$INDU: Update on 15/40 Exponential Moving Average Strategy

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Is Deutsche Bank the New Lehman Brothers?

Are we seeing a replay of 2008 when Lehman Brothers went bankrupt?  The rumor has it that Deutsche Bank is going bankrupt. We are not talking Greece here. We are talking Germany. Germany has held Europe together. Therefore, a collaspe of Deutsche Bank would have dire economic and financial ramifications for not only Europe but the entire global financial community. Maybe this is why the Fed did not increase interest rates last week. 

Fed's Wealth Creation Advertising Campaign for "Main Street"

By the way, this is the same advertising campaign that the Federal Reserve used in 2000/01 and 2007/08 to increase the wealth effect of those of us on Main Street. How well did that work out?

If You Thought August was Scary, You Haven't Seen Anything, Yet!

Mark Spitznagel is CIO for Universa Investments, which is a hedge fund. He is definitely an "Austrian Economist" directly aligned with Ludwig von Mises and Fredrich Hayek.  As you can tell, I am definitely a strong proponent of the Austrian School of Economics. For more information about Austrian Economics, click on Mises Institute.

I Know I am Preaching to the Choir -- But This is Not Going to End Well!

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Is This "DOG" a Winner?

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Global Dow Index (DGT)

The Global Dow Index is an equally weighted index of the world’s 150 largest stocks. It includes companies from developed and emerging economies as well as those from emerging economic sectors. Therefore, this index is an excellent barometer of the state of the global equity markets.  The index is traded as an “Exchange Traded Fund” with the symbol DGT. Along with weekly updates of the Exponential Moving Average Strategy on the $INDU, I will include the Global Dow Index (DGT) as well.

Wonder Why Trump Has Struck a Nerve with the American Voter – Look No Further Than the Following Chart

Since December 2007, according to the Household Survey of the Bureau of Labor Statistics (BLS), only 790,000 native-born American jobs have been added. Contrast that figure with 2,100,000 foreign-born Americans have found jobs over the same period of time.  Belt-line, traditional Washington politicians, you better take notice! 

$INDU: Defensive Position is Justified for the Week Ended Friday, September 4, 2015

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End of the Shemitah Year is Upon Us

The following post was written on August 8, 2015. Since we are now "one week away" from the end of the Shemitah Year, I thought it would be relevant to post it again. (My intention here is the reinforcement of learning through redundancy.) 

"First, what is a “Shemitah Year?” The Shemitah (sabbatical) is the seventh year of the seven-year agricultural cycle. During Shemitah, the land is left unused, including plowing, planting, pruning and harvesting. Other cultivation techniques (such as watering, fertilizing, weeding, spraying, trimming and, mowing) may be performed as a preventative measure only, not to improve the growth of trees or other plants. Additionally, any fruits that grow of their own accord are deemed ownerless and may be picked by anyone. All debts, except those of foreigners, were to be forgiven.

Second, every seventh year, the Shemitah, on the 29^th day of the Hebrew month of Elul, occurs.  Elul is the twelfth month of the Jewish civil year, or the sixth month of the ecclesiastical year in the Jewish calendar, August and September.  The current Shemitah year ends on September 13, 2015.  Also, on that date, we have Yom Teruah (Feast of the Trumpets) and ten days later we have Yom Kaphar.  (I will let you do the research on those two Hebrew festivals and their significance along with the meaning of Shemitah.)  By the way, I don’t consider it a coincidence that the greatest stock market “point crash” occurred on the 29^th day of the month of Elul (September 2008).  And, let us not forget the stock crash caused by the events of “9/11.”  When did that stock market crash occur?  On the 29^th day of the month of Elul, which was the exact day of the ending of the Shemitah year.

In conjunction with ending of the Shemitah year on September 13, 2015, we have an unusual astronomical phenomenon; a blood, red moon is expected on the evening of Elul 29, 2015 (September 13).  A blood, red moon is usually associated with “pending world chaos.”  Well, we already have a whole lot of chaos throughout the world. How much worse can it possible get? Maybe a whole lot worse.  If it appears to be scary now, just wait until it comes knocking at your door, especially if you don’t have the knowledge you are currently receiving by reading this blog.

Will we have another stock market crash following the ending of the current Shemitah year on September 13, 2015? The end of Shemitah occurs at sunset on September 13, which is a Sunday. However, a Jewish day goes from sunset to sunset. Therefore, Monday, September 14, would be part of September 13; and on that Monday, the stock markets will be open."

On August 21, the "Bearish Death Cross" was confirmed by the $INDU's 15-week EMA crossing below its 40-week EMA. So, as we enter the end of the Shemitah Year, the "Bear" has already spoken. Is more coming from this "Bear?" We may find the answer to that question very shortly!

