1/28/2016 On a cash flow basis all five indices we follow have been saying sell since January 7, 2016. On a price basis only the DOW, Nasdaq, and S&P are at their lows and attempted and struck out three times trying to give a buy breakout. Any day now we expect investors will capitulate and we expect the next plunge to be worse than we had in early January. If the plunge in early February is worse than in early January, then we estimate that the following plunge could set the bottom for this economic cycle. It is however more probable that we will face a third stock market decline before the bottom. When it is over all the imaginary geniuses on wall street will see past their terrible advice and pretend to know what they are talking about. We believe that the best of all the economic analysts is Economist Mohamed El-Erian.

         1/27/2016  Both the 65 day moving averages and the 200 dma’s are becoming cliffs and a huge selloff climax should be coming soon.   Then we expect a small rally and a final test of the lows to determine if the bottom has been established.  The industrials are correlated with the economy and the aerospace sector is a leading indicator.  They have already peaked and that says the economy is now entering a recession.  Crude oil and the stock market recently have been correlated leading indicators.  When energy demand peaks the economy is peaking.  Lower production means a lower energy demand.  If the stock market bottoms in April it means the economy will be bottoming just about election time.  That would mean a likely clean sweep of the “stupid party” out of both the executive and legislative branches and real government again instead of illegal harassment of critics, corruption, incompetence, inaction, and executive orders.  That would also mean a roaring bull market a year from now.

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