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Quote of the Day

Thursday, May 31, 2012

May 31, 2012 -- I've been writing my Dow Theory Letters ever since 1958 without a stop. Since I broke my hip, I've had to spend a lot of time at home and in bed. This has allowed me time to think, to read, and to have some leisure.

 

Many years ago back in the 1970s I got interested in Christian Science. My grandmother on my dad's side was an ardent Christian Scientist. Out of interest, I bought some Christian Science books around that same time. I looked at them casually and let my interest drop there.

 

While in bed I wondered what my life was all about. Stroke, two heart attacks, WWII combat, broken rib, divorce ... was God trying to tell me something? It certainly seemed so. I had a book by a great and famous metaphysician, Emmet Fox. I started reading the book, and the more I read, the more sense I made of my life. I also read books by another metaphysician, Florence Shinn.

 

I have always been a chronic worrier, and frankly, I was tired and worn out from worrying. I also lived in the past, and in the future, but never in the present. If you live in the present, you usually stop worrying. Worries usually have to do with events or possible events that occurred in the past, or events that you think will occur in the future.

 

One thing I learned from reading Emmet Fox was to live in the present, by the day -- one day at a time. According to Fox, God gives you what you need to know each and every day, and God gives you what you need to sustain yourself each and every day. To hoard, to prepare endlessly for the future, is a mistake, and is based entirely on fear. If you believe in God, it is senseless to hoard and prepare for the future since you have no idea what the future holds. You will receive what you need each day from God. That may seem like a miracle. But I now believe it.

 

This manner of thinking and believing made a huge impression on me. Actually my worrying has decreased day by day (what a relief!). On some days I don't worry or fret at all. I found a sense of peace -- this after 87 years of sweat and worry.

 

But, I wondered, is there some reason that I've lived this long and am still able to think? The answer seems to have come to me. I believe that I'll be of use to my subscribers. I think we're going into tough times, and we'll be dealing with events that we've never experienced before. During these difficult times, I feel that I'll be of help to my readers.

 

I guess you know that I don't advertise or send out "promotional literature." At my peak after taking over Marty Zweig's subscribers, I had about 9,000 subscribers. Amazingly, without any promotions, I still have over 7,000 subscribers, and my list is building up again. How come? How is that happening? Honestly, I don't know.

 

We are now, according to my studies, in a primary bear market. I'm obviously not happy about this. But in this business, you must deal with reality, whether you like that reality or not. I sense that we're going to see and deal with a good many realities that we've never dealt with before. They say that the most senseless sentence in investing is, "This time it's different." But no slogan works every time, and I'm afraid that this time it really will be different.

 

Next, let's look at the BIG picture (below) as seen in the S&P going back to 1980. What we see here is a great bull market stretching from 1980 to 2001. Then we see a bear market in force until 2004. Next a continuation of the bull market to 2007, followed by a violent bear market that was interrupted by the Fed in 2009. And finally, the bear market rally to the present. But what is particularly interesting is VOLUME. Note how volume flared higher during the bear market of 2007 to 2009.

 

Then we saw a strange and stumbling market recovery after 2009. After 2009, volume died down. What happened was that the retail public, that was so active during 2004 to 2007, got killed in the bear market of 2007 to 2009. After the terrible beating the retail public sustained, they decided they'd had enough of Wall Street. In the rebound that started from the 2009 low, the retail public never re-entered the market. The rise from 2009 was mostly a matter of traders and hedge funds with the retail public sitting on the sidelines, licking their wounds.

 

The chart can be seen as a giant head & shoulder top with the action starting from 2009 representing a right shoulder. The support would be a line connecting the 2002 and the 2009 bottoms.

 

 

 

 

TODAY'S MARKET ACTION:

 

My PTI was unchanged at 6365. The moving average is 6373, so my PTI is bearish by 8.

 

The Dow was down 26.41 to 12393.45.

 

Transports were up 45.06 to 5074.70.

 

Utilities were up 2.20 to 468.04.

 

NASDAQ was down 10.02 to 2827.34.

 

S&P 500 was down 2.99 to 1310.33.

 

There were 1466 advances and 1567 declines on the NYSE.

 

There were 51 new highs and 128 new lows.

 

Total Volume on the NYSE and associated exchanges was 4.35 billion.

 

Bonds: Yield on the 10 year T-note was 1.566. Yield on the long T-bond was 2.641. Yield of the 91 day T-bill was 0.031.

 

Dollar Index was up 0.04 at 83.05. Euro was down 0.13 at 123.68. Yen was up 1.17 at 127.67. Currency Prices as of 1 PM Pacific Time.

 

August gold was down 1.50 to 1564.20. July silver was down 0.226 to 27.75.

 

July light crude was down 1.29 to 86.53.

 

My Most Active Stocks Index was up 7 at 226.

 

The Big Money Breadth Index was down 2 at 973.

 

GDX was down 0.46 at 43.78.

 

HUI was down 4.027 at 416.44.

 

CRB Commodity Index was down 2.08 at 272.97.

 

The VIX was down 0.08 at 24.06.

 

Permanent Portfolio Fund (PRPFX) was down 0.20 at 46.22 (previous day closing). YTD Return: 0.28%.

 

Late Notes -- With the Dow down a previous 13 out of 17 sessions, it seemed overdue for a blessed rally. But nope, the Dow ended down 26 points with the Trannies up 45. There were 51 new highs and an expanding 128 new lows. Yeah, it's a bear market and a brute, at least so far. Can we have another day down tomorrow? Seems impossible.

 

Thinking over the Facebook matter, it was one of the greediest acts I've ever seen on the Street or anywhere else. To raise the amount of the offering and then hike the price just before the issuing was pure greed. Sucker buyers at the high may never get their money back. All's fair in love and Wall Street. Ugh.