Dow Jones Industrial Average (.DJI) End of Capitalism? Don’t Bet on it

Dow Jones Industrial Average (.DJI) End of Capitalism? Don’t Bet on it

Dow Jones Industrial Average (.DJI) End of Capitalism?

There is an unfettered greed and it sits at the heart of the world economy.  

Its most visible incarnation, of course, is Gordon Gecko’s home turf — Wall Street itself. Home of the New York Stock Exchange where trillions of stocks and shares are traded daily. 

Here surrounded by thousands of Covid-19 deaths and legions of unemployed are markets that have risen over the past 12 months. 

The world economy has come to a standstill we are told. Two hundred and fifty thousand people world-wide have died of this pandemic according to politically influenced hospital data, US unemployment is touching a historic 15 per cent but on a 52-week basis, the Nasdaq index of US stocks is up.   

The people who own these shares or a good cross section of them are richer than ever before. 

When the economy is good, shares go up and the ultra-wealthy benefit and when the economy is bad, the US government underwrites banks and corporations so shares don’t fall and neither does the wealth of the ultra-wealthy, if you think that is Capitalism, go back to school.

Of course, anyone — certainly any American — can buy stocks but only the connected have access to the Fed capital, the leverage, the advanced products that allow them to make or break markets and fortunes, the very heart of Socialism is the rise of the Political elite.  

Mass unemployment and deaths make fertile ground for the Socialist message and even the performance of the companies on the market no longer matters that much.  

Uber, for example, just reported losses, layoffs, and a falling dividend but its share price soared. Tesla famously has scarcely ever made a profit, but it is worth hundreds of billions etc, but as favourites of the Politically empowered there seems no downside.

Basically the money, the trillions circulating the markets — not just the stocks but the loans, the derivative products, the bonds and the money pumped by the US treasury into banks — has taken on a life of its own but it’s a closed shop and you are not invited, as Marx intended.

This cycle of crazy accumulation now appears to threaten the system itself. 

Those seeking power blame capitalism and urge us all to give more power and money to the bloated stinking corpse of government. Capitalism — a system based on supply, demand and individual choice — has proven to be the best system humans have for allocating resources, but it exists in few places now.  

Capitalism, where innovation and efficiency are rewarded and poor decisions are penalised. It is brutal but effective.

However, today this thesis is being undermined. We see banks and industries declared too big to fail and bailed out, and money flowing in the direction of big companies regardless of how they perform in an orgy of Socialist rhetoric and left wing stupidity from all sides. 

Is pumping billions of dollars into a handful of big tech companies — like the thought Police of Google, Facebook etc. — really going to provide us with the innovation we need to change a radically unequal world or even discuss the truth on issues like climate change?  

Again, I use Google as much as anyone else, but they seem to be sucking up an increasingly absurd amount of global capital, spending more and more on “Lobbyists”

Just a tiny fraction of the money they hand out in Washington could address homelessness, health care and education . 

But given the huge returns you can make investing in the world’s biggest companies, why would you bother thinking of how horrendous it is to fund your own oppressor? 

Basically the market via the forces of fear and greed should lead us to the efficient distribution of the world’s resources but that system appears to have broken down and if it isn’t fixed eventually, the consequences will be far worse than a virus, we will all fall under the dark shadow of Communism.

Shayne Heffernan Trade Idea

“Unlike the majority of stock market analysts, I believe we are not only going to test the 18,000 low again, which is now the base of support on the Dow Jones, I believe we will crash through it and then continue on to all time highs. The S&P currently is trading at over 2,800. During last month’s nosedive, the S&P hit the 2,191 level. At the very least, it is headed to the 1,800 level . It maybe time to either short the US stock market or move to cash. Holding onto Bitcoin is ridiculous, gold is the viable option for a corrupt Fed.” Shayne Heffernan PhD in Economics

Why This Matters

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 27,329.07.

The projected lower bound is: 21,276.15.

The projected closing price is: 24,302.61.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 6 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 59.1841. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.95. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 32 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 79. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 455.430 at 24,331.320. Volume was 26% below average (neutral) and Bollinger Bands were 63% narrower than normal.

Open         High        Low         Close         Volume
24,107.820   24,349.900  24,107.051  24,331.320    337,341,408
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bullish
Long Term:         Bearish
Moving Averages: 10-period         50-period         200-period
Close:           24,044.33         23,116.66         26,440.38
Volatility:      27                86                46
Volume:          399,046,944       572,785,344       348,174,752

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.

DJ INDU AVERG is currently 8.0% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 20 periods.

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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