Dow Set To Defy Naysayers and Trend Higher

By: Sol Palha | Thu, Nov 5, 2015
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Being ignorant is not so much a shame as being unwilling to learn. ~ Benjamin Franklin

Fear sells, and like misery it demands company. The so-called crash in August triggered dozens of hibernating bears to emerge from the woodwork. Rested from the last severe beating they took, they are ready for another healthy dose of pain. In their quest to push the fear factor a notch higher, celebrity perma-bears such as David Tice are brought out confirm that all is not well. If the markets were destined to sink into the gutter, David Tice would not have sold his Prudent Bear fund at the peak of the 2008-2009 financial crisis. Then you have many others taking out expensive ads calling for the end of the world. A close look will reveal that these same chaps were bullish once an upon a time and have now jumped ship. Then you will have those who came out when the markets were pulling back, 2003 and 2008 come to mind. On each occasion, these chaps were right for a brief period. The better option would have been to open long positions in top companies and let your profits soar. Something so simple, is not easy to sell, so the spin doctors to sensationalize the event. If you something sounds too bad to be true, then it probably is and vice versa.

Even though the markets pulled very strongly in August, these fear mongers are still pushing the same old theme. Avoid these individuals like the plague. From a contrarian perspective, the only role they play is to inform you of what you should not be doing. We find it quite amusing that even though the markets have virtually recouped all their losses, these guys keep stating that a crash is in the works.

A recent report illustrated that roughly 90% of all articles published in the Washington post have a negative connotation. With the election cycle underway and as the candidates jockey for the head position of Jackass, the airwaves will be blasted with even more negativity. Negativity attracts even more negativity; expect every negative story to be blown out of context while positive events will be marginalized. As far as we are concerned, this is a great development, for negativity is a precursor to panic and panic is the precursor to opportunity.

We believe the markets will trend upwards for the following reasons:


What's next for the Dow Industrials?

The markets have covered a lot of ground over a very short period of time. Thus, we feel that it's time for another bloodletting stage. Ideally the Dow would come close to testing its lows again, and put in a higher low. This will set the stage for a nice strong year-end rally, that should continue well into the first quarter.

Markets climb a wall of worry and plunge down an abyss of joy. As masses are far from joyful, treat every strong pullback as a buying opportunity.

He was so learned that he could name a horse in nine languages; so ignorant that he bought a cow to ride on. ~ Benjamin Franklin

 


 

Sol Palha

Author: Sol Palha

Sol Palha
TacticalInvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

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