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Charts: What's up Doc?

Just spent a few minutes musing about the November 30th Issue of Barrons and I  opened up a surprising set of charts.  Page M51 of that issue shows 6 month charts of the Dow Jones Industrials, Dow Jones Transportation, and Dow Jones Utility Indices, all stacked neatly one on top of the other, which really helps at this time in the morning.

As I drank my first cup of coffee and the charts came into focus, I noticed two interesting and odd patterns.

First , it appeared that each of these indexes peaks in the middle of the month and reached a minimum around the first or second of each month.  This was not a small pattern.  This was a 6% per month pattern.  If you, perchance, were purchasing each of these stocks in the indices, at the ratio used by the publisher, about the first of the month, and selling about the 15, you would have been receiving a return of about 6% per month.  That is a tidy sum, net of commissions.

Wondering what was happening, I spoke to someone who still has a regular job (lucky guy).  He said that his employee regularly takes money from his oh-so-opulent paycheck around the 10th of each month and immediately buys stocks and stuff with it.   Since there are still quite a few lucky working stiffs,  that suggests that this pattern in the market is due to all these lucky bucks rolling into  TIAA-CREF and the like.

Second, using my trusty pen and drawing curves through the monthly maximums and monthly minimums, I discovered there was a "channel" (no big deal) defining the minimums and maximums.   What is a big deal, I noticed, through bleary eyes, that the Dow Jones Industrials continues to march upward, but both the Transportation and Utilities indices are tanking.  Seriously tanking, and have been doing so for the past 3 months. 

Since companies need to ship their product (Transportation), and use power to make it (Utilities), it appears to me that these last two indices are suggesting a not-too-distant downturn in the industrials.

I am currently between 60% and 90% cash in my portfolios,  having sold all that stuff I bought on Friday, when the Dubai burp took place.

Disclosure: No positions