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Dow Jones Industrial Average Index Set To Defy Naysayers

Dow Jones Industrial Average Index Set To Defy Naysayers

Being ignorant is not so much a shame as being unwilling to learn.
Benjamin Franklin

Updated April 2020

Dow Jones Industrial Average Index Set To Soar

Fear sells, and like misery it demands company.  The so-called crash in August triggered dozens of hibernating bears to emerge from the woodwork. Rested from the last severe beating they took, they are ready for another healthy dose of pain. In their quest to push the fear factor a notch higher, celebrity perma-bears such as David Tice are brought out confirm that all is not well.  If the Dow Jones Industrials average Index was destined to sink into the gutter, David Tice would not have sold his Prudent Bear fund at the peak of the 2008-2009 financial crisis.

Then you have many others taking out expensive ads calling for the end of the world. A close look will reveal that these same chaps were bullish once an upon a time and have now jumped ship. Then you will have those who came out when the markets were pulling back, 2003 and 2008 come to mind. On each occasion, these chaps were right for a brief period. The better option would have been to open long positions in top companies and let your profits soar. Something so simple, is not easy to sell, so the spin doctors to sensationalise the event.  If you something sounds too bad to be true, then it probably is and vice versa.

Even though the markets pulled very strongly in August, these fear mongers are still pushing the same old theme.   Avoid these individuals like the plague. From a contrarian perspective, the only role they play is to inform you of what you should not be doing.   We find it quite amusing that even though the markets have virtually recouped all their losses, these guys keep stating that a crash is in the works.

A recent report illustrated that roughly 90% of all articles published in the Washington post have a negative connotation.  With the election cycle underway and the candidates jockeying for the head position of Jackass, the airwaves will be blasted with even more negativity.  Negativity attracts even more, negativity;  expect every negative story to be blown out of context while positive events will be marginalised.  As far as we are concerned, this is a great development, for negativity is a precursor to panic and panic is the precursor to opportunity.

We believe the markets will trend upwards for the following reasons:

 What’s next for the Dow Jones Industrial Average Index

The markets have covered a lot of ground over a very short period of time.  Thus, we feel that it’s time for another bloodletting stage.  Ideally, the Dow would come close to testing its lows again, and put in a higher low.  This will set the stage for a nice strong year-end rally, that should continue well into the first quarter.

Markets climb a wall of worry and plunge down an abyss of joy.  As masses are far from joyful, treat every strong pullback as a buying opportunity.

He was so learned that he could name a horse in nine languages; so ignorant that he bought a cow to ride on.
Benjamin Franklin

Dow Jones Industrial Average Index Update April 2020

V-readings are in the stratosphere, and that seems to be fitting given the extreme moves we have seen in the sentiment arena and the markets.  One should therefore not be surprised by 1000 point moves in the Dow, for it’s going to occur regularly.  Last week the Dow tacked on over 3600 points in less than three days. There is a strong chance that the Dow could still experience a 3000-point move in one day.

We almost have a “mother of all buy signals”, another small downward move and our indicators will be in place to trigger this signal.

We are dangerously close to hitting the upper limit of the madness zone.  Bear in mind that before this pandemic, the gauge never even hit the extreme end of the hysteria zone. So, this is an unprecedented development. Given this massive move in the anxiety gauge, neutral readings would now need only to dip down to 10% to trigger the “father of all buy signals” provided our technical indicators move to the extremely oversold ranges, and the Trend indicator remains positive (bullish).

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Market Sell off; is it time to panic  (Sept 12)

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