Tuesday, October 21, 2014

Dow Trend - Simple as ABC


Investors would all like to know if the Dow is trending up or trending down. How do we know? Simple. 

In the new era, the Federal Reserve Bank controls every aspect of our lives including stock trends. Certainly the Fed sets prices for everything including stocks. Forget corporate earnings. Almost all of them are the result of accounting trickery. The blog ZeroHedge put out a great chart of Bank of America. Their ‘earnings’ are completely dependent upon backing out GAAP expenses for legal fees incurred due the company acting with criminal intent to carry on its business. The company claims legal fees are ‘one-time’ expenses. Yet, the company has these ‘one-time’ expenses every quarter. Every single quarter. So, Bank of America uses non-GAAP accounting to pretend that if they hadn’t lost money due to the enormous legal fees necessitated by operating a criminal organization, they would have made money. They take the legal expenses and add these expenses back to the the income side of the ledger. So that’s accounting trickery. 

But alas, we don’t need no stinkin’ earnings for stock prices to rise. I don’t care if every one of the thirty Dow stocks declare bankruptcy in the morning. The stock price of every one of them would be higher by the afternoon close. Why? Because the Fed maintains their control over the world by conning the world with ever ascending stock prices. 

Okay, look at the chart below. This is the Dow year-to-date through 10/21/14. 

I marked the letter ‘A’ on the chart. This is the beginning of August and the Dow has just dropped some 700 points from its high in July. Why? The world thought the Fed was serious about terminating its QE program. No stimulus, no bull. Down went stocks. What turned the Dow index around? The Fed Chair Yellen popped out and told the world that QE might last indefinitely. Up went the Dow.

See letter ‘B’. The Dow rolled over. Why? Fed Chair Yellen mused that she thought stock prices were stretched. Down went the Dow.

See letter ‘C’. The Dow shot back up. Why? After Ms. Yellen tanked the Dow at ‘B’, she watched as the index lost about 1000 points. As the Dow touched the 16,000 line, Ms. Yellen sent lap dog Plosser or Bullard or one of those propaganda tools out to talk up the index. They said QE could last forever and interest rate increases were way far off. Up went the Dow.

Interestingly, at letter ‘C’, Walmart said sales were stale and they lowered projections for the entire coming year. McDonalds said Q3 sales were down 3% in america and down 20% in China. IBM lowered expectations and consumer spending decreased for the first time all year. Of course, the consumer spending will be ‘revised’ soon to show a gain as the Fed continues to manufacture, write, and promote the news they need to justify their furtive filching of america. Of course, the Fed needs the populace to be brain dead so that has already been accomplished. 

The clown show continues. The Dow IS the Fed. The Fed IS the Dow. This used to be against the law. Americans used to have more respect than to surrender to a bankster mob that promises to goose the Dow when necessary. But not now. This is the new era. We no longer have to know anything to make money in stocks. When will the current rally fade? I’m sure the Fed will tell us. What will the next trend bring us? All we have to do is listen to the Fed. It’s as simple as A-B-C.

DJIA - YTD, October 21, 2014
Chart courtesy StockCharts.com

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article.