What is the stock market doing today? May 2020 Update
One thing to keep in mind is when the coronavirus pandemic hysteria subsides the media will find another item to focus on. They are already directing the focus on Trump’s threat to issue new tariffs. Remember what we stated that the Coronavirus is going to be made to look at the straw that broke the camels back. The US is going to use this to mount a full-scale attack on China; the attack will most likely be in the form of media and economic warfare, with a minor chance of a warm encounter. Hence, regardless of whether Trump wins or loses the future narrative is already etched in stone.
While the media will do its level best to trigger a stampede, until the trend turns negative, every pullback regardless of intensity should be embraced, especially now that the Fed has openly declared war on the bears. Forever QE is here to stay until the masses wake up and right now you have a better chance of winning the lotto
Insiders are loading up on shares
As evidenced by the excerpt below, insiders are loading up on stocks left, right and centre. The astute investor would do well to follow in their footsteps; use strong pullbacks to load up on quality shares.
Insiders have been using this massive pullback to purchase shares, and one way to measure the intensity of their buying is to check the sell to buy ratio. Any reading 2.00 is considered normal, and below 0.90 is considered as exceptionally bullish. So what do you think the current ratio is; well, it’s at a mind-numbing 0.35, which means these guys are backing up the truck and purchasing shares.
Based on very heavy transaction volume, Vickers’ benchmark NYSE/ASE One-Week Sell/Buy Ratio is 0.33, and the current reading is 0.35. Insiders are not just buying shares, they are back the truck up. Insiders behaved in a similar fashion in late-December 2018. In early 2016 when stocks also corrected; and in late 2008/early 2009, at the depths of the Great Recession correction. Insiders seem to be telling us that today offers a similar opportunity. https://yhoo.it/2TV0cE2
The Crowd is Panicking
‘Don’t be fooled by the recent rebound in stocks; the investment scene is beginning to resemble the 1929 market crash and the early 1930s Great Depression.’ To me, it’s like 1929 when stocks first fell, then rallied before plunging anew as the Great Depression set in. In his Bloomberg piece, Shilling pointed to the 48% plunge in the Dow Jones Industrial Average from Sept. 3 to Nov. 13 back in 1929, a pullback which may have “seemed like a reasonable correction” at the time, since the blue chips had rallied 500% in the eight years leading up to it. https://yhoo.it/3aVVY42
We hope these guys keep publishing articles like this for it will add to the volatility creating lovely opportunities along the way up, to open even more positions at a discount. You have to love these guys; they preach gloom and doom when the Fed has openly stated they will do whatever it takes to support this market. You don’t fight the Fed when it puts the pedal to the metal
Now, these wise guys that felt so smart by blasting the hell out of us during the market meltdown will weep tears of blood shortly if they are not already doing so. They made the same mistake before, promising never to fall for the fake news/hysteria that made them dump their shares at the bottom.
But like mentally deranged individuals, they did precisely the same thing at the worst possible time, and what was their excuse; “it’s different this time”. Well, it’s always going to be different, and that’s the excuse the masses will use forever to justify the fact that they let emotion overrule logic and sold when they should have been buying. In the end, this story will be repeated again and again, because the mass mindset knows no better. Hence the saying misery loves company and stupidity simply demands it. Success is based on taking an approach that is bound to draw shouts of criticism from the masses. The only saying that comes to mind is the truth hurts and boy does it
What is the stock market doing today? Going Back to Dec 2006
The moving averages of new highs and new lows we maintain have once again suddenly changed direction. In fact, the 20 days moving average of new lows completely thrashed the 20 days moving average of new highs; it has now issued one of its highest readings in over 90 days and this is taking place when the Dow is trading in record-high territory Clearly the smart money is selling into strength, but this will prove to be a long term opportunity as the overall trend is still positive.
The Lower Standard Deviation bands on the Dow actually lost value; only the positive bands gained value. Such developments are usually bearish.
We have now established that a relationship exists between the Dow industrials, the Dow utilities and the Dow transports. This relationship is different from that of the Dow Theory; in fact, we are not true believers of this theory. We have also shown that this relationship has existed for a rather long time.
According to this relationship, the utilities lead the way up or down; there is usually a lag period of anywhere from 90-180 days between the utilities, the Transports and ultimately the Dow industrials. The charts below reveal that the Utilities have already started to pull back after putting in a series of new highs; though we don’t think they will correct seriously yet as they already experienced a rather hard correction after putting in a new high back in Oct 2005. Market Update Dec 2006
The really interesting development is that the Dow transports have started to break down while the industrials are putting in new highs. As the Utilities corrected rather strongly after putting a new all-time high back in Oct 2005 the Transports and the Dow have to play catch up. The Dow utilities went on to put another new all-time high after Oct 2005 but they only did so after experiencing a rather strong correction. This means that the Transports and then the Dow need to first correct and then if the relationship holds rally one more time. To put it simply the pattern appears to be holding as the Transports were the next in line to correct and then the Dow should follow.
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