Of late, I have again been hearing talk that Wall Street is to blame for the woes of the economy. Let me get this right. The center of the world's financial markets, the very core of the free enterprise system, is the blame for the economic mess that we now face? Really? When the economy is expanding and the markets are moving up into unsustainable bubbles, it seems that everyone is happy with the free enterprise system. As housing prices moved into their bubble tops in 2005, on the back of irresponsible lending and borrowing practices, no one seemed to complain then either. But, when these unsustainable bubbles that were created by the desire to capitalize on the free enterprise system begin to contract, many want to stand back and blame the very same system. It scares me to hear such nonsense because it only serves to prove the ignorance of the masses, our irresponsible society and the evolution of socialist thinking in which we have evolved.
Reality is, we have the greatest economic system ever. However, like any other great creation, it is often the ignorance of man and his attempt to make things better that ultimately are at the root of the demise. In this case, the root of the problem is not Wall Street or the free enterprise system itself. Rather, it is Washington and their arrogance to think they can manage, fix and control the system. Think about this. We have a bunch of politicians, many of whom have never even held a real job, that we are relying on to fix everything from environmental concerns to healthcare, to the economic woes. Is that not insane? Would we go to our auto mechanic to get a root canal? What does a politician really know about the economy? About as much as your auto mechanic does about root canals. All that the politicians know is to print money and to bail out the world. It's nuts and that is the problem. Just as I said back in 2000 and all through out the rally into the 2007 top, all this is doing is making matters worse. The economy operates on a cycle. The economy breathes. This means that is must contract, in order for it to expand. These idiots are trying to keep it from the natural contraction that must occur. In doing so, they continue to only make matters worse and then when the contraction does finally come, it is far more violent than if the market was allowed to naturally ebb and flow. Think about it. Was the decline into the 2009 low not far worse than the decline into the 2002 low and were the efforts to "manage" the economy not far greater during the 2002 to 2007 period than it was prior to 2000? Of course.
According to the long-term Dow theory phasing and historical values, the data continues to suggest that the 2009 low was not the bear market bottom. In fact, the data continues to suggest that the rally out of the 2009 low is likely a rally that should ultimately prove to separate Phase I from Phase II of a much longer-term secular bear market. Within the context of this rally we have the politicians trying to manipulate the markets so that they can take credit for saving the world and the motive for them is re-election. Not doing the right thing. But, they are playing with a financial bomb and it will blow up. When it does, the Phase II decline should follow.
The beauty is that it does not matter what is driving price or that these idiots are continuing to try to manipulate the natural forces of the market. Reason being, price is price and it does not matter what's driving it as it still appears as a price bar on the chart regardless of the driving factors. It is the meaning of the structure in which these price bars appear that is important. As a market technician, all I have to do is wait for the structural setup. Once that setup is in place, the bear market decline into the Phase II low will resume with or without their manipulation. I know for a fact that there is a particular DNA Marker that has appeared at EVERY major market top since 1896. This DNA Marker has also appeared at the vast majority of the 4-year cycle tops, even if that 4-year cycle top was not associated with a more major top. This set up is structural and statistical based and for that reason it is completely independent of the attempts to "manage" the economy. After all, it all boils down to price on a chart. Therefore, once this setup is confirmed, I will know, just as I did at the 2000 and the 2007 tops, what is about to occur. Did the fine folks on CNBS or in Washington warn you of those tops? No, because they did not see it coming and even if they did they could not tell you. This time will be not different. The technical setup will mature and when it does, the Phase II decline will be underway. It's not Wall Street's fault. If anyone is to blame, it's the politicians and greed of the participants, which is what creates the cyclical expansion and contraction in the first place. Don't be fooled again. At present, we continue to operating under a Dow theory bearish primary trend change and that we have multiple Dow theory non-confirmations in place. We are now simply waiting on the DNA Markers to fall into place. The emotionless, technical and statistical based research is available at Cycles News and Views, www.cyclesman.net