What Every Investor Should Know about the Dow Theory?

What Every Investor Should Know about the Dow Theory?

The transports topped out in November of 2014, and according to the Dow theory this is a big negative;  the Dow Industrials should have followed suit. Instead, the Dow soared higher paying no heed to this theory proving to a large degree that this argument has lost its value. After all, it is a theory and the definition of a theory is “a supposition or a system of ideas intended to explain something, especially one based on general principles independent of the thing to be explained.”

Dow Jones Transportation Index 26 September 2016

As early as 2006 we offered an Alternative Dow Theory that has proved to be far more accurate and reliable than the original Dow theory.  Just to let this sink in, the transports topped out almost two years ago and instead of trending lower the markets have surged to new highs. If you look at the above chart, the Transports appear to be finally gathering momentum and to break out. In the Dow theory alternative, we stated it was the Utilities that lead the way as opposed to the Dow transports, well let’s see if that holds true. The reason we are using older charts is to illustrate the power behind this alternative theory fully.

Dow Jones Utility Index

The Alternative Dow Theory Has A Better Track Record than its predecessor

In the chart above, the utilities pulled back after the Dow transports, let out some steam and then soared to new highs. Even though the correction appeared to be strong, the Dow utilities held above the main uptrend line.  It is all but obvious that the Dow utilities are a better barometer of what one should expect from the markets.  The Utilities topped in Feb of 2015, and after that, the Dow trended sideways before correcting, illustrating that they follow the lead of the Utilities and not the Dow transports.

The Dow utilities bottomed towards the end of August 2015 and rallied until Nov of 2015 before pulling back again. The Dow followed in the utility footsteps. It bottomed in Jan of 2016, while the utilities bottomed on Dec of 2015; once again leading the way.  The Dow utilities rallied until July 2016 before pulling back.

The Dow rallied until Aug of 2016, proving again that the utilities are a better indicator of market direction than the Dow transports.  At this point, it appears that the utilities are building momentum to take off again. If the pattern holds, then the Dow should follow in its path.

 

How are the Dow Industrials and Dow Transports faring in 2017?

Dow Industrials and Dow Transports faring in 2017

Well, as you can see the transports took off like a rocket after September 2016 and have not looked back since. The picture of the Dow industrials is almost identical to that of the Dow Transports.

Dow Jones Industrial Average Index - Dow transports

Once again, we have clear evidence illustrating that the Dow utilities provide a much clearer picture of where the Dow is heading as opposed to the Dow Transports.

Out with the Old Dow Theory and In with the New Dow Theory

The Dow utilities and the Dow industrials both traded to new highs; this means rather than leading the way up the Dow transports are propelling individuals to draw the wrong conclusion. The Dow Theory ceased to work properly a long time ago, and in the era of hot money, it is having a hard time trying to be relevant. The alternate Dow Theory that focuses on the utilities is a better option. Thus, maybe it is time to put this 100-year-old theory to rest; we will let you be the judge.

Paying attention to what the utilities are doing going forward could prove to be rewarding. Once the Dow utilities start to trend upwards, it should serve as a strong signal that the Dow is going to follow in its path. Applying the principles of Mass psychology and Contrarian investing we were able to state with confidence that the experts were wrong when they stated this market would crash in 2014, 2015, 2016 and so far in 2017. In fact, we went on record to the state over and over again that this Stock Market Bull would trade to heights that would shock everyone.

 

Published courtesy of the Tactical Investor

 

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The Psychology of Contrarian Investors

Contrarian Investor

A contrarian investor focuses on the facts and not the noise

We are going to use the precious metals to illustrate some of the Psychological principles of being a Contrarian investor. Keep in mind that most contrarian investors are not real contrarians but fall under the category of Fashion contrarians.

Contrarian investing is based on taking a position that is opposite to that of the masses. In general contrarian, investors get in an investment too early as their analysis is based on doing the opposite of the masses.  In contrast mass psychology dictates that you wait for the emotion to hit a boiling point, euphoria or panic before a position is taken. Mass psychology involves the actual study of what the masses are doing as opposed to just determining that their current action is wrong and using that information to take a position in the opposite direction.

A contrarian Investor takes a position that is contrary to the Masses

Contrarians only take a position that is contrary to the masses and that about wraps up the ideology of being a contrarian today. Very few of today’s contrarians are true contrarians; they fall into the category of fashion contrarians.

Contrarian Investors Psychology Zebra

Investors that adopt the doctrine of mass psychology correctly look for something more.  Mass psychology takes the principle of contrarian investing and then pushes it to the next level.

