Little action in the markets during the past couple of weeks. It does look like correction is soon approaching. I counted an Elliott five waves from the January lows in the Dow Jones Industrials. Wave number five may not be completed, however there are indications such as the diverging MACD (a momentum indicator) that the uptrend, at least in the short term, is waning. The recent high of 18668 is barely higher than that of the 18662 high in mid July. The MACD has been declining since as seen circled below, a clear divergence.
I am making a revision to my long term forecast for stocks. Below is my previous labeling of the Dow Jones Industrials which encompassed the giant triangle formation starting in 2000. I believed that the Dow would soon top and then drop to 5000 within a few years. I then predicted the Dow would make a new all-time high of perhaps 30-40k by year 2025 or 2030. That would be the final leg (Wave 5 of 5 in Elliott Wave terms) of the great bull market that started a hundred years ago.
I now give a greater possibility that the current seven year bull market IS the final leg of the bull market. The giant triangle pattern from 2000 to present is not an expanding triangle five-wave pattern. The formation from 2000 to 2009 is a three-wave “zigzag” pattern.
Erectus Walks Amongst Us, by Richard Fuerle, challenges the political correctness and mainstream assumptions about race, genetics, and the origin of modern Man. I found the book absolutely amazing in terms of information. Much of the stuff I never heard before. I had briefly written a review of this book earlier this year. This article explains more in depth about my findings. BTW, a hard copy of Fuerle’s book is over $150 from Amazon the last time I checked. Fortunately you can read it here for free: http://erectuswalksamongst.us. I am not writing this out of prejudice or hate but to better inform.
The out-of-Africa theory goes something like this: all humans on earth evolved from Africa (By “Africa”, I’m referring to sub-Sahara Africa). Africans migrated out of their continent around 65k years ago. They first replaced the Asians and then the Europeans. Because of their superiority and strength, the Africans were able to replace the more primitive populations of homo erectus and neanderthals in those continents. Thus everyone’s roots can be traced back to Africa. According to Wikipedia, the OOA theory is the most widely accepted model of the geographic origin and early migration of anatomically modern humans among paleo-anthropologists. I will show you, based on the book, that this theory is flawed.
“Throughout history, most of the instances of people from one region attacking and conquering substantial portions of another region have involved ‘northerners’ invading more southerly lands.” (Hart, 2007).
Last week, the Dow Jones Industrials lost 139 points and the S&P 500 was virtually flat. The market continues the week with little change.
The Dow Transports, as I’ve noted in the past, still lags the Industrials and S&P 500. While the Industrials and S&P 500 have made recent new highs, the Transports is still 16 percent below it’s November 2014 high of 9300. This is likely a telltale sign of the weakness of the markets overall. Whether this trend continues or not remains to be seen.
Economy will continue to expand slowly for 2016, but will likely plunge next year. I advise you to stay liquid and put off major purchases such as real estate, major business investments, and medium to high-end automobiles. You should start taking money out of the banking system and into gold, cash, Treasury bills, and Bitcoin. Do not wait until disaster strikes – react BEFORE disaster strikes.
Both the S&P 500 and Dow Jones Industrials made new record highs this week. Stocks have rallied for three weeks in a row following the Brexit drop. The bull market, which started in March 2009 is now seven years old. How long will the rally continue?
Although I believe the next crisis will be deflationary, I don’t have a crystal ball. I believe the best strategy to preserve your hard earned savings is to prepare for both the scenarios of inflation and deflation. You should divide your assets evenly between those that will benefit during inflation and those that will benefit during deflation.
It is true that much of what has taken place in America over the last 100 years has been constant inflation mixed with a few very brief spurts of deflation. Most of the time your assets would be fine parked in gold, silver, stocks, bonds, real estate, and collectibles. But the history of constant inflation has made most believe deflation will never happen and few are prepared for it. Again, that’s why you need to prepare for both.
Stocks continue to rally. The S&P 500 is only five points away from their May 2015 all-time record high. The Dow Industrials is just over 200 points from it’s record. The rates on both the 10 year and 30 year Treasuries made an all-time record low this week.
Despite the rash of shootings and continuously negative press that guns have gotten, firearm sales continue to go up. I’m not sure if it’s from the persistent fear of tighter gun control from the Obama administration or if it’s from the fear of increasing crime and terrorism. Or perhaps a combination of both. But whatever it is, guns have been rocketing in sales.
Stocks this week exploded to the upside after last week’s beating on Brexit news. The Dow Industrials recovered all of last week’s loss. The markets, though, have been absolutely directionless for the past 14 months. What to make of this recent rally?
Mac Slavoof http://www.shtfplan.com presents a list of 100 items (below) that are likely to dissappear in a SHTF scenario. While I don’t think it will get bad enough in the US to warrant this type of preparation, other parts of world will probably experience chaotic conditions when the global economy turns south. The author expects hyperinflation and shortages. I, on the other hand, expect the opposite – deflation and surpluses. Even when the Dow Jones was at 6500 back in 2009, we were not experiencing riots. There were no widespread water or electricity shortages that I knew of. Utilities were not being cut off. I do believe the Dow will decline to 5000 within 2-4 years, which would represent a 70 percent decline from here. Certainly a significant decline and one that portends a sinking economy, but even at this level I don’t think it will be quite SHTF. That scenario I believe is at least 15 years away. The list below is interesting nevertheless and there are useful tips. Some items you should have in handy regardless of the situation, such a generator during power outages.