Buyback trend combined with declining rates lead to an investment rally

Stock Market – Has the Bull Been Replace with the Pink Bunny?

Posted on June 8, 2014 by Martin Armstrong

The market keeps churning higher ironically because people keep shorting listening to this nonsense. These constant short positions are the fuel that makes the market rise on a gradual basis. Keep in mind, people are running into the 10 year at 2.6% because they fear even lower rates coming. This is a different crowd. Many do not invest in stocks or do so with one-eye open all the time. This is the attitude behind Andrew Melon’s famous quote at the beginning of the Crash in 1929 – Gentlemen Buy Bonds.

Nevertheless, while the market then crashed in a normal fashion and started to recover, then the second shoe fell in 1931 that began with the sovereign default in Austria. That turned into a collapse in confidence and people ran from government debt in Europe and elsewhere pouring into the USA driving our rates to barely 1%. That proved that gentlemen also lose money.

Part of that trend was also the buybacks. We are seeing that again this time but into the rally. The first target for the high on this trend lines up with the ECM turning point on 2015.75. That will be 26 quarters from the low in 2009.

This buyback trend combined with declining rates attempting to stimulate spending, is more likely to lead to an investment rally and the mainstream media (including internet) who constantly preach the end of the world, will be wrong and stubborn. When the Wall Street Journal  accused Jesse Livermore of trying to influence the Presidential Election and they were proved dead wrong, Even when the market rallied during the summer of 1926, Time magazine, the New York Times and the Wall Street Journal all reported the rally skeptically and they doubted how much it truly reflected business conditions. They were predominately bearish back then during the rally as they are today. In the February 25th, 1924 edition of Time Magazine, they reported the prejudice of the Wall Street Journal who after falsely accusing Livermore, simply refused to ever quote him again.

“At this stage enters Mr. Livermore, the noted operator. His last two main prophecies on the stock market had been sufficiently fulfilled so that he had attracted considerable speculative following.  From his vantage point in Miami, he sent a statement to the press which was widely published, although  the Wall Street Journal refused to include it in its columns.”

Unfortunately, this is reality. They press will NEVER quote what I have forecast because it does not fit their agenda. You can tell easily who is biased and who is not. When they give only one-side of a story, beware, there is something rotten in the core. Refusing to be balanced is not journalism – it is propaganda.

Here is a chart showing the rally the WSJ did not believe back then. Look at the oscillator. It remained high into 1929.