or severe threat to the rebound.

And while there is nothing really new here, it’s pretty obvious the tide is shifting towards a much more pessimistic outlook. After all, it was just a few months ago when some of these same economists were looking at rate hikes in response to the rebound.

Today, they seem to have caught a case of the “new normals”—especially since a weak consumer poses a "significant" or "severe" risk to the recovery.

That's why they have largely adjusted their growth figures to less than 3 percent going into 2011. Again, that explains why unemployment is likely to stay high since it takes about 3 percent growth just to create enough jobs to keep pace with the population increase.

For the unemployment rate to really drop, growth would have to equal 5 percent for a full year to drive the unemployment rate down by 1 percentage point.

That, to me, is a long shot in the short term. You see, it’s different this time as the chart below clearly shows.

Now if that’s not the most telling chart I’ve seen in a long time, I don’t know what is. What strikes me about though is this: It covers practically everyone’s common experience.

In other words, what it shows is a lifetime of job growth that has only recently failed us. I think that is part of the reason why so many people have a hard time grasping these new realities.

They are so different than the sum total of our experience that I think we underestimate them.

Food for thought.

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Why Johnny Can't Find a Job

Here's something to think about as you head into another great summer weekend. It's one of the reasons why Johnny can't find a job.

As a former small business owner, I can tell you that this one is spot on. Part of the problem is undoubtedly structural.

From the Wall Street Journal by Michael P. Fleischer entitled: Why I'm Not Hiring

“With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it's going to be later—much later. Here's why.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She's been with us for over 15 years. She's a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides. And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare. That's the small stuff. New Jersey takes $1,893 in income taxes. The federal government gets $3,661 for Social Security and another $6,250 for income tax withholding. The roughly $13,000 taken from her by various government entities means that some 22% of her gross pay goes to Washington or Trenton. She's lucky she doesn't live in New York City, where the toll would be even higher.

Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest—$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153. Altogether, company-paid benefits add $9,714 to the cost of employing Sally.

Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers' comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally's Medicare and $3,661 for her Social Security.

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally's job each year.”

Think about that the next time you don't get a raise...or a job offer.

Between globalism and government we are commiting national suicide.

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The Debt Slaves Revolt

According to RealtyTrac today, the number of U.S. homes lost to foreclosure surged in July in yet another sign that lenders are moving more quickly to take back the keys.

In all, lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009.

What's more, in the bigger picture, RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year. Ouch,

In the meantime, here's another great story on housing bubble's seamy aftermath.

It seems some borrowers are unwilling to become debt slaves....

From the New York Times by David Streitfeld entitled: Debts Rise, and Go Unpaid as Bust Erodes Home Equity

“During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Utah Loan Servicing is a debt collector that buys home equity loans from lenders. Clark Terry, the chief executive, says he does not pay more than $500 for a loan, regardless of how big it is.

“Anything over $15,000 to $20,000 is not collectible,” Mr. Terry said. “Americans seem to believe that anything they can get away with is O.K.”

“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. 'The case is sitting stagnant' he said. 'Maybe it will just go away.'”

Needless to say, this is going to be a huge problem going forward since the equity stake has been wiped out in nearly every second mortgage in the country.

The scandal is that the banks are still holding billions of these loans on their books at par hoping that “maybe they will all just go away”.

Good luck with that one.

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The VIX Indicator Heads Higher

Landing with all the force of a feather, Quantitative Easing (QE) 1.5 might as well have been QE Nothing.

A day after being announced, the Fed's latest attempt to goose the economy sent the markets into a tailspin as the Dow dropped 265 points yesterday.

And for those of you scoring at home, the decliners led advancers by the magical ratio of 9 to 1 signaling a major reversal is at hand.

From the relatively placid days of July, market volatility made a gigantic comeback as the dollar jumped, Treasury yields plummeted and the VIX Indicator shot up by 14%.

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But as any trader will tell you, it is at the exact moment the markets become complacent that they take one in the ear.

After all, the last time the VIX had fallen this low (21.36) was May 3, just three days before the infamous "flash crash". In the aftermath of that gut-wrenching plunge, the VIX doubled in the span of just a few days.

That's one of the reasons why every trader on Wall Street keeps an eye on the VIX as they speculate on the market's next move. More often than not, it is the action in the VIX that signals major market tops and bottoms.

That's because the VIX is one of the so-called contrarian indicators. That is, it tells you whether or not the markets have reached an extreme level of sentiment - either bullish or bearish.

If so, that tends to be a sure sign the markets are about to stage a reversal. Because let's face it, "the crowd" hardly ever gets it right.

So, the smart money simply uses the VIX indicator as a sign to bet against them all.

The VIX Indicator Explained

Developed by the Chicago Board Options Exchange in 1993, the CBOE Volatility Index (Chicago Options: ^VIX) is one of the Street's most widely accepted methods of gauging stock market volatility.

Using short-term near-the-money call and put options, the index measures the implied volatility of S&P 500 index options over the next 30 day period.

