The stock market Average added more fluff to its value again this week, posting a triple digit gain and raising its year-to-date advance to 4.2%. The Dow, now at its 52 week high and peeking above the action-zone high, has officially re-entered the dangerous territory called “irrational exuberance.” Investors take note.
Stock market Strength continued to show a more accurate portrayal of the economic situation by falling 2.1% in the trading week. It is down that same 2% for the year thus far, as the correction that began in September 2012 has continued early into this New Year. Unlike the Dow, the 15-51 Indicator is down 17% since reaching its high watermark late last year. Gold, by any measure, has continued to look lost during this same time and is up only fractionally this year. The chart below paints the picture.
This is a world where strength is steadily falling and average is rising. It is the Bizarro World of finance and economics – where Wall Street takes negative cues from Washington DC and turns them into short-term trading gains. This is a world built for shysters and money launderers.
Let’s begin the conversation by calling a spade a shovel – as long as Wall Street keeps receiving billions of dollars of new freshly printed cash they will keep applauding poor monetary policy and higher taxes. If the stock market is, indeed, the capital markets for the free-market then it ought to be trading in that direction. But that’s not what is happening right now.
All too often the Street applauds government corruption at the expense of free-market principle and sound financial acumen. They do so because it is they who receive the new money, which they then invest and drive up the valuations of stock market indexes. They then use these inflated valuations to lure money out of the hands of apprehensive investors – against all good and sound advice. They do so just to make a few extra bucks at the expense of their consumers.
With each passing day the Wall Street establishment becomes a bigger and bigger part of the problem.
These last seven days amounted to a week where the same old story was in full effect but was yet again ignored by the Wall Street establishment. Several reoccurring themes posing a major threat to the world economic system have once again shown their ugly heads only to be totally discounted in the value of investments. This is a world where stock prices soar and reality is completely disregarded. Here’s a sample of recent news to reinforce that point:
Due to a continued display of managerial incompetence in Washington DC, Fitch Ratings firm warned this week of another U.S. downgrade. This is a rude awakening for those thinking the “fiscal cliff has been averted” like many news installations have reported. As mentioned before, nothing has been resolved with recent congressional action and the boys and girls in Washington continue to neglect their fiduciary responsibility. The financial status of the U.S. is in trouble – and our enemies know it.
From a foreign policy perspective it is the 1970’s all over again – a U.S. Ambassador was assassinated late last year and several hundred hostages were recently taken in Algeria. Governments are under siege all throughout Africa and the Middle East – the oil hotbed of the world. They see the American Market as vulnerable, her government weak.
And who could blame them?
Best Buy signaled a flat holiday shopping season while massive U.S. layoffs continue to continue, with American Express announcing an 8.5% cut in staffing while Morgan Stanley sliced another 1,600 jobs. The U.S. economy is slowing, unemployment remains a stiff burden, and profit margins are shrinking. Add to this that the strongest economy in Europe, Germany, drastically shrunk in the most recent quarter while the region’s joblessness hit another all-time high. They’re still in major trouble over there. And then there’s Africa.
Am I crazy? – or do these conditions not add up to a 52 week high stock market valuation?
The Dow Average is at a yearly high but Strength is weak. In other words, current markets are not operating as normal!—And that’s a risky proposition. Investors should take special note.
Times like these highlight a great difference between Average construction and the superior nature of the LYB method and 15-51 construction. In the chart below, let me ask: Which portfolio is easier to buy low and sell high? – Which is easier to identify “high” and “low”?
When it’s easier to see “high” it’s easier to sell high. The same is true with buying “low.” That makes it easier to make money and achieve your financial objectives.
This makes the Lose Your Broker method and 15-51 construction not only stronger but smarter than conventional thinking.
Be part of it.
And stay tuned…