COMMON SENSE

The stock market is not the economy, yet the Financial Cheerleaders on CNBC shout rational recovery of the recession.  First, the cheerleaders told us not to expect much movement in the stock market in August, yet the market has been trending higher.  I have talked about the low trading volume and the use of computerized programed trading that causes low volume days to move higher.  The predictable Irrationality of the stock market is always explained away by the CNBC cheerleaders, who continually urge their viewers to “buy something” now!

However, the rational reality cannot hide from the sad performance of General Electric’s (GE) share price.  It is the worst performer within the Dow Jones Index over the last 9 years.  After all, isn’t that what CNBC viewer want, the “long term investor’s point of view.  Well, maybe they have a financial interest in becoming cheerleaders for the Dow Jones Index, since General Electric owns CNBC network. In fact, the worst performing stocks in the Dow Jones Index over the last 9 years, for long term investors, is self explained in this chart.

Is it ironic that none of the CNBC cheerleaders have shown you the actual long term results the Dow Jones Index?  What did you expect?  The never told you it was time to sell, only to buy, buy, buy.  I think their favorite line for morning guests are, ” So, what are you buying now?”  The predictable irrationality good ole boys are only too happy to tell them what they have already bought.  So you will place your orders to buy the stocks they already own.    If you look at the next chart, there are only 10 stocks of the Dow Jones Index which have a positive return over the last 9 years!

Notice the list of stocks in the top 10.  Who would have thought Caterpillar (CAT) would have out performed a technology firm.  I would think that given the furious buying activity within the NASDAQ market, the leaders would be technology stocks.  Someone asked me 9 years ago would the NASDAQ every get back to 5000 points.   I said, sure, around 2018-2020!   I am going to revise that to 2036 for the NASDAQ…. maybe.  Hey, look at the Japanese market, still in the tank from it’s all time highs.  Remember last summer, all of you were complaining about the “greedy oil companies” gouging you at the pump?  I told the complainers, “you had better hope that gas prices rise to $10 a gallon, other wise your 401k plan will be cut by 50%.   Which has more money in it, you gas tank or your 401k plan?  The Fed was trying to create inflation at that time, but they are always behind the curve!  Now they are creating the biggest liquidity trap in the modern  world.

Now the stock market is rebounding only because of the massive government bailouts and those who “day trade” the stock market with programmed trading.  The stock market has been manipulated once again by the “Feds Plunge Protection Team“, which buys stocks and bonds.  Why, just last week, the Treasury issued bonds, which no one wanted.  So the bond were sold to a primary bond dealer…. can anyone guess who’s the dealer?  I bet you a dollar, it was someone who received TARP money!  The Treasury bonds were then sold back to the Federal Reserve in 10 days!   Can you say “Enron?”  Once again, the middle class will pay for the parties for those on Wall Street.

Despite the Irrational Recovery of the stock market, looking at the stock returns on the Dow Jones Index, does not give me hope for the future.   None of the CNBC cheerleader have mention the words “toxic assets”, nor the 9 million mortgage foreclosures.  The commercial real estate collapse has yet to materialize.  Quietly kept under cover as the largest commercial property owners go to the Fed and Treasury to receive bailouts!  You have to understand, all markets are connected easily manipulated.  Everyone is talking about the “Wiemar Republic“, and the causes of hyper-inflation on the economy.  I don’t think we are heading for hyper inflation, but the “Mother of all Depression.”   The economist who are predicting hyper inflation have failed to remember the “baby boomers”, and they are “mad as hell!”    What are the baby boomers going to do?  They were told that if they have invested in a 401k plan, bought a home, maybe a second one at the lake,  they could retire in luxury and travel around the world!  You can bet, Wall Street is laughing all the way to the “Hampton’s” with all they money they have made off the 401k “dumb money.”   The Wall Street insiders call 401k plans “dumb money” because it just keeps pouring in as long as people have jobs.  Some point in time, when people begin to loose their jobs, they will be forced to take some of the “dumb money” out of the 401k plans.   When the baby boomers hit 59 1/2…. there could be massive withdrawals from these plans.  Can you stand another 50% drop in your “long term investment?” Will you be able to work another 20 years before you can retire?

I feel, we have less than 90 days to put a plan together to protect your ass…ets.  The first step will be the hardest for you to take, because it involve learning how to manage your own money, while you still have some.  I am putting the finishing touches on a free DVD to help you get started with the next financial disaster that’s coming.

Please post some comments at the end of this blog.

What financial  information would you like to learn?