Mass psychology focuses on extreme situations

Students of Mass Psychology look for extreme type situations. In other words, sentiment should not just be bullish before an opposing strategy is put into play, it should be at the boiling point and only then will the student of mass psychology look for an exit and attempt to take an opposing position to that of the masses. To illustrate this point, we will use the following example.

The commodities sector has several components to it, two of them being the Gold and Silver. Throughout 2002 and early 2003, the hate and disgust for both these sectors were extremely high. Fast forward to 2004 and Gold was being mentioned everywhere; even CNBC had a little ticker that stated what the price of Gold was throughout the day. The hate or disgust for both these sectors was no longer there, and even though both these sectors have a long way to go before the masses fully embrace them, they did not provide a psychological basis for taking an opposing position to that of the masses in  2004.

Gold went on to soar to untold heights, heights that most would have deemed impossible in 2003. All along the way we continually stated that Gold would continue to trade higher and higher until 2011. We warned our subscribers to bail out of Gold very close to the top.

 A Contrarian Investor pays close attention to what the masses are doing

Even though the masses have still not fully embraced Gold, this concept does not matter in the long run. A more important criterion would be to find out what % of investors has taken positions in these sectors or not. Next one would try to find out what the Gold bugs (the most bullish individuals ever created on earth) are doing. If all the Gold bugs are bullish, then based on the contrarian rules of investing you should take a contrary to a neutral position because all the individuals in your group are now optimistic.

Do not pay attention to the masses; they know not what they are doing when it comes to investing

Should one care what the masses are doing that much or focus on the Gold bugs (the group) that are emotionally tied up with Gold?  The masses in general, will not embrace Gold fully until it becomes fashionable and by then a large portion of the Bull Run will be a thing of the past. In the last Gold Bull Run, the masses did not even know what was going on, let alone take a position in this sector.

So one measure would be to determine if all the people who believe in Gold have already taken positions if they have then the market has become saturated. The only way the market can continue its upward run is for momentum players to jump on the bandwagon.  These players have very short time spans of concentration, and thus, they jump in and out very fast. Once they decide to bail out the corrective phase could be very painful as was the case of precious metals topped out in 2011.  The housing collapse and internet bubble serve as two stark reminders of what happens once momentum has run its course.

A Good Contrarian Investor understand the core principles of Mass Psychology

Mass psychology is the constant analysis of the playing field to determine how the game is being played. Are the rules changing, are the players become more aggressive or docile, is the playing field soft, rocky or worse yet on extremely high and treacherous ground.  One has to take measures at different levels and then compare it the pattern you have already established from past observations.

In this sense, mass psychology is dynamic compared to the methodology most contrarians put into play. Contrarians do not measure their position relative to those of other contrarians; they only measure their position relative to that of the masses, and therefore, they fail to obtain a vital piece of data.  This usually results in pain, misery and taking on substantial losses   In, other words; they do not measure the intensity of emotion in their camp.

The gold bugs are a classic example of contrarian investing gone wrong. They moved from the Euphoric phase to the having found religion period, to the gnashing of teeth and pure misery phase, as they watched Gold plunge from 1800 ranges down to the 1000 ranges.  They still cannot fathom why this happened, especially as trillions of more dollars have been created since 2011.

The Internet boom lasted one-year longer after all the TA and contrarian indicators were in the extremely bearish zones. Euphoria for this sector was running sky-high.  If one had shorted the markets based on these contrarian factors only one would have lost one’s pants and well as underwear. In other words, you would have most likely lost a small fortune.

Gold bugs should have banked some of their profits. Instead, they continued to plough money into Gold, and as it pulled back, they jumped in joy and added even more. Once the correction moved from the mild to the wild phase, they panicked and started to pray. Today the sentiment is almost as bearish as it was in 2003.  From a long term perspective, a great buying opportunity could be at hand.

Be A true Contrarian Investor and not a fashion contrarian

Most so-called contrarians were caught flat-footed when the Equity markets mounted this huge rally from Oct 2004. Their contrarian indicators suggested that taking a short or neutral position was the right thing to do.  Only 10% of the investors can win at any given time. The moment the number surges past this level (no matter what side of the fence they are on contrarian or the masses side); the markets will adjust to bring this ratio back to its norm.

Investing based on psychology amounts to not only taking a position against the masses but also against the fashion contrarians.  Once sentiment has reached the boiling point, one should go into cash; risk takers can consider shorting the markets.  Finally, less attention is being given to the precious metals sector, so establishing a position now could be viewed as a prudent long term investment.

