It occurred to me I forgot to post my portfolio results for last Friday: +0.49%.

Now on to today’s results:
DRR: 1.22 to $39.55 (3.18%, -1.74% overall)–bought at $40.25
SPXU: 1.00 to $14.36 (7.49%, -6.27% overall)–bought at $15.32

OVERALL: +0.52%

“Did you know [October] is National Dwarfism Awareness Month? Neither did we. It would be easier to remember if they made it February instead.“–James Taranto

The overall market trend in the S&P 500 is still up. However, there are some dark clouds, as the world’s markets have opened this week on the downside, and U.S. index futures are down. Add to that the McClellan Index still shows overbought in the short-term view, and the VIX kept dropping Friday, and things are starting to look precarious in the equity markets.

Since today is the last day of the month, don’t expect a lot of volume. However, I would still advise against riding long daytrades too long.

This week’s “trick or treat” will come in the form of U.S. jobs reports, starting with the ADP Employment Change and Challenger Job Cuts reports on Wednesday, and culminating in the Unemployment report on Friday.

In the meantime, euro-skepticism prevails…

Next European problem: Undercapitalized banks
From Bloomberg:

Europe’s largest banks may raise just a tenth of the total capital shortfall estimated by regulators, fueling concern policy makers’ plans to bolster the region’s lenders could fail.

A tenth?! Even if that estimate is off a little, I think it is safe to say the plans to bolster the banks will fail. But then we shouldn’t be surprised the politicians underestimated the problem, since former European Central Bank head Jean-Claude Trichet had to convince Europe’s leaders that Greece had a debt problem, and it was a big problem for them.

Sarkozy can’t win
My sympathy goes out to French President Nicolas Sarkozy. Now he is catching political heat for having turned to China for assistance with funding the European bailout. Of course, his critics fail to explain how the bailout was going to be funded…

Euro deal has 2 weeks?
According to economist Liam Halligan, the latest deal to save the euro has about 2 weeks. While I agree with his basic premise that the deal is doomed to failure, I question where he comes up with the 2 week time frame.

This weekend, I decided to give you folks a special treat: The top 3 scariest movies for Halloween weekend:
1. Jaws: Any time a movie causes me to keep my head on a swivel anytime I am in the water at the beach, that movie has done it’s scary job! Of course, I know sharks mainly attack from below the surface, so you will rarely see a fin before the shark attacks. But that doesn’t help.

Aside from the fear factor, Jaws was just a great movie. Directed by Steven Spielberg, and starring Roy Scheider, Richard Dreyfuss, and Robert Shaw, the people involved were all top-notch, and the quality shows on-screen.

2. Alien: Imagine being trapped on a space ship, light years away from any help, with the biggest, ugliest, most dangerous bug-like alien monster, who just happens to have acid for blood. Alien, directed by Ridley Scott and starring Sigourney Weaver, takes the classic slasher flick plotline and puts it in space. If you really want a great double feature, follow this movie with Aliens, the sequel, which has a lot more action, and a lot more bugs.

3. Nosferatu: A silent film from 1922, Nosferatu is a film that any description does not do justice to the fear factor involved. Max Schreck, who plays the title vampire, is JUST scary. If you don’t believe me, watch it yourself. Following is the movie in it’s entirety:

U.S. Stock futures are slightly down at the moment, but I wouldn’t read too much into that. The more significant factor is how the world markets, especially in Europe, opened positive but are now turning negative. On top of that, the U.S. indexes are all at the top of their Bollinger Band range (although the Nasdaq does have a little room to go up), which means they will need a significant push to go much higher. Anybody out there want to put on some large long positions going into the weekend?

Two other things to look at today: First, the daily McClellan Oscillator, which shows a VERY overbought short-term condition on the NYSE:

Second, the VIX (Volatility Index) has moved out of the “fear” area:

Keep in mind that the lower the VIX is, the fewer short positions there are out there. This is significant when considering that short positions put a safety net on any market drops, literally providing “crash insurance”. I am NOT saying there will be a market crash today, but the odds of it are greater as the VIX drops. What I am saying is be very careful buying what looks like an oversold condition today, because there is a higher risk of that just being the beginning of a larger market drop. For daytrading, you are better off looking for the short-term overbought conditions and going short.

Samsung overtakes Apple in smartphone sales

According to Strategy Analytics, Samsung is now the biggest seller of smartphones in the world. However, as much respect as I have for Samsung, this news should be viewed with a critical eye. I work with a woman who used to work for Motorola, and according to her, smartphone makers are notorious for dumping unlocked smartphones in emerging markets as a way to increase sales. I am not saying this is how Samsung improved their numbers, but it is possible.

That said, Samsung did beat analysts’ estimates with their earnings report. Samsung is one of the few companies involved in the smartphone business which looks like it has staying power over the long-term.

The Spanish Mess

Spain’s unemployment rate hit a 15-year high of 21.5%, as consumer prices rose another 3% in October (after a 3% increase in September). But Europe is fixed, right?