But because it is basically a derivative of a derivative, it acts more like a market thermometer than anything else.

And like a thermometer, there are specific numbers that tell the market's story.

A level below 20 is generally considered to be bearish, indicating that investors have become overly complacent. Meanwhile, a reading of greater than 30 implies a high level of investor fear, which is bullish from a contrarian point of view.

In fact, the old saying with the VIX is, "When the VIX is high, it's time to buy."

That's because when volatility is high and rising, it means "the herd" is stampeding to the exits, leaving bargains for money-making traders.

That's why successful technical analysts often rely on the VIX indicator to assess whether or not the current market sentiment is either excessively bullish or bearish in order to plot their next move.

How to Play Market Volatility

But it's not just a reading of "under 20" or "over 30" that works with the VIX. That's a bit too simple.

On top of those levels, smart traders also add the price movement within the Bollinger Bands into the mix. Of late, that has been one of the key tells in predicting the market action.

So what are Bollinger Bands you ask?...

My pal and super-trader Ian Copper explains them this way:

Bollinger Bands are a popular technical indicator for traders to determine overbought and oversold conditions. In a range-bound market, for example, it works even better as prices travel between two "rubber bands," or like balls bouncing off the walls of a racquetball game.

For instance, in the VIX chart below you can actually see these "rubber bands" in action...

Breakthroughs Nowhere Near This Big Have Paid Investors Over 10x Gains

Our resident biotech expert just came across a tiny company that can make the human immune system 1000 times more effective against dozens of deadly diseases -- including the major cancers: Prostate, lung, breast, cervical, and more...

Here's how their revolutionary "cell-shock" technology could hand you as much as 1000 times your money as it saves tens of millions worldwide.

Check it out: As the VIX trades, volatility rises or falls as it bounces off of the upper or lower bands. It's these extremes that have marked the major market turning points from a contrarian perspective.

So as the summer relief rally begins to fade, the VIX is back in the headlines. That's because as months go, September and October tend to be rocky ones for the stock market.

In fact, historically, September has been the worst month of all time for stocks, while October is remembered as the month of epic crashes.

That likely means more market volatility in the months ahead - not less.

One way to play these market moves is by trading between these two exchange traded funds (ETFs) that Ian recommend to readers a few weeks ago.

Go Long the iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX) as the VIX falls to the bottom of the bollinger bands. This ETF rises as broader markets top and begin to fall.
Go Long the Barclays Inverse S&P 500 VIX Short-Term Futures ETN (NYSE: XXV) as the VIX rises to the top of the bollinger bands. This ETF rises as broader markets bottom and begin to head higher.

These and other winning options strategies can help you put fear and greed in their place, earning you big profits as you trade the extremes in market sentiment.

Afterall, when Ben Bernanke admits the economic outlook is "unusually uncertain", you can bet that market volatility is not that far behind.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

Stem Cell Stocks: Geron Corp. (Nasdaq:GERN)

You may have never heard of Joseph Lister, but the odds are pretty strong that you're familiar with at least one of the things named after him.

Originally developed as a powerful surgical antiseptic, his name can be found in a product called Listerine - that wonder of the dating world that "Kills the germs that cause bad breath."

However, it's not Lister's contribution to commingling that actually made him famous. Instead, it was his contribution to the acceptance of the germ theory of disease.

Adding to the works of Louis Pasteur and Robert Koch, among others, it's because of Dr. Joseph Lister that doctors wash their hands and clean their instruments, which believe it or not was a revolutionary idea at the time.

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Because before it became commonly accepted that microorganisms can cause many diseases, "modern medicine" simply didn't exist.

That's why the germ theory is widely regarded as the greatest medical advancement of all-time, helping to lead us out of the dark ages and into a virtual medical renaissance.

It's the point on the graph where the mortality rate of patients makes a dramatic and lasting turn to the downside, creating a pre- and post-germ theory world - one completely unlike the other. (Sort of like comparing apples to kangaroos.)

That's exactly the type of seismic shift that regenerative medicine is about to usher in according to stem cell researcher Hans Keirstead.

The Next Breakthrough

In fact, the UC Irvine scientist believes that cells culled from a fertilized human egg that can grow into any type of cell in the body are a medical milestone seen only once every 100 years.

Accordingly, Keirstead says, "I have never seen in my career a biological tool as powerful as the stem cell. It addresses every single human disease." (emphasis mine)

That's a claim that, if proven true, has the power to create a pre- and post-stem cell world as radically different as the world that was changed by the germ theory.

It's a gigantic leap that may just begin with this small step.

On July 30^th the FDA granted the go-ahead to the world's first experiments with embryonic stem cells to treat humans using Keirstead's work with spinal cord injuries as its basis.

As with the rats in Keirstead's lab, scientists hope by injecting stem cells into the spines of volunteers they'll be able to regrow damaged nerve cells allowing those patients to recover feeling and walk again.

