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DOW theory signals bear market (recession)

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posted on Nov, 25 2007 @ 07:53 PM
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money magers closely follow something called dow theory, it is a time tested "play book" that these managers of 80% of stock's /equity's in U.S markets follow.

the dow theory had a critical support level of 12845 (from the august lows) . this level was breached on wednesday when the dow closed at 12799. THIS is what confirmed a Dow theory bear market (when combined with the dow transport sector breaking below the august lows a few days earlier)

Thursday the markets were closed and Friday had a short session when most big players were already off for the long weekend. Friday was a good day as lots of people were out hunting for "deals" but the overall volume was very lite (hence the sentence before).

The money managers are/have sent out messages to their clients that they should hold more cash when the dow theory break below support like it has.

There should be alot of selling on monday.

edit in searching for a detailed explanation i found who some consider the gold standard in predicting where the dow will go, and he talks about he current situation and dow theory here

www.321gold.com...

[edit on 25-11-2007 by cpdaman]




posted on Nov, 26 2007 @ 10:44 AM
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early on dow is down *but nothing drastic*

i was reading on numerous sources and in many speeches that what the public or investors are pinning their hope's on are further rate cuts, what they don't seem to realize is credit will be INELASTIC to further rate cuts, because of the lack of trust in the banking sector attatched to the structured vehicles which were responsible for most of the growth in western economies over the last few years.

just like when the fed rose 13 straight times 1/4 point (in 2004/05) the housing market kep booming and loans got cheaper, some may aruge that their is lag time, and in some cases that may be true, but here we have a problem with the very foundation of the capital banks make loan's from, and as these structured vehicles lose more with the housing market the secondary derivative market is taking a beating and the risk was spread throughtout the banking and credit industry's , lenders are tightening their lending regardless of what the fed funds rate is, and* fast and furious rate cuts can only hope to cushion this blow, not return us to the times of a credit boom*

a problem in the 500 trillion derivatives market tends to do that.

edit market is in a free fall sort of mode now.

i will re-iterate people should get OUT of stock's .

the reason why is simple the risk to reward for staying in the market when there is a credit crunch the likes we haven't seen on THIS planet ever.

515 trillion derivatives market is having seizures, the potentail fallout will likely shake inflated asset prices DOWNWARD.

Hold cash, yes cold hard cash. The dollar has already fallen down the steepest slope it is going to fall, yes it will go lower, but it is not in a hurry to go to the bottom of the ocean, at least not yet.

People have been baited to go into the markets now to outpace inflation.
The smart money is in cash ( or better yet was converted to Euro's) as well as (Yuan). The big money is waiting for asset deflation. They will use this cash to buy up assets at penny's on the dollar. The public and gov't will demand a solution! (after millions lose ton's in the markets).

Then we shall learn what inflation means. The Fed and bernanke and the gang will man their "helicopters" and begin to severely devalue the currency as well as inflate, inflate,inflate using any and all measures.

When the fed starts printing out of control (they aren't yet, although some are being *baited* into believing so) People will soon after become hip that their dollars are going to be worth a lot less tommorrow than today. they will raid their 401k (if they hadn't already for food, and necessity's) and this money will PILE into the very investments that the RICH had bought dirt cheap

[edit on 26-11-2007 by cpdaman]



posted on Nov, 28 2007 @ 01:31 PM
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What amuses me the most is how the economic talking heads are actually debating whether the U.S. is heading or fending off a recession.

In truth, the conversation should be just how deep a depression will the U.S. enter. I am a very big patriot for our country and way-of-life. And I certainly saw the measured reasoning of why we went to War in Iraq.

Unfortunately, I also saw the dangers to that involvement and we're realizing them now. America won't disintegrate and we will pull through this economic trial-by-fire. But the country will be irrevocably changed as a result, much like it did coming out of the Depression, which created the modern welfare state.

For better or worse, government spending on tremendous social programs brought the U.S. out of the depression in the 30s. The problem is tremendous government spending and a nation that lives well beyond its means is putting us in a depression. So the cure the first time won't work this time.

Batten down the hatches, everyone!



 
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