The Dow

DJFOR-W 8-22-2015

The failure of the Dow to close above 17007 confirms that we are not yet ready to take off to the upside. We needed a closing ABOVE 17007 to firm up the market to state definitively that the August low will hold and new highs are ahead. We needed a minimum closing ABOVE 16632 to firm up short-term support. The closing BELOW 16632 does not provide a Monthly Sell Signal; it is a warning that the Dow remains vulnerable going into September. Only a monthly closing BELOW 15550 would have been a MAJOR SELL SIGNAL that key support has held. Consequently, the close of August was not strong enough to avoid a retest of the lows. Therefore, the Dow did not finish in a position that would imply NEW LOWS ahead just yet and there was no confirmation of a bullish development.

The forecast array showed the week of the 24th as a Panic. However, the long-term turning point targets are for the week of the September 21. That will more likely than not now become an important turning point as it grows in intensity. This is not over until Obama sings.

We are at least going to see a retest of the lows and produce a lower weekly closing, unless we start to close significantly higher on a weekly basis above at least the 17875 level. Otherwise, a weekly closing below 16008 should signal a revisit of the lows during September. Only a breach of last year’s low will warn of the slingshot move setup. What would be very bearish would be a rally to retest the highs without new highs during the week of September 21, which would then warn of a crash.

jumper

Those calling for the end of the world and a 1929 type depression are only looking at the charts. They are clueless as to how everything else is setting up. Nothing is in line for such an event. Keep in mind that event created big government and socialism. This time government is in crash mode, not the private sector. Politicians will do the jumping this time. If the stock market to crashed, capital would then run to bonds. Just how low do you think interest rates would go — negative 20%? Come on. This is a 5000-year low in interest rates so we will have to flip out to the upside. There is no choice in this regard.

 

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NickelthroweR
NickelthroweR

Greetings,

The markets are so rigged now that it is impossible to predict exactly what it will do. My advice would be to enjoy the Market as it happens and not worry too much about trying to predict where it will go. For example, I live in California so the markets are open for several hours before I even bother to get up. When I do, I jump over to Bloomberg, look at the DOW and then read a few blurbs from the “experts” as to why that number is where it is. Pure entertainment.

Events are now in the driver’s seat so sit back and enjoy the ride.

Stucky

I have Fux Newz in the background as I paint.

Apparently, there are HUGE stock bargains RIGHT NOW!!! You fuckers here are stoopid for not getting in …….. NOW!!!! Because, this is nothing more than a market correction. Because, the USA!USA!USA! economy is fundamentally sound.

Stewart Varney doesn’t come across as an ass-klown so, few criticize him. But, he’s as evil a cockfuker out there as anyone. Just two things from the past couple days;

—– got into an argument whether or not politicians lie. He said very few lie. Rather, what they do is “spin”, which is far different than lying. That they have Amerika’s best interests at heart.

—– Bernie Sanders said something about the stock market being rigged. Stewart went on and on how that’s virtually impossible. That the stock market is one of the best and fairest indicators of this country’s economic health.

All Brit announcers should be deported back to their shitfuk country. Start with Stewart, a bought and paid for corporatefuk shill.

DC Sunsets

Idiot.

Money does not run from stocks to bonds. This post eliminated whatever respect I maintained for Armstrong.

For every dollar that goes out of a stock trade, a dollar goes into it. This is axiomatic.

What Armstrong (along with most people) forgot is that when markets decline there is NOT MONEY COMING OUT OF THAT MARKET. The same amount leaving with a seller had to arrive with a buyer.

What happens is that the wealth value of ALL the holdings that were NOT traded rises or falls with the market.

Who is so ********ing STUPID to think that if the market cap of a stock is $1 billion, it can be turned into 10000000 $100 dollar bills (or the electronic parallel to them), and then taken and placed into a different market?

Money doesn’t move from stocks to bonds or vice-versa. Those who repeat this are charlatans or fools.

What likely characterizes the path ahead is for EVERYTHING to drop in dollar exchange value. This is the essence of a credit collapse deflation.

dollars on one side————– assets on the other
____________________________________
………………………………….^………………………………..

It’s a teeter-totter. As assets rise in dollar value, the dollar declines in purchasing power. By flooding more dollars into the system, the Fed (in collusion with CONgress) decreased the value of each dollar and the dollar value of assets rose.

INFLATION! Voila! As long as the “assets” weren’t food, fuel, etc. it seemed like there’s nowhere near the actual amount of inflation as is actually being produced. Why, everyone’s getting rich! Right?

Even when houses skyrocketed in dollar cost, people celebrated! Why? Did they ever consider what would happen when their kids needed to buy a home? Or pay rent??

No.