Employment Report for August 2015

The unemployment rate for August dropped to 5.1%, which is well below July's 5.3%. The 5.1% rate is the lowest since April 2008. Good news, right? Wrong! Our economy is still not adding enough jobs to cover new entrants into the workforce. Well then, how did that unemployment rate drop from 5.3% to 5.1%?  It is all in the way the unemployment rate is calculated. I will try to make this as pithy as possible. First, the formula for the unemployment rate is equal to the "number of unemployed people divided by the number employed plus unemployed." Therefore, according to the equation, if you are no longer looking for work, because you are discouraged or can not find a job, the rate must go down. Therein lies the problem. For August, 261,000 individuals dropped out of the labor force but we only added 173,000 jobs. According to the Bureau of Labor and Statistics, who calculates the unemployment rate, those individuals, who can not find work or become discouraged after four weeks, are no longer considered unemployed. How illogical is that thinking? Just because one can not find a job, the government thinks that individual is satisfied with his or her lot in life. Second, given the 261,000 individuals are no longer being counted as unemployed, the labor participation rate is at the lowest rate since 1977, or 94 million individuals are no longer in the labor force. And, then, we have those economic pundits on the major cable channels claiming that since the unemployment rate is at 5.1% everything is just great.

Knowledge is powerful. The only problem is that one has to search diligently for it and then apply it. 

Federal Reserve System's "Normalization" Policy?

Lately, the Fed has been using the following phrase: "Return to Normalization." Exactly what is the Fed saying from the use of that phrase? Well, I believe it is an euphemism for a return to "higher interest rates" from the current artificial low rates instituted by its Zero Interest Rate Policy (ZIRP) over the past six years. Yes, I still believe that the pending Sovereign Debt Crisis will cause a flight to Treasury Bills and Notes. The consequence will be for interest to decline. However, in order to protect financial viability of local and state pension plans, the Federal Reserve System will have to raise rates. How soon should the above scenario start to play out? By guess is, of course, 2016.

Bear vs. Bull

The objective of the Bear is not to help those investors who are Bears to make money and hurt Bulls. The Bear wants everyone to be losers. And, that is so important for investors to realize during a Bear market. Bear markets will have massive rallies, which are usually caused by shorts having to cover their positions. That is why my focus is not on the daily noise (ups and downs) of the market but on the weekly closing prices, which eliminates all that daily noise. And, that is why I use the weekly "Exponential Moving Average" as my investment strategy. That is, if the DJIA’s 15-week EMA > 40-week EMA, the market’s trend is up (bullish). Likewise, if the DJIA’s 15-week EMA < 40-week EMA, the market’s trend is down (bearish). Currently, the phase of the market is bearish (trending down).

Early Equity Futures Point Much Lower for a Monday's Opening

$INDU's futures are down approximately "200 points" in early Sunday trading. Could this be a harbinger of last Monday? 

INDU's EMA is Bearish: Sell Equities and Move to TSYs

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Apple (AAPL): Stage 4 Declining Phase -- Avoidance

Am I Buying This Dip? Not on Your Life!

On Sunday, August 23, 2015, I said the following: “Therefore, my best guest is that we could see more early selling pressure Monday morning, which would be a continuation of Friday’s selling along with early selling pressure coming from Asia markets on Monday. However, I would not be surprised that early selling would lead to a price reversal that actually leads to the market closing higher on Monday. Then, the market could stage higher prices through Wednesday.  A sharp sell off Thursday and Friday, which would test Monday’s low.”

What happened on Monday? The DJIA plummeted 1,089 points right out of the gate, which was the largest single day drop ever.  By days end, the DJIA recovered about half of the initial loss to close over 500 points lower. According to my Sunday blog, the DJIA did not close up for the day; however, it did recoup a significant portion of that initial decline. Today, Tuesday, I was anticipated, as stated Sunday, a rally to carry the DJIA up for the day. Well, it started out very well. DJIA up 500 points, and, throughout the day, it was hovering about 250+ points higher. Then, in the last twenty minutes of trading, it tanked to close 204 points lower, which was very unimpressive.  I still believe that Monday’s low at 15,370.33 remains a critical mass. If that price level is taken out, say within the next couple of weeks, the next major support is at 14,300.

As I stated this past Friday, the DJIA’s 15/40-week Exponential Moving Average (EMA) Strategy has spoken that the trend has changed from bullish to bearish. And, until we have a reversal of that strategy, the best investments going forward are Treasury Bills and inverse index funds.

DJIA: Expectations for Monday, August 24, 2015

The “Exponential Moving Average” spoke on Friday, August 21. That is, the DJIA’s 15-week EMA closed below its 40-week EMA, which signaled a change in the intermediate trend from bullish to bearish. Since this is a weekly signal, any price action that happens during the week is considered “investment noise.”  That is, these daily price movements are an annoyance that must be put up with until the close of the market on Friday. However, Homo sapiens being an impatient lot do not want to wait until Friday. Therefore, my best guest is that we could see more early selling pressure Monday morning, which would be a continuation of Friday’s selling along with early selling pressure coming from Asia markets on Monday. However, I would not be surprised that early selling would lead to a price reversal that actually leads to the market closing higher on Monday. Then, the market could stage higher prices through Wednesday.  A sharp sell off Thursday and Friday, which would test Monday’s low. 

Update: As of 11:30 PM (EST), the DJIA's futures are down over 400 points. Definitely looks like a rough start for the market when it opens on Monday.