Never Doubt The 8th … But Doubt The Data

From the previous post two days ago …

NASDAQ Had been bullish all through the month up till the close of Wednesday 27 October. NASDAQ was still well bullish at the start of the week and on Tuesday, I told my students about the Eighth Candle possibility with less than 4 days left in October. This made it quite ridiculous to consider that we would see a bearish monthly candle by month’s end. But here we have it even after it recovered some of its losses from yesterday … and we still have tomorrow to go …

The 8th on NASDAQ after the close of 30 Oct 09
The 8th on NASDAQ after the close of 30 Oct 09

So we have the Eight Candle Reversal on NASDAQ in spite of Thursday’s dubious GDP result. Looks like America is waking up to the truths behind the stats and are going to make those in power pay for their folly.

Dow Jones completed one of the most perfect Dojis I have ever seen … it opened October at 9,711.60 and closed at 9,712.73. S&P500 also burned all its gains for the month in the third last and last day of the month, 4.5 hours before the close.

Last week, Friday 24th closed down and followed up another down close the following Monday for a DFDM. Now we have another down Friday and if Monday follows another down close, November is going to be damn interesting (read: Bearish) especially starting on Friday 6 November – Non Farm Payrolls. I suspect now that the GDP results are done and dusted, there is little reason for the government to hide anything now and the employment numbers may just blow everyone’s expectations Southward.

After all, it’s quite ignorant to believe that all those returns on their GDP numbers were anything near accurate. It doesn’t take a mathematical genius to look through the monthly and weekly data numbers of all the economic indicators over the last three months to know that the GDP doesn’t add up. It is also common sense that more than half the “growth” figures were the result of stimulus monies. In fact, the government contributed 80.3% while the other odd 20% came from inventory restocking – which actually decreased by $130.8 B – which was higher in Q3 only because Q2 was lower at -$160.2 B.


The inventories number is telling us that retailers and wholesalers have either not put in the order or have not received shipments of goods that would replenish their stocks. In the end, manufacturing production did not produce a good push in the quarter and the smaller drop in inventories was due to a pickup in consumer sales.

So why should we believe the power players anymore? They’ve proven themselves worthy white-liars since before they took office.

It took them 13 months before they told the world that they were in Recession in December 2008 since December 2007. It also conveniently forgot to tell the world that they were in Depression after qualifying an extended period of negative growth and achieving 4 negative quarters …

Year/Quarter ... Nominal GDP ... Actual GDP

Also consider the country’s Debt-to=GDP ratio …

U.S. Debt-to-GDP Ratio since 1940

Here’s a great way to end this posting and get you all ready for Monday … Richard sent this classic to me and it is a must-share for everyone who loves trivia …

The Great Depression 1929-1932 Headlines mixed in with some recent ones:

September 1929
“There is no cause to worry. The high tide of prosperity will continue.”
– Andrew W. Mellon, Secretary of the Treasury

July 12th, 2007
“This is far and away the strongest global economy I’ve seen in my business lifetime.”
– Henry Paulson, US Treasury Secretary


October 29, 1929
Stock market crash
December 5, 1929
“The Government’s business is in sound condition”
-Andrew W. Mellon, Secretary of the Treasury

July 12, 2008
“These institutions [Fannie and Freddie] are fundamentally sound and strong. There is no reason for the kind of [stock market] reaction we’re getting.”
Christopher Dodd, Chair, Senate Banking Committee, Financial Post


May 1, 1930
“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.”
President Hoover

June 29, 1930
“The worst is over without a doubt.”
– James J. Davis, Secretary of Labor.

May 7th, 2008
“The worst is likely to be behind us,”
Henry Paulson, US Treasury Secretary


August 29, 1930
“American labor may now look to the future with confidence.”
– James J. Davis, Secretary of Labor.

March 26, 2009
“We, as a nation, have already begun the critical work that will lead to our economic recovery.”
President Obama


September 12, 1930
“We have hit bottom and are on the upswing.”
James J. Davis, Secretary of Labor.

February 24, 2009
“The US will emerge from this recession, stronger than before …”
President Obama


October 21, 1930
“President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter.”
– Washington dispatch.

February 24, 2009
Over the next two years, this plan will save or create 3.5 million jobs…
-President Obama


November 1930
“I see no reason why 1931 should not be an extremely good year.”
Alfred P. Sloan, Jr., General Motors Co.

June 9, 1931
“The depression has ended.”
Dr. Julius Klein, Assistant Secretary of Commerce.


For your easy reference, here is the DOW relative to those dates 80 years ago …

Dow Jones Industrial Average 1928 to 1934

Dow Jones Industrial Average 1928 to 1933

So where will Monday go? It is supposed to be one of the more bullish days of the month but if it doesn’t bounce, another DFDM is not going to do the Bulls any favors.

Have a great weekend!


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Thanks 4 million

Hi. I think snp500 seems to be making a double top at 1100? Hit major downtrend line since 2007 peak. Very obvious Divergence on daily time frame as well.Any breakout through 1100, the rally will resume. Any comments?

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