The Dow High Nobody Believes

The Dow Jones Industrials has rallied in the face of incredible skepticism with a litany of reasons why it shouldn’t be happening, that are of course all domestic oriented. This is fantastic for it shows the market is NOT historically at a high. Bubbles come when the vast majority claim the rally will never end. What is happening here is a lot of clever people keep selling and getting stopped out. They are fueling the rise and that is VERY GOOD for the long-term.

GOLDEN RULE #2

The market gods are NEVER generous. They give you one chance only to sell the ALL-TIME HIGH OF HIGHS or buy the HISTORIC MAJOR LOW. The more a market keeps knocking on the same door, the chances are that door will open.The curious aspect is the overwhelming news coverage is saying this is a top that could begrudgingly go a little higher. The likelihood is clear – by NO MEAN are we dealing with a major high. We should see a temporary high ideally form by next week with the market falling back to retest support with a lot of I told you so’s. Nevertheless, we are in a serious global meltdown and people just do not understand what we are facing. This was the purpose of trying to do a public service with the Sovereign Debt Crisis Conference on March 16th. Unless you grasp the true nature of what is happening, you are just going to get lost in the woods bombarded with opinions that mean NOTHING. No market is ever moving in isolation. The overall trend is ALWAYS, and without exception, verified continually by the dance of many markets collectively as they gyrate to a single theme.

Dow-Euros-3-4-2013

While everyone is excited about the Dow scoring new highs, in Euros, we are not there yet. To the Europeans, the Dow can provide an explosive investment opportunity. Keep in mind that when the Euro breaks, that capital will flee by the boat-load and the domestic pundits as always will be clueless. The talking head will be babbling to each other ignorant that we live in a world economy.

The Dow Jones Industrials on the spot in dollars shows resistance during March standing at 14349 followed by 14961. The timing models have not changed and we still see the week of 3/11 where the high should form. Keep in mind that the Dow tested the 1,000 level four times before it blasted through to the upside. They blamed me for that one too because we advised a lot of the takeover guys back then but the Dow had traded at below book value in 1985. It was not what I said, it was the fact you could buy a company, sell all its assets, and at least double your money. The financial stocks are up sharply but they too were often trading BELOW book value at the start of the year.

The broader resistance stands at 16727 followed by 24275. Once we break above the 15000 level, we should then start a decent run that most analysts will keep trying to pick the high. However, our minimum targets for a high in 2015.75 would be 16990 to 20966.The extreme target objective will be 23388 to 25127.

We will be address the pull back at the conferences for the optimum buying opportunity. This World Economic Conference was moved up to March 18th-19th for this very reason. Things are starting to cook and the good news is the amazing bearishness that the market is going to crash shows just the reason why it will not. The majority will be trying to sell and that provides the energy for the rally to press high in the years ahead until they are finally convinced the Dow is going then to 40,000.

The Dow reached 14,286 intraday closing at 14253. Corporate profits have about doubled.Even the Dow Transports made a new high. The bank stocks are still suspect and people are not looking to the banks since they have been the problem. Keep in mind what I have been warning about – yields of solid stocks is far better than what you can earn in banks or bonds and are much safer.

DJFOR-W

The forecasting array has targeted next week as the turning point 03/11. If by chance that were a low, then the next target would be the high 03/25. Otherwise, a high next week should be followed by a pull back, a buying opportunity, and then wild and crazy times ahead. Expect some wild price moves coming in April. This will indeed be the times that try men’s souls. Volatility will also pic up next week.

Forecasting has been a chest beating PERSONAL OPINION game of I told you so. That is just stupid because everyone has an opinion and nobody can forecast based upon opinion on a consistent basis. The ONLY way to learn is to OBSERVE, and let the markets TELL you what they are doing. They do speak in tongues, so that means you must watch the entire world to understand and in all currencies.

Please keep in mind that our computer is correlating everything globally and then runs it all again in every currency. This leads us to:

GOLDEN RULE #3

Bull Markets and Bear Markets take place ONLY when that trend is reflected in EVERY currency not just the local currency.