The Dow
The failure of the Dow to close above 17007 confirms that we are not yet ready to take off to the upside. We needed a closing ABOVE 17007 to firm up the market to state definitively that the August low will hold and new highs are ahead. We needed a minimum closing ABOVE 16632 to firm up short-term support. The closing BELOW 16632 does not provide a Monthly Sell Signal; it is a warning that the Dow remains vulnerable going into September. Only a monthly closing BELOW 15550 would have been a MAJOR SELL SIGNAL that key support has held. Consequently, the close of August was not strong enough to avoid a retest of the lows. Therefore, the Dow did not finish in a position that would imply NEW LOWS ahead just yet and there was no confirmation of a bullish development.
The forecast array showed the week of the 24th as a Panic. However, the long-term turning point targets are for the week of the September 21. That will more likely than not now become an important turning point as it grows in intensity. This is not over until Obama sings.
We are at least going to see a retest of the lows and produce a lower weekly closing, unless we start to close significantly higher on a weekly basis above at least the 17875 level. Otherwise, a weekly closing below 16008 should signal a revisit of the lows during September. Only a breach of last year’s low will warn of the slingshot move setup. What would be very bearish would be a rally to retest the highs without new highs during the week of September 21, which would then warn of a crash.
Those calling for the end of the world and a 1929 type depression are only looking at the charts. They are clueless as to how everything else is setting up. Nothing is in line for such an event. Keep in mind that event created big government and socialism. This time government is in crash mode, not the private sector. Politicians will do the jumping this time. If the stock market to crashed, capital would then run to bonds. Just how low do you think interest rates would go — negative 20%? Come on. This is a 5000-year low in interest rates so we will have to flip out to the upside. There is no choice in this regard.
The DOW for the Close of August
The DOW recovered for the close of August, holding key support and last year’s low. Make no mistake about it, we now need to hold last week’s low in order to see the Dow continue to advance into 2017. A breach of that low will warn of a slingshot type move setting up. That would mean we will fall first to the 14000 zone and then swing to new highs. This can be accomplished with a low in early 2016 and a rally thereafter once everyone realizes it is government that is melting down.
It will become extremely important to watch Weekly Bullish Reversals from here on out. If they are elected, then the crisis is more immediate. If not, then we get the dramatic false move on a yearly level. That will warn that indeed we may be witnessing the full blown collapse of the monetary system, which would become obvious as soon as 2017.
DAX for the Close of August 2015
On the monthly level, the DAX has not yet given a long-term sell signal. August indeed produced the Panic Cycle the computer highlighted for August, and we still see September as a target for a turning point.
If the DAX can establish a low with the ECM, then it will be in a position to rally further upon electing any Bullish Reversal generated from that low. This would seriously imply that the shift from public to private assets will be seen in Germany as well.
Market Talk — September 1, 2015
You can always expect a quiet session when one of the major centers are out for a bank holiday, and that was what we saw yesterday. Not that dealers needed much of an excuse after last week’s fun and games. Asia did have a weak session after all the talk of the possibility of the Federal Reserve raising rates in September; we saw most Asian equity indices lower by around 1%.
Europe lost most of last week’s positive energy and we saw 1-2% losses across the board for DAX and CAC whilst FTSE remained closed. The DOW did swing within a 300-point range but that does not feel as spectacular after last week’s 1000-point days.
Oil had quite a volatile day on Monday, initially lower around 2.5%, but in the late U.S. session saw good buying ending almost unchanged on the day. The TWI/Brent spread still trades around $4.75. Early Asian talk of continued China slowing has hit the black gold to Monday opening levels (-3%). Gold was treading water for much of the fairly quiet session but has managed to bounce in early Asian trading Tuesday. More talk of Chinese demand out of U.S. Treasuries is prompting the black gold/yellow gold rumors.
The U.S. Treasury market performed well despite all the talk of the Fed beginning its tightening maneuver. The curve did flatten as all the buying was cantered at the longer end. 2/10s flattened 3bp that put the 10yr yield at 2.18%. The spread TY/RX 10yr spread closed yesterday at +139bp; we did see it trade +135bp at one stage yesterday.
The U.S. Dollar Index still trades around the 95.50 level. GBP lost ground on Monday but this was offset by equal euro strength. The Russian rouble returned much of last week’s gains as energy prices were hit ending the Monday session 1.25% lower.
Medicare Costs May Jump 52% in 2016
Before, I never had to pay when I picked up medicine for my mother. Ever since Obamacare, I have to pay a fair amount. Now, almost one-third of the roughly 50 million elderly Americans who depend on Medicare for their healthcare and other services are likely to see their premiums jump by 52% or more in 2016. Why? Because inside the law, Congress has decided to tax everyone, and they punish anyone who has saved over the years since they are the “wealthier” beneficiaries. Whenever the Social Security Administration fails to boost the annual cost of living adjustment, the “rich” get cheated. Don’t forget, household income/wealth in excess of $250,000 are the most hated “rich”.
Congress is focusing on addressing ballooning deficits in the Social Security Disability Insurance program, which is part of the unfunded liabilities they used as an excuse to tax people in 2016. There is a huge problem in the off the chart premium of Medicare Part B, the premium-based government health insurance program that covers seniors’ visits to doctors and other health care providers, including outpatient care and durable medical equipment.
They are showing no sign of printing their way out of socialism. They are justifying their revisions on entitlements of the “rich” whom they claim are taking advantage of the program when in fact they too paid into the program. If this was a private company, we would call it consumer fraud. The advantage of being a politician is that you can lie all the time and get away with it.
This is a reflection of the rising costs (cost-push inflation) contrasted with DEMANDinflation reflecting a boom. The former is deflationary and the latter is inflation. It is a question of public confidence at ALL TIMES.
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