Who knows what evil lurks in the hearts of men? The bond market knows…

Absolutely Europe is fixed! Italian 10-year bonds hit a new high of 6.06%. But…but…I thought Merkel and Sarkozy fixed everything?

Occupy London, but only part-time

It seems somebody used a thermal camera on the “Occupy London” protest, and discovered that 90% of the tents were unoccupied overnight. I can’t blame them, since I would rather sleep in my own bed at home, rather than a tent in London during an October night…

I am sure I wasn’t the only one who looked at today’s run-up in the markets and just scratched my head. In order to buy the long-term longs today, you have to believe the following:

1. The new European debt plan, after countless attempts going back to last year, will finally fix their problems, even though many of the details remain to be finished.
2. The U.S. economy is much better now because consumers are spending on their credit cards.
3. The Congressional Supercommittee will find a solution to America’s super-sized debt. Or else you believe they won’t and the automatic $1.2 trillion in budget cuts over the next 10 years will be good.

We can revisit this after the markets crash…

In the meantime, my portfolio is eating it:

DRR: -1.56 to $38.31 (-3.91%, -4.82% overall)–bought at $40.25
SPXU: -1.54 to $13.38 (-10.32%, -12.66% overall)–bought at $15.32

OVERALL: -1.10%

If you are ever looking for international investment ideas, Simon Black’s blog, Sovereign Man, is a great place to look for them. Black is a world traveler who looks for investment opportunities all over. He had a post 2 days ago, “Vast business and investment opportunities in Mongolia”, which I found intriguing. So I decided to do a little research into companies and other investments involved in Mongolia (Note: If you are doing research and come across “Inner Mongolia”, that is NOT part of Mongolia. Rather, it is a region of China.).

Following is a list of companies that have some operations in Mongolia, although they are not primarily in Mongolia. Keep in mind, these are not recommendations (although I will answer any questions you have about them). These companies are just presented for your information, in order of market cap:

1. Ivanhoe Mines Ltd. (IVN)*
2. Dennison Mines Corp. (DNN)
3. Entree Gold Inc. (EGI)
4. Telestone Technologies Corp. (TSTC)

Of the companies above, the best financials belong to Telestone Technologies, a Chinese company. With the recent controversy surrounding Chinese companies and their accounting practices, proceed at your own risk. The other three companies are typical mining operators with ugly financials.

Arguably, the best known of the Mongolian companies is the Mongolian Growth Group (MNGGF), mostly because it is the only stock you can trade of a pure Mongolia play. MNGGF is a real estate, financial services, and insurance company that only operates in Mongolia. Since it is a young company, it is difficult to say how soon they will be profitable, although they are certainly growing. MNGGF is a speculative play, and should be reviewed on it’s own merits (although most of what I have read has been positive).

Another lesser known Mongolian company is SouthGobi Resources Ltd. (SGQRF in the U.S., but is also traded under other symbols in Canada, Hong Kong, and several European exchanges). SGQRF is a coal mining company, which is really convenient for them because China is nearby and uses a LOT of coal. However, their free cash flow is horrible even though their debt is reasonably low.

But for a somewhat more reasonable Mongolian coal mining company, Mongolian Mining Corporation (MOGLF in the U.S., but I think it is also traded on several of the German exchanges). MOGLF specializes in coking coal. Their financials are a bit cleaner than SouthGobi, although both companies are speculative.

There are a few other Mongolian penny stocks out there, but they are too speculative even for my tastes.

Finally, there will be a Market Vectors Mongolia ETF, but it isn’t out yet. According to the last Van Eck (the company which peddles Market Vectors etf’s) filing with the SEC, it is scheduled for November 9th, but they have put it off several times before, so don’t assume it will happen.

Overall, my best advice is to take a small position in MNGGF, but only if you don’t mind a highly speculative play. However, Mongolia Growth Group is the most reputable (and don’t mistake that for actually being reputable) of the Mongolian stocks right now. These are mostly microcap stocks with high upside, but also a big fat zero on the downside.

One other thing to remember is that Mongolia is more of a “frontier market” than an “emerging market”. That means the upside is huge, and the downside is a worthless investment. However, as frontier investments go, Africa being another one, I prefer Mongolia. With a huge customer for Mongolian resources in China (both countries have very good trade relations), and a parliamentary republic government, as well as a culture which screams “capitalism”, Mongolia just seems like they are in the growth sweet spot right now.

*Rio Tinto (RIO) is involved in a project with Ivanhoe in Mongolia, but the Mongolian exposure of Rio Tinto is just too small to even bother mentioning them in this post.

U.S. 3rd quarter GDP came in line with estimates at 2.5% annualized. So with Europe fixed (yeah right) and the U.S. economy rolling right along (never mind the 402,000 more unemployed people last week), the markets will roll along merrily. But how far?

For the S&P 500, I see the next key level of resistance at 1274, the 200 day moving average. But I will be surprised if we break that today, but not impossible in the next several days. However, if the S&P bounces down from 1274, probably on less-than-stellar news, then 1256 could provide some bottom resistance, or we could see a return to yesterday’s close of 1242.