On the same token, most investors and experts expected the Market to Crash after Trump won and we stated that it would create a buying opportunity just as Brexit did. In fact, since 2013 we have been stating that a stock market crash was a long way in the making and that all strong pullback should be viewed through a bullish lens.

 

Published courtesy of the Tactical Investor

Tap water quality investigation: Lead in some Canadian water

Tap water quality investigation

Tap water quality investigation: MONTREAL (AP) — Hundreds of thousands of Canadians have been unwittingly exposed to high levels of lead in their drinking water, with contamination in several cities consistently higher than they ever were in Flint, Michigan, according to an investigation that tested drinking water in hundreds of homes and reviewed thousands more previously undisclosed results.

Residents in some homes in Montreal, a cosmopolitan city an hour north of the U.S.-Canada border, and Regina, in the flat western prairies, are among those drinking and cooking with tap water with lead levels that exceed Canada’s federal guidelines. The investigation found some schools and daycares had lead levels so high that researchers noted it could impact children’s health. Exacerbating the problem, many water providers aren’t testing at all.

It wasn’t the Canadian government that exposed the scope of this public health concern.

A yearlong investigation by more than 120 journalists from nine universities and 10 media organizations, including The Associated Press and the Institute for Investigative Journalism at Concordia University in Montreal, collected test results that properly measure exposure to lead in 11 cities across Canada. Out of 12,000 tests since 2014, one-third — 33% — exceeded the national safety guideline of 5 parts per billion; 18% exceeded the U.S. limit of 15 ppb.

In a country that touts its clean, natural turquoise lakes, sparkling springs and rushing rivers, there are no national mandates to test drinking water for lead. And even if agencies do take a sample, residents are rarely informed of contamination. Full Story

 

Trump may face fight over planned move from NYC to Florida

NEW YORK (AP) — Donald Trump a Florida man? Not so fast.

Despite a stinging “good riddance” tweet from New York’s governor, the president’s home state may not let him go to Florida without a fight.

Trump’s plan to shift his permanent residence to Palm Beach will likely be heavily scrutinized by New York state officials, who are notorious for auditing wealthy residents seeking to flee to lower-tax states to make sure such moves are real and not just on paper.  Full Story

 

Prosecutor reviewing Russia probe known for tenacity, ethics

HARTFORD, Conn. (AP) — The man leading the inquiry into the origins of the Russia probe is no stranger to politically sensitive investigations.

In his 41-year career as a prosecutor, John Durham, the U.S. attorney for Connecticut, has led investigations into the FBI’s cozy relationship with Boston mobsters such as James “Whitey” Bulger and the CIA’s use of tough interrogation techniques on terrorism suspects.

Former colleagues and defense lawyers who have squared off against him say he is unlikely to be concerned about any fallout from his findings during this new assignment. Full Story

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Will Bitcoin Crash Chart

Bitcoin Crash Chart

Will Bitcoin Crash or Backbreaking Correction? (Bitcoin Crash Chart)

The dot.com insanity experienced a backbreaking amendment before the market launched and beat out toward the finish of 1999. The picture below represents that Bitcoin likewise experienced such an adjustment, but since of the expansive finish move it has all the earmarks of being only a blip. Tactical Investing amounts to combining Technical analysis with Mass psychology  creating a system that is second to none.  The Trend Indicator is an example of such a system.

Bitcoin Crash Graph

It combines the most important aspects of Mass psychology with the best of Technical analysis to yield a system that identifies the trend in advance of the event. Our technical indicators also enable us to identify crucial turning points in the market accurately.

Think about that from a high of 2977 (June 10, 2017); it dropped to a low of 1808 set on the fifteenth of July 2017; it shed generally 40% in that brief period (shown by the green box). Everybody recognizes what pursued.

Depressed people tend to depress everyone around them, however it keeps an eye on Pay’s all around inadequately over the long haul

It looks horrid, the media is siphoning apocalypse type situations, solid bulls are appearing of shortcoming, and even contrarian investing specialists are beginning to break. Unadulterated Contrarian Investors are more intelligent than the majority, yet they do have imperfections; the most astute financial specialists are the ones that put the standards of mass brain science into play.

They watch the mass outlook, and they comprehend that notwithstanding when dread begins to crawl into the condition, they are constrained to make this inquiry: Was the group in a condition of elation when the market beat out? On the off chance that the appropriate response is “no”, at that point regardless of how horrendous the image may look, the end amusement is that the group is being set up for a bogus descending move. Furthermore, the ordinary reaction would “why”. Basic answer, this is a propelled type of Pavlovian preparing.

