It is interesting that the pulse did not vanish in this way in the 1987 Crash. The 1987 Crash was a fluke. It came near the beginning of a Business Cycle Expansion (1983-2001), so it was swept away by the force of the natural inflation of the economy. But the Great Depression and the Dow Jones collapse came at the very end of a Business Cycle Expansion (or Inflation – Expansion IS Inflation), which had run from 1911-1929. The market was ‘out of energy’, and was experiencing entropy – the energy in the system was leading to increased dis-organization and chaos.
Today, our expansion ended in 2001 (1983-2001) – and we have been struggling with an entropic system every sense. Cheap money has propped up asset prices, but it has not defeated entropy; and it will not. The only thing that ‘defeats entropy‘ is time. Entropy comes into a system when the energy quotient flips from creative to destructive (it is very much like sap feeding the life of the tree during the growing season – this is anti-entropy, where the energy leads to greater forms of organization in the system – and the sap declining back into the root system when the Business Cycle ends, to protect the root-system – this is entropy).
Here is the 1987 chart. There is a slight period of no pulse, followed by a massive implosion of prices. But the index quickly bounces back with rapid increase in pulse and rapid recovery.
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Here is today’s DJIA. Note the lack of a pulse today. Note also that the Second Pane showing the indicator that measures Higher Highs and Higher Lows has turned negative also.
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So what is this telling us about today? The pulse – the rising sap – tells us which issues are vital, awake or alive.
We run a report every day to see which issues have the strongest pulse. Here is today’s report – the top pulses by number. There are a few themes here. The anti-gold ETFs are very strong, as one would expect; Japan Indexes are strong; Japan currency issues are weak. If fact, if you were long all the issues on this list, you would be in excellent shape investment-wise.
Note also that the VIX – the CRB Volatility Index – is alive. This is generally a negative for stocks.
Also note the low-priced gold stock LODE appears on this list. This makes me wonder if the second- and third-tier gold stocks (the cats and dogs) might recover ahead of the more established mining stocks.
I am not bullish on gold yet. My theory is that stocks fall from 2001-2019 and gold rises from 2001-2019; so I am an interested part in this central-bank inspired attempt to murder gold before out very eyes. I think it will fail. But my adversaries are very smart, and very tricky; I believe they are not wise, since they refuse to follow the laws of nature and go-with the natural law of 18-years of Inflation of assets followed by 18-years of deflation of assets. This is for the good of the world, for the balance of prices, and for the balance of wealth between the rich and the poor. Current fed policy is anti-poor, anti-old, and anti-everyone but the very richest people in the world. It will come to a great tragedy.
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