The Dow Jones Stocks Index Probably Peaked Monday (18th Nov 13)
Stock-Markets / Stocks Bear Market Nov 19, 2013 - 10:32 AM GMTBy: Brian_Bloom
I recognise that I’m sticking my neck out here, but this post will be short and to the point. It seems to me that, barring significant Fed intervention, the US equity market probably peaked today. Please take the time to read my “Author Comments” that follow the Conclusion.
Below is a weekly chart of the $indu (courtesy Bigcharts.com)
Chart #1 – Dow Jones Industrial Index
Note how the index is now hitting the resistance of the upper rising trend line.
Now look at the chart that illustrates investors sentiment as measured by Investors Intelligence, published a few days ago (source: http://www.yardeni.com/pub/stmktbullbear.pdf
Chart #2 Ratio of Bulls to Bears
Bear in mind that Chart #2 above was reaching for an all time high before the market hit its high today.
Finally, have a look at the Volatility Index below (source stockchart.com)
Chart #3 : Volatility Index
Note how the MACD histograms have been contracting and how today’s histogram bar penetrated above the zero line.
Conclusion
Barring significant interference from the Federal Reserve’s plunge protection team, it is highly probable that the US stock market peaked on November 18th 2013. If so, this is an extraordinarily significant development.
Author Observations
To me, the key issue is “confidence”, and one of the most important drivers of confidence is “credibility of political leaders”. The Obamacare debacle has seriously damaged the US President’s credibility and he is now being seen for what he is: A highly intelligent, brilliantly articulate theoretician who is more at home with giving speeches, networking and negotiating than he is with managing.
Quote: “President Obama has reached his lowest approval rating in any Quinnipiac University national poll since being elected president, with 39 percent of registered voters now approving of his job performance and 54 percent disapproving.”
Read more: http://www.washingtontimes.com/blog/inside-politics/2013/nov/12/obama-hits-lowest-approval-rating-presidency-poll/#ixzz2l239rnEn
Also, to illustrate that Obama is not alone in the world, the following is a quote regarding voter confidence in the French leader. This is relevant because, in my view, we are witnessing the beginning of a serious problem of principle – the principle being ” erosion of confidence in supposedly democratically elected leaders across the planet”:
“The latest data show a continued erosion of France’s industrial base and export share. It risks shattering the credibility of President François Hollande, who has been talking up recovery for months. A YouGov poll showed his approval ratings have dropped to 15pc, the lowest recorded for a French leader in modern times.” http://dollarcollapse.com/currency-war-2/welcome-to-the-currency-war-part-11-a-rising-euro-kills-the-recovery/
The US will too-soon be facing a situation where Congress will have to agree on raising the country’s debt ceiling. Against a background where the Conservatives want to cut spending and where the US president is lacking in credibility, it seems that time has run out. Mrs Yellen’s predisposiion to “want” to continue with QE begs the question regarding how the money the Fed prints is going to find its way into the main street economy, particularly if there are going to be limits set on government expenditure.
So what do we do (you and I and millions of ordinary thinking voters like us)? The question now goes far beyond “how can I make a buck?” The question now is: “How can we hold the system together in an environment where the democratically elected political leaders no longer have the voters’ trust?”
This particular question is what has been occupying my mind for well over a decade, and the answer seems to lie in the phrase: “We manage upwards.” Those of us who are capable of thinking more than superficial thoughts need to discuss amongst ourselves what it is that we want to see. We need to take the decision-making function out of the hands of our political leaders and give them guidance. This is how democracy is supposed to work. In theory, politicians should be following voter instructions. In practice, voters have become so dumbed down that the politicians (and those who they truly represent) have been given a free hand and they have stuffed up badly. The challenge thinking voters have is that we are facing uncharted waters and its not easy to come up with a cohesive approach.
Nevertheless, after decades of thinking about it, it seems to me that there are two “core” issues that need to be addressed:
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Unethical behaviour needs to be viewed as criminal behaviour for which there are legal consequences
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Because energy drives the world economy, we need to embrace high “Energy Return on Energy Invested” energy paradigms. (As solar and wind are both lowEROEI energy paradigms, they do not represent “practical” solutions to the overall problem of declining net energy output per capita across the planet)
My two factional novels – Beyond Neanderthal and The Last Finesse, are an attempt to address 1 and 2 above. Clearly, they are not intended to be “prescriptive” and should not be seen as such. Their main intent was to illustrate principles. We have been “gulled” into believing that the core problem is fiat currency. It is not. Fiat currency is just a symptom of 1 above. Moving to a gold standard, for example, will not address the self-centred predisposition of people to behave unethically to get what they want.
The two points above represent points of departure for serious discussion amongst thinking voters to evolve a way forward. The novels themselves, via their entertaining fictional storylines, provide further background information regarding what energy options are (conceptually) available – besides solar and wind - and why “personal ego” and “toxic testosterone” have probably been driving unethical behaviour, and what society might do to manage the now unacceptable and unsustainable level of unfetteredself centred behaviour on the part of decision makers in all walks of life.
Let it be very clearly understood: I do nopt believe that “socialism” is the answer. But it is now abundantly clear that limits need to be placed on personal unethical behaviour within a free enterprise environment. The interests of society as a whole must transcend the interests of the individual.
It will be very constructive if you were to read my two fact-based novels and recommend to your thinking friends and acquaintances to do the same. There are solutions out there. The primary challenge is that the system as it currently exists will not allow easily those solutions to be embraced. Vested interests have become too powerful. We need to change the system.
The books have been getting rave reviews from ordinary thinking people. They can be acquired in e-book format from Amazon and various other retailers for under $10 a copy. The Amazon links are:
Beyond Neanderthal (which offers a long term visionary approach)
The Last Finesse (which offers a near term and more pragmatic approach)
If demand justifies it, I will move to make both books available in paperback. Right now, Beyond Neanderthal is available in limited numbers in paperback
Author, Beyond Neanderthal and The Last Finesse
Beyond Neanderthal and The Last Finesse are now available to purchase in e-book format, at under US$10 a copy, via almost 60 web based book retailers across the globe. In addition to Kindle, the entertaining, easy-to-read fact based adventure novels may also be downloaded on Kindle for PC, iPhone, iPod Touch, Blackberry, Nook, iPad and Adobe Digital Editions. Together, these two books offer a holistic right brain/left brain view of the current human condition, and of possibilities for a more positive future for humanity.
Copyright © 2013 Brian Bloom - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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