Doctrader

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Theres this thing called 401K plans. Thats when your employer doesnt have a set retirement plan and you deposit your money into a special savings account that holds mutual funds. Those advisers always say: Put it in stocks because thats where the growth is and you dont want inflation to destroy your savings. So, like an idiot, I believed them and dutifully saved my money. Lately, the fund seemed to be growing smaller, but the professional advisor said keep it where its at. You have to take the good with the bad. You will be ready when stocks go up. Then, there was this one week where the market kept going down and down and everyone said were doomed but I was trying my best to keep strong and stay the course.
Sigh

My 401K now barely exists. Where did all that money go? Thats okay, I dont need to retire.

Still, it could have been worse. Remember when they wanted to privatize social security and turn it into a big 401k plan for everyone? Imagine how that would have gone!

Duration : 0:1:33

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The December 19, 2005 edition of Newsweek, an article by Jane Bryant Quinn titled “Investing Goes Back to Basics” includes the following text: “All-in-one funds are also the cure for people who think they can “time” the market by buying stocks when they start to rise and switching to cash before they fall. A new study by the University Of Michigan School Of Business, funded by Towneley Capital Management, throws a wet towel on those dreams.”

Now you have to stop and think about who is funding this study, a capital management company. In case you don’t know this either, the University of Michigan issues a report about consumer confidence on Friday mornings. What you may not know is that the University of Michigan sells the results of this report on Thursday to companies for advance release. When the report is released on Friday mornings, those with advance knowledge have already traded on the information through the futures market. The Market Media Matrix strikes again.

Getting back to the report of market timing versus long term “buy, hold, and hope strategy,” the article written by Jane Bryant Quinn’s says, “If you invested $1 in the market in 1963 and held through 2004, it would have grown to $75, with dividends reinvested“. Wow, I bet you just can’t wait for each dollar you have invested to “grow” to $75 in only 42 years!

The previous statement is called “the bait”, in the bait and switch selling technique. Here comes the switch. “But markets move in spurts. If you happened to miss the 90 best-performing days out of that 42-year span, you’d have earned only $2.70.” Not only is this the switch, but they have include a dire warning that if you try market timing, you will end up broke! My interest was peaked when I saw the 90 best performing days mentioned in the article. So, what this article is saying, you only needed to invest money for 90 days to make your money grow, the other (365 days X 42 years= 15,330) -90 days= 15240 days) 15240 days your money is just sitting there doing nothing.

The true purpose of this study is based in the next statement. “However, if you guessed right to avoid the worst 90 days, you’d have turned $1 into $1,694.” Are you scratching your head now? I guess my mind just works different than most people, because I try to see things logically, so this is what I am thinking.

Choices A, buy, hold, hope for 42 years for 90 good days in the market, results $75.
Choice B, time the market yourself and miss the best 90 performing days, results $2.70
Choice C, use market timing to avoid the worst performing 90 days of the market, results $1694.

Given the choices of A, B, or C, everyone would want choice C. So how does one go about learning how to time the market? The Harmonic Stock Clock uses simple rules to help you do your own market timing for your own stocks. How does the Harmonic Stock Clock help you do this? Look at the sample charts below, you will see the ideal time to buy a stock and the best time to avoid market tops.

Click here if you would like more information concerning the Harmonic Stock Clock

God Bless

Doc

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Market Built By Fear,
not from falling prices, but from missing the next rally.