"This is a first for the spinal cord field, a first for the stem cell field," Keirstead said on the announcement. "Most importantly, it's a victory for the patient community, which really has nowhere to turn. There are no treatments for spinal cord injury."

Carried out by the California-based biotech company Geron Corporation (NASDAQ: GERN), these clinical trials are one of the only hopes for the over 250,000 Americans already living with a spinal cord injury.

Unfortunately, that's a number that continues to grow since a spinal cord injury is sustained by an individual every 41 minutes...

And I don't have to tell you that the cost of this national tragedy - both emotionally and financially - is one that cannot possibly be measured.

Now after clearing a one-year FDA hold on the trial, Dr. Richard Fessler, who will lead the research, believes that if the treatment works it would be 'revolutionary'.

"The therapy would provide a viable treatment option for thousands of patients who suffer severe spinal cord injuries each year," he said.

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The Promise of Stem Cell Stocks

For Geron shareholders, that leaves the possibility of a "billion dollar toe wiggle" if Keirstead's work can be duplicated and Geron's GRNOPC1 works in human paraplegics.

If that is the case, the company's biggest challenge may be turning back takeover bids, according to Stephen Brozak, an analyst with WBB Securities in New York. He recently said on Bloomberg that shares of Geron would soar on "volume of biblical proportions" if successful, while putting a $19 price target on the firm.

But in Geron's case, the spinal clinical trials are only part of the bigger picture.

In a more permissive stem cell environment, Geron scientists now manufacture seven different types of potential treatments from embryonic stem cells, including:

Neural cells to treat spinal cord injury
Cardiomyocytes to treat heart disease
Pancreatic islet cells to treat diabetes
Dendritic cells for cancer therapy
Chondrocytes for arthritis
Osteoblasts to rebuild bone
Hepatocytes for drug discovery and liver failure

That pipeline makes Geron Corp. one of the top companies in the growing stem cell industry, where one success story is all it takes to reward investors.

That's why I can't help but believe we're on the doorstep of the next great medical leap forward.

After all, if the germ theory could pull medicine out of the dark ages, imagine the advances regenerative medicine can bring about.

The possibilities in this case are endless.

Your bargain-hunting analyst,

Steve Christ
Editor, Wealth Daily

P.S. The biotech bull market is a story that we've been following for nearly two years now. In fact, our research has led us to a radical biotech stock that could be one of the sector's biggest winners... To learn more, click here.

"Home-Debtors" Continue to Buy and Bail

Here's a new take on a story that I wrote about two years ago.

Apparently, some “homeowners” are still dumping their wildly overpriced homes and are picking up the half priced deals that are just down the street.

Despite the best efforts of Fannie and Freddie to end this game, “buy and bail” still lives...

From Bloomberg by Kathleen M. Howley entitled: “Buy and Bail” Homeowners Get Past Loan Restrictions

“Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home.

Real estate professionals call it “buy and bail,” acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s “underwater,” or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan.

The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of buy and bail underscores the lingering impact of the worst housing crash since the Great Depression.

“People were holding on, hoping the market would turn around,” Collier, who won’t work with applicants who intend to go into foreclosure, said in a telephone interview. “But now they’re giving up because there’s no light at the end of the tunnel in places like Florida.”

About 12 percent of residential-loan defaults in February were strategic, meaning homeowners decided not to make payments even though they could afford to, New York-based Morgan Stanley said in an April 29 report. The rate, which was about 4 percent in mid-2007, probably will increase even if home values start to recover, said Frank Pallotta, managing partner of Loan Value Group, a mortgage-consulting firm in Rumson, New Jersey.

“After home prices bottom, the borrower in a position of negative equity is able to quantify exactly how long it will take to recoup the loss, and may decide to walk away,” Pallotta said.

Clients of Ron Wilczek, a real estate broker in Tempe, Arizona, two months ago bought a house near Phoenix even though they couldn’t sell their existing property because its value had sunk so far below its mortgage.

Now settled in their new residence, they may try to sell the first home for less than what they owe, said Wilczek, owner of Metro Phoenix Homes. If the lender won’t agree to a short sale, they may just stop making payments, he said.

“You can make the argument that you must honor your commitments no matter what,” Wilczek said. “On the other hand, you have people who are realizing that if they want any hope of a retirement or a better life for their families, they can’t keep paying for something that will never, at least in their lifetimes, regain its value.”

Here is the funny thing about people. When given the choice between being poor and living comfortably, they always seem to choose comfort for some reason.

Go figure.

Related Articles:

"Homeowners" Buy and Bail

Used Home Sales at a 3-Month Low

Trulia: The Sellers Are on the Run

Meredith Whitney Predicts a Housing Double-Dip

To learn more about Wealth Daily click here

Why Stalin's "lost oil" could bank you 180 times your money by this time next year

Joseph Stalin isn't widely known for the mistake he made nearly 70 years ago...

But he should be, because it stands to make a handful of savvy investors quite rich in the coming months.

In fact those who know what we've just uncovered could make as much as 180 times their money.

Read our latest report now before this story makes headline news.