The Bitcoin Crash Chart resembled the Tulip Bubble, it was a trick from the earliest starting point. The ones that made the cash were the ones that got in first, the ones that got in late were given their heads on a stinky tin platter. Never get into a speculation when the majority are euphoric, purchase when there is blood in the lanes and the other way around.

Financial exchange crashes are diverse as they don’t speak to one segment, so it is simply an issue of time before the business sectors will return to the standard. From a mass brain research point of view, financial exchange crashes are only long haul purchasing openings. Disregard the what occurs if the securities exchange crashes situation, and spotlight on what you would do if stocks you were biting the dust to possess before are currently selling for pennies on the dollar.

Pavlovian Type Training Is Being Used On The Masses

At the point when the market puts in a base subsequent to encountering a backbreaking remedy, and after that proceeds to mount an amazing rally; the group engraves the accompanying information in their brains. Purchase the pullback, since it is a phony snare to drive us out; they likewise begin to have confidence in the accompanying mantra “the more grounded the pullback, the better the chance”. Next time when the Market puts in a best, bullish slant will remain bizarrely high, and that will be the notice to understudies of Mass Psychology that the genuine skull pulverizing revision is en route. Once more, we point you toward the not very far off Bitcoin stupendous buyer advertise and the similarly fabulous accident. From low to high Bitcoin attached 11,000% in increases and the majority still expected that the main bearing it could exchange was up. When it bested the Bitcoin swarm was past overjoyed.

Concerning whether the bitcoin crash is finished, we trust that one should hold up somewhat longer before bouncing in and in every way that really matters, Bitcoin chart is exceptionally far-fetched to test the 20,000 territories for quite a while. On the drawback, bitcoin is probably going to test the 3000 territories with a conceivable overshoot to the 2,500 territories before a significant base grabs hold. Right now, there are numerous different stocks that look fascinating and unmistakably more appealing than bitcoin, for instance, PG, MRK, TCEHY, and so on.

 

Courtesy of Tactical Investor

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Rate of Inflation not an issue according to Bond Market

Rate of Inflation not an issue according to Bond Market

The Bond market is Indicating that The Rate of  Inflation is not an issue in 2017 

Bonds should have continued to plunge, but notice that bonds bottomed in April and have started to trend higher. After the July rate hike, bonds should have taken out their April lows, but they did not.  Instead, they went on to put in a series of higher lows; higher lows are usually indicative of higher prices. Furthermore, the stock market hardly reacted to the last rate hike; after a very mild reaction, it has continued to trend higher.

rate of inflation

We tend to focus more on the technical and psychological outlook, and both are indicating that inflation is still not an issue.    The Gold market is also indicating that inflation is not an issue. Last July Gold traded past $1400; at that time rates were lower and the US dollar was trading at higher levels.  But today rates are higher today, and the dollar is trading lower than it was in 2016, but Gold instead trading at or above $1400 can’t even trade above $1300 for a sustained period.

Mass Psychology seems to support the theory that US inflation is not a big problem

The psychological factor does not support higher prices; the economy is not doing well as the consumer is not spending wildly. Consumer confidence is increasing, but consumer spending is not marching in tandem with consumer confidence.  Income growth is weak; the rise in incomes and net worth has primarily benefited high income and high net worth households. These are the same individuals that have the most money invested in the stock market which has tripled since its March 2009 lows.

We have listed a plethora of factors that illustrate that inflation is not an issue; at least not yet.

Even James Bullard, president of the Federal Reserve of St Louis went seems to be in agreement

“Low inflation has been the major surprise of the era,”

He also went on to state that he was still waiting for inflation to return to the 2% ranges and would not support any increases in the Fed’s benchmark rate until 2018 to allow inflationary forces to recover. He might have to wait a lot longer than that. AI and technology, in general, are going to continue to fuel lower prices. The retail sector is in freefall; the remaining players battle it out, and price wars will continue for the foreseeable future. Food prices are going to plunge due to the price war that new entrants like Lidl and Amazon have triggered.

The bond market is not supporting the higher inflationary outlook, in fact by all measures the bond market appears to be building momentum to trend higher.

US Jobs Report misses the mark

The unemployment rate edged up to 4.4% and wages barely grew. Only 156,000 jobs were added as opposed to the 180,000 consensus number.

The retail sector continued to get hammered; retailers shed 9,00 jobs, while the public sector shed another 9000 jobs.

“In months where there are anomalies like this, we look at the three-month average, which is 185,000,” said Michael Gapen, chief United States economist at Barclays. “The labor market is healthy, but we still have the conundrum that solid employment gains haven’t translated into faster wage growth.”

One wild card in the second half of 2017 will be gasoline prices. The surge following Hurricane Harvey’s devastation in Texas will leave less money for consumers to spend on other goods and services.

