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Stock Market Alert: The Dikembe Mutombo Continues to Hold!

Stock-Markets / Stock Markets 2018 Dec 19, 2018 - 04:21 PM GMT

By: Barry_M_Ferguson

Stock-Markets

A lot of people voice opposition to walls. Funny. There is a wall on the Dow Jones Industrial’s chart.

Yeah, I know. Readers of my blog are shocked that Dow 24k cannot be breached. Again, as former NBA star Dikembe Mutombo used to block shots near the basket, the Federal Reserve certainly does the same in stocks. Specifically, they are currently defending the Dow 24k line with great force and determination. Check my previous blog posts for the DML (Dikembe Mutombo Line) origination.


Fundamentally, there are reasons why investors would be selling stocks right now. Since President Trump’s election, there has been an unabated (early 2018 not included and now irrelevant) push higher peaking at, as I estimated in previous articles, at Dow 26k (Actually 26800 - the Fed was just showing off). Many market observers agree that stock prices are pricey, debt of all kind is due to delirium, corporate earnings may erode as the tax cut effect of 2018 ebbs, international problems seem to be proliferating, and the rest of the world seems to be wobbling economically speaking. There are many reasons to sell.

There are few reasons to buy other than Donald J. Trump is the current POTUS. We all know that in January the Democrats will again assume control of the US House of Representatives. Their single-minded mendacity will be directed at the POTUS and by definition or ‘representation’ the american citizenry. Absent the tens of trillions of stimulus money thrown at the economy and zero percent interest rates throughout the preponderance of President Obama’s term, the stock market indices would surely have led a route to depression. We should expect chaos and mayhem to ensue upon arrival of the democrats, socialists, the Marxists, and communists. Yes, the democratic party is indeed inclusive. Anyone that hates America and Americans is welcome.

Will the Republicans be able to stop the Democrats? I hardly think so. The Republicans can’t get in to the House Chamber because they are outside pulling on the door marked ‘Push’.

So, trouble could be in store for investors seeking returns in stocks. But ultimately, the Fed will save us all. As Nick Diaz once said to his opponent in mid-fight, “Don’t be scared, Homey.” 

Chart 1 below shows 4 days of trading with 15-minute bars for period 12/6/18 - 12/11/18. If we were calling a heavyweight fight that had turned into a slugfest, we would say, “…a left to the body, a right to the head, followed by a brutal left hook…” and so on. If we were calling the action on this chart, we would say, “…up 800 points, down a thousand, up 800, down 600, back up 500!” All that action is from 5 dominant waves of buying or selling over the course of just four days. Note the three times on this chart that the DML was challenged resulted in an immediate barrage of buying. Who buys this market when it is diving other than central bankers and other manipulators?  

Chart 1: DJIA - 4 day 15 minute bars ending 12/11/18

 

Chart courtesy StockCharts.com

How important does the DML look on a longer term chart? Chart 2 below is a look at the Dow Jones Industrial average since just before the 2018 election.

Clearly stock prices reacted positively to the election of President Trump. It may have done so had Ms. Clinton been the victor. The markets do what the Fed wants them to do. The important thing though is to stay in the moment. Why is the Dow 24k level (the DML) so important? One only needs to see Chart 2 for a visual as to tracking the most important factor driving stock prices. That, of course, is central banker support. Like most vermin, they leave a trail. I drew a line along the 24k DML. It shall not be breeched!

Chart 2: DJIA - Since just before 2018 election

Chart courtesy StockCharts.com

Barry M. Ferguson, RFC
President, BMF Investments, Inc.
Primary Tel: 704.563.2960
Other Tel: 866.264.4980
Industry: Investment Advisory
barry@bmfinvest.com
www.bmfinvest.com
www.bmfinvest.blogspot.com

Barry M. Ferguson, RFC is President and founder of BMF Investments, Inc. - a fee-based Investment Advisor in Charlotte, NC. He manages several different portfolios that are designed to be market driven and actively managed. Barry shares his unique perspective through his irreverent and very popular newsletter, Barry’s Bulls, authored the book, Navigating the Mind Fields of Investing Money, lectures on investing, and contributes investment articles to various professional publications. He is a member of the International Association of Registered Financial Consultants, the International Speakers Network, and was presented with the prestigious Cato Award for Distinguished Journalism in the Field of Financial Services in 2009.

© 2018 Copyright BMF Investments, Inc. - All Rights Reserved

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. 


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