I anticipate that the trust in the IOU value of government bonds, even the US T-bond, is going to begin visibly waning. Short-term rallies notwithstanding, the trend toward HIGHER interest rates is in place. The trend away from BLIND trust is in place.

The last asset class to hold up was stocks. While they may very well rally sometime soon and yet relieve the fear in the market at the moment, I still think the likeliest path ahead is down to depths not now imaginable.

The DJIA is now in a weekly downtrend, a condition not seen since 2011. The last time the monthly chart looked like this was then end of January, 2008.

Look at that point in time below. Yes, there was a rally in Feb. Look what happened during the next 15 months.

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=djia&uf=0&type=2&size=2&sid=1643&style=320&freq=3&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=13&rand=1474707617&compidx=aaaaa%3a0&ma=5&maval=13&lf=4&lf2=32&lf3=256&height=553&width=579&mocktick=1

DRUD
DRUD

When one looks at wealth from the most fundamental level (ie. land, time, labor, IP, energy, etc.) you soon realize that ALL financial assets are simply claims on this REAL wealth. The issue, of course, is that with our debt-based fiat/credit=money system, there are MULTIPLE claims on all the same real wealth.

A deflationary collapse of this system is baked in the cake. There really is no other path out. Sure, governments will try to “fix” the problem with the usual ideas (loose money policies, low interest rates (oops can’f go lower than 0, or can they?)) which will inevitably fail because we are bumping up again limits in REAL wealth. We have all been trained to measure wealth (to measure EVERYTHING really) in terms of DOLLARS. This concept is as absurd as it is ubiquitous. Money exists as a placeholder for wealth, but this system has made it more important than the wealth itself.

DC Sunsets

Totally agree, DRUD.

I find it fascinating that even actions that are obviously deflationary (e.g., ZIRP, bank bail-ins) are thought to be “deflation-fighting” tools.

What is an interest rate, but the price for borrowing money? What does it mean when the Fed can’t GIVE AWAY its credit at ZERO cost (excepts to those so politically-connected that they believe themselves immune to losses)?

It means there’s no demand for it. Fed Credit now is worth less than cow manure (which is useful fertilizer, at least.) Collapsing prices is a key symptom of the forces of deflation.

All roads lead to an accounting reconciliation of excess IOU’s and multiple claims on the underlying wealth asset. Given that government debt is an IOU based on the taxing ability, as the value of bonds decreases, it suggests that so too does the underlying value of what politicians can steal going forward.

Democracy, turning from thieves into cannibals….that’s that that signals.

DRUD
DRUD

And yet, supposed experts can be so entirely, willfully ignorant about this reality. Found this article over on dollar collapse.

http://www.japantimes.co.jp/opinion/2015/08/31/commentary/world-commentary/2008-crisis-comes-around/#.VeXbpPldXNt

My favorite line is: “The central bank can always — repeat, always — add to demand in the economy by directly creating purchasing power.”

Even when it is completely obvious to anyone that this is patently false.

DC Sunsets

Agreed. The Central Bank “adds” purchasing power by deleting it from elsewhere.

By adding credit, all it does is add repayment burden. Now, if the Fed elected to flood the country with actual banknotes, that’s a different story. Doing so now would likely destroy the value of the Fed’s own balance sheet. I doubt those clowns would do that on purpose.

I suspect that (printing ever-larger denominations of paper money) will happen sooner or later, but only once the Credit Hindenburg has thoroughly burned and the rallying cry is, “there’s a shortage of MONEY!”

DC Sunsets

From the article you linked, DRUD:

“There’s no question that helicopter money would stimulate demand.”

Spoken like a dyed in the wool Keynesian. What would he think if, instead of “stimulating demand,” all it did was pay off debt?

Yes, I know, abstract thought is an aptitude few columnists seem to enjoy.

DRUD
DRUD

The other huge misconception that abounds is that of central bank omnipotence, ie the concept that central banks control economies. Societies create economies because people cannot function alone, without trade/commerce. The course of the economy is decided by the masses, always has been always will be. Central banks CAN affect course changes through “monetary policy” which is really more like group psychology. Just like a handful of cowboys can drive a massive herd of cattle…but if the herd panics, central bank omnipotence disappears like a fart in the wind. We are in the late stages of that particular game.

Westcoaster
Westcoaster

Following your thread Drud & D.C., and your comments are spot-on. I look at it like a balloon. Sure you can squeeze one side, but the reaction will be to create a bubble on the other side. Squeeze to hard and…..pop goes the weasel!

robert h siddell jr
robert h siddell jr

DRUD, it’s a two layer cake: deflation of everything you own (except PM, weapons, food and farmland/water) but inflation of everything you need. BlackLivesMatter murders will become the modern dodos.

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