The Dow & Why the Majority MUST Always be Wrong

Pecora Commission Hearings

Every stock market crash since 1907 has begun on the hunt to find that huge short position that manipulated the market down. Never has any investigation EVER found this mythical short position. Nevertheless, the theory that there is some huge player that overpowers the market and sends it collapsing down is a great one that dominates every crash. The reason no such position exists is simply that the real fuel is always the majority. Bubbles take place because people become convinced it will never end and they are the ones who buy near the tops. Just as in the metals, every rally is “real” but the declines are always manipulations. Government shares that same reasoning at the start of every investigation.

The truth is simple. When the majority is on one side, scare them, and what you will get is is a panic collapse. If the bulls reached 90%, scare them, they try to sell, but there is no bid. That creates the downdraft or flash crash. The majority MUST always be wrong because they become the fuel to swing the market in the opposite direction. The key is to remain unbiased. The future will reveal itself soon enough. A biased fool keeps his mind closed to the patterns around them. That is why a fool is always easily separated from the money.

DJIND-W 5-7-2013

The stock market had to rally. The talking head still do not believe it and keep trying to pick the top. That is good because that means it has further upside potential. When then all starting calling it a “new plateau” as they did in 1929, look out below. The Dow Jones Industrials major target resistance begins at 15441 on a daily basis, but the weekly level show 15731 and the extreme target of 16647, which if hit in May, would be a warning of exhaustion.

DJFOR-W - 5-7-2013

The Weekly Timing Array is still showing the weeks of 5/20, 6/10, and 07/01 as key targets for turning points.

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