After Roflma with the cheerleaders comments, I had to look up the facts to help you balance the “new bull market” froth. If you are a trader, then have go with the signal lines, if you are “buy, hold, and hopeful,” the you love the pep rally every night on cnbc’s “Mad Money”. It’s funny, you need some humor at the end of the day of trading, I get my “captain and coke and watch the show. I thought about taking the show seriously, but you know, you just never get a “sell” on some stock picks., like.. EL, GP, PG, EPL, NFX, these were the picks 22 days ago. Just for giggles and grins, you should track all the “perma bull cheerleaders stock picks. Maybe it’s bad “karma”, as soon as a stock is recommended, people sell the stock. Or I could be more cynical… Oh well,.. Another note about a 1 day market move. The executioner’s line is still above most stocks, hanging over their heads until prices get close enough for the chopping block. I am talking about the 50 day moving average line, something that all money managers use to justify their holdings. The dirty little secret is that when the 50 day moving averages drop below the 200 day moving averages, the money managers fiduciary responsibility is to liquidate some or all his stock position.. Believe me when I say, the money managers are too lazy to go through the hassle, that is why we have been in a trading range. The other little dirty secret is that of program trading, if the market averages are controlled not hit the “trading curbs”, they can continue to churn their portfolios over until the next quarterly report.
Interesting… note.. when the bull market began in 10-‘82 to 10-‘85, market gains were up 35%. However, that was at the beginning of a new bull market, not like this secular bear market. The rates of return in 10-‘84 to 10-‘87 were up 83%, then just 1 day after the 10-19-‘87 crash, the Dow Index was up only 42%. There are so many hedge funds and program trading that makes this market very easy to manufacture a market rally by using the futures market leverage. You see, the Fed has protected the big hedge funds, just as they have done before in 1996,1997, 1998. The fed allowed the stock market bubble to inflate, fearing inflation, when had deflation in 1999 an 2000. and they have always been behind the curve when fighting inflation. In 1987, I was investing other people’s money in safe mutual funds for their IRA’s, there were around 3,000 mutual funds then. Compare that to with over 30,000 mutual funds and variable annuity accounts by insurance companies. In 1990, there was $39 billion in hedge funds, now there are $972 Billion. All these markets are inter-connected with foreign financial markets, it will take just a push on the button to “sell“ as it is to push the button to “buy“. Hey, do you remember when they told you that a lowly employee at a hedge fund, pushed the sell button for 15,000 sp500 contracts? Caused the market to drop around the world. If you can find a source for that story, will give you a free “Harmonic Clock Stock Book“ . Just send me an email to Doctrader@nospamyahoo.com

Since 10-18-2002, the cyclical short term bull market rally, the Dow Index is only up 24%. So I have to concluded that this market is not a “new long term secular bull market, but just a fading bull market in the last gasp for higher ground. These hedge funds also owe an debt of gratitude for all that the Alcazar Greenspan has done for them, so they don’t want him to retire with another tulip bulb bubble collapse under his reign.

With all that said, I did go short this morning after the first red zone time, but after the oil inventory report, the “feds plunge protection team“ started a systematic buying binge to squeezed all the “short out of the market above the harmonic green signal line. By the time the second red zone time, I was out of the shorts, the market was being supported by the red signal lines. By the time the master harmonic pivot time had arrived, price had moved too fast according to the harmonic heartbeat, so it was a good time to go short again, after I had two down candles. By 11;15, was out of the short and out till after 1 pm. After lunch, looked at the advance decline line, declining issues dropped from 2300 down to below 2000. That’s a good indicator to watch, when there is a programmed turn around, this indicator will suddenly reverse directions starting at 1 pm, till the end of the day. This market is built on fear, not from falling prices, but from missing the next rally. They did, went long the rest of the day after the first harmonic time after 1 pm. If you look at the market on a 2 min chart, or higher timed framed charts, the index never touched the red signal line for the rest of the day! The velocity and tci indicator never dropped below the zero line either.

Usually when the market trades up through the green signal line on a daily chart, the market registers a triple digit gains. One thing that concern’s me about today’s trading, is that some hedge funds are using my harmonic stock clock signal lines. They have programmed the signals into their computers, how can I tell? The big trades that come through the market during my harmonic clock times zones. The program trading starts the buying frenzy off in low volume time zones and the program traders are taking profits when prices exceed the harmonic heartbeat. That is good for you the small investors and for the swing and long traders. The more the harmonic stock clock system is used, the truer the signals are for everyone. The danger of program trading is that all these computer’s are competing against each other and the long term investors may be caught off guard with losses like what happened in 1987. If there is follow through for today, the market is slightly overbought, based on my Harmonic Heartbeat indicator. For Tele chart Gold users, the T2107 indicator and T2118 are still trending downward below all three signal lines. Good luck trading.

Past yearly performance of the Dow index during the month of October as measured from October the prior year.

10-19-04 to 10-19-05 4.3%

10-20-03 to 10-19-04 1,2%

10-18-02 to 10-17-03 16.8%

10-19-01 to 10-18-02 -9.5%

10-19-00 to 10-19-01 -9.3%

10-19-99 to 10-19-00 -.6%

10-19-98 to 10-19-99 20.%

Value of the Dow Index during the 18 year secular bear market
as measured on or near October 19th.
66—785
67—903
68—967
69—839
70—756
71—868
72—932
73—963
74—655
75—842
76—950
77—812
78—846
79—815
80—961
81—847
82—1014
83—1247
84—1226

For those interested in buying the Harmonic Stock Clock book, the alternate website is still running.
Doc

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