Pivotal Events

Guest Post by Bob Hoye

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What Hindenburg Omens and an Oil Crash Mean

Guest Post by Tom McClellan

[biiwii comment: Bullish?]

Hindenburg Omens
December 11, 2014

The two big financial news items in December have been the multiple Hindenburg Omen signals and the crash in crude oil prices.  I recently went on CNBC to talk about the former.  Its relationship to the latter is inescapable.

A Hindenburg Omen occurs when the number New Highs and New Lows on the NYSE both exceed a specified percentage of total issues.  See this article for more details.  There are other requirements, such as that the NYSE Comp be in an uptrend, and the McClellan Oscillator needs to be negative.  Those other criteria are important, because there is no sense getting an omen when you are already in a downtrend, or when the market is too strong to be able to go down.  This month we have seen the New Lows list expanding, thanks to the poor performance of multiple issues with the words “resources”, “energy”, or “drilling” in the companies’ names.

So does it really count if the New Lows list is populated mostly by members of a single sector?

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Myth #10: Central Banks Control Markets

Guest post by EWI

Don’t Get Ruined by These 10 Popular Investment Myths (Part X)

Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. — NONE have a reliable effect on the stock market

You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

This series gives you a well-researched answer. Here is the conclusion of this 10-part series.


Myth #10: “Central banks and government policies control the markets.”

By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)

Virtually everyone believes this statement; certainly most economists do. Keynesians and monetarists believe that authorities can control the money supply and interest rates, and most neo-Austrians believe that the Fed is all-powerful when it comes to inflating: Whatever inflation rate it wants, it simply manufactures.

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A Busy Quarter – But Why?

Guest Post by Michael Ashton

Serendipity often plays a role when I am considering a blog post. In this case, I wasn’t even planning a post but was updating old spreadsheets for current data to see how things have developed. In the past, I have documented how NYSE Composite volume has been falling fairly steadily since at least 2006. It is difficult to tell whether this is important or not, since some of this is due to the fact that more trading occurs off of the NYSE these days. Still, there was a significant drop-off in 2010 and 2011 and 2012 which seemed more than coincidental (2012 total volume was about half of the volume traded in 2008, in terms of shares, and probably lower than that in terms of volume).

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10 Years of “Why Sell Now?”

Guest Post by Doug Wakefield

wakefield
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Avoid This “Hideously Expensive” Market

Guest Post by Bill Bonner

1210-DRE-blog

Source: Wikimedia

Dear Diary,

The Dow plunged 51 points yesterday. Gold surged $37.10 – or 3.1% – to settle at $1,232 an ounce.

The US stock market is “hideously expensive,” says value investor James Montier at Boston-based investment firm GMO.

He’s not wrong about that. But we have a feeling it’s going to be even more hideous before this story reaches its end.

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Growth-Sapping Effect of the Minimum Wage

Guest Post by Michael Ashton

I just saw this interesting article in Econbrowser called “New estimates of the effects of the minimum wage.” It is both good news, and bad news.

It is good news because it clarifies a debate about the effect of the minimum wage which has been raging for a long time, but without much actual data. This article summarizes a clever approach by a couple of academic economists to examine the actual effects of increasing the minimum wage. The research produces solid numbers and confirms some theories about the effects of the minimum wage.

The bad news is that the effect of the minimum wage is just what theory says it should be, but liberal politicians have insisted isn’t true in practice. And that’s a net negative effect on overall welfare, albeit divided between winners and losers. However, even that ought to be good news, because this analysis also means that we can reverse the policy and reap immediate gains in consumer welfare.

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Any Quantity of Money is Just Fine

Guest Post by Steve Saville

Some comments by John Mauldin towards the bottom of a recent article reflect popular opinions about money that can be summarised as: “a growing economy needs a growing money supply” and “there isn’t enough gold in the world for gold to be used as money today”. These opinions reflect a basic misunderstanding about money.

Here are the Mauldin comments to which we are referring. We’ve put notes below each excerpted comment, but the main part of our response is further down the page.

“The current structure of Bitcoin carries the same inherent flaw that gold does (and to some extent the euro, too): in a world of ever-increasing abundance, gold is massively deflationary and provides unreasonable “rents” to those who hold it. Even given that inherent flaw, it has been the most stable store of value for millennia.”

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Deflation!

soda.jerkWell, now that the title has hopefully gotten your attention I’d like to talk about the ‘d’ and ‘i’ words that so many financial types – myself included – throw around so often.  This is due to a reader/subscriber KR’s aggravation at my use of the word deflation, which he had thought was meant sarcastically, but then came to find out I am serious when I use it.

First I want to note that I seem to have been pissing everyone off lately, gold bugs (one of which I am) and gold bears in particular.  That is due to my writing style being one where if I’ve got something to say, I say it.  Sometimes that’s bad for business, as I can get a little heavy handed.

I’ll try to be less heavy handed going forward but in criticizing what I view as promotion with little backing substance (whether bullish or bearish), I don’t retract any comments aimed at the type of people that I think are not being square with readers or are simply not doing the work required (i.e. promoting lazy analytical thinking).

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