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  • History Repeats, Shorting Commodities  0 comments
    Mar 16, 2014 10:33 AM | about stocks: DEE

    This chart shows the MACD of the Dow Jones Industrial Average:

    (click to enlarge)

    The chart can be clicked to view a larger version.

    The sections indicated are the exact same length of time. The 1-2-3 pattern occurs during each bull market.

    The only thing missing now is for the "fast" blue line to cross below the "slow" red line.

    Don't worry, it's coming. History repeats.

    Here's how the above applies to the DJIA:

    (click to enlarge)

    This past week was the first time in almost two years that the DOW closed each of the week's five days in the red. It won't be another two years before it happens again. It will probably happen within two months.

    There hasn't been a two-month drop in the DJIA since late 2012, and in that case the 2nd month was barely lower. The last time there was a significant drop in two successive months was at the end of the 2007-2009 market plunge in February 2009. A significant two-month drop will probably happen again this year.

    News Item: In-the-know insiders are dumping stocks

    Almost a year ago, we offered the idea of shorting commodities via DEE (Powershares DB Commodity Double Short ETN).

    Just over a month later, we posted that the downtrend had been broken and we were adding to our position.

    Here's how it looks now:

    (click to enlarge)

    That chart, coupled with the fact that bullish sentiment and large speculative bets in commodities are at bullish extremes and levels normally seen before a crash, keep us very bullish and comfortable in our double-short commodities DEE position.

    Disclosure: I am long DEE.

    Stocks: DEE
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