“For the economy, it’s steady as she goes, but for the markets, it’s Goldilocks,” said Torsten Slok, chief international economist at Deutsche Bank, referring to the not-too-hot, not-too-cold August payroll increase.  NY Times

The markets are holding up well and trending higher as we stated they would all along in 2016 and now in 2017.  Until the sentiment turns bullish the markets are expected to trend higher.

Price of Copper Signalling Inflation or higher Stock Market Prices

Price of Copper probably a bullish Development for the Stock market

Many pundits associate higher copper prices with inflation. This is the wrong metric to look at; higher copper prices are usually associated with an improving economy.

Copper has traded past a key resistance point ($3.00) and it has managed to close above this important level on a monthly basis.  The long term outlook for copper is now bullish and will remain so as long as it does not close below 2.80 on a monthly basis.   Copper is facing resistance in the 3.20-3.25 ranges and as it is now trading in the extremely overbought ranges. As copper is now trading in the extremely overbought ranges, it is more likely to let out some steam before trading past this zone.  A healthy consolidation will provide copper with the force necessary to challenge the 3.20 ranges and trade as high as $3.80 with a possible overshoot to $4.00, provided it does not close below $2.80 on a monthly basis.

 

Price of Copper Signalling Inflation or higher Stock Market Prices

Now that copper has traded past $3.00 on a monthly basis,  the Fed deserves another pat on the back for they have managed to further cement the illusion that this economic recovery is real. Copper is seen as a barometer for economic growth, so pulling off a Houdini here is probably going propel a lot of former naysayers to embrace this economic recovery.

Mass Sentiment is still Negative so Stock Market likely to Correct only

 

Combining this data with the action in the Copper markets leads us to believe that the stock market is more likely to experience a correction than an outright crash. Higher copper prices are usually indicative of higher stock market prices.  Therefore, the copper markets are confirming that the long term trend is still intact.

What about the Inflation issue?

The chart below puts an end to that argument for now. If inflation were an issue, the velocity of M2 money stock would be trending upwards. Until it starts to trend upwards, inflation is not an issue and the focus should be on higher stock market prices.

 

Conclusion 

Don’t focus on the noise; focus on the trend as it’s your friend and everything else is your foe.

 

Published courtesy of the Tactical Investor

 

Stock market corrections or stock market crashes

 

Stock market corrections or stock market crashes

Stock market corrections or stock market crashes: The Dow would have to drop below 9000 to break below the main uptrend line; an unlikely event in the near future. However, this does not mean it’s impossible. Every once in awhile the markets experience a monumental crash that can shave of as much as 60% of the Markets current value.   In this is instance we are using weekly charts; each bar on the chart represents one week’s worth of data.  Straight off the bat, you can see that back breaking corrections translate into long term buying opportunities.  Remember when there is blood in the streets and the masses are in panic mode, the opportunity is knocking.

Crashes are buying opportunities

Market Crashes are Buying Opportunities

The first zone comes into play at 16,000. If the Dow closes below this level on a monthly basis then there is a chance it could trade as low as 13,000.  However, based on the current market sentiment, there is very little likelihood of such a scenario coming to pass.  Mass Psychology is very clear when it comes to dealing with stock market crashes. Market crash on a note of Euphoria and bottom on a note of despair. Mass psychology states that optimum time to get into the markets is when the masses are in panic mode.

 

Anxiety index is a great market timing took

 

A fortress of support comes into play at the 13,000-13,500 ranges

To trade any lower than this level, the Dow would need to close below the above ranges on a quarterly basis. If it were to do that then the main uptrend line could be tested. Note that this trend will continue to trending upwards, so in 12 months, the trend line could move from the 9000 ranges to the 10,000 plus ranges.

Buy the Fear Sell the Joy 

The individuals who arrive at the party late are the first ones to come out and mistake a correction for a crash.The crowd panics when it sees blood in the streets; instead of joining the crowd do something different take advantage of stock market crashes and buy as the crowd dumps quality stocks and flees for the exits.

Crash or correction boils down to the angle of observance 

What is stunning to one, could appear ugly to another; it comes down to the angle of observance. Alter the angle and the image changes. Mass media and most experts try to alter the angle and direct you to see what they want you to see. They are in the fear “Selling Business” because fear sells, so they focus on creating a mountain out of a mole hill.

History clearly indicates that the Astute investors build very large stakes when there is blood in the streets.  Moreover, they keep building these positions as long as the main driving force is fear.  Take a look at the current Bull market; the Dow is trading at 22,000 and the masses are still nervous. It’s history in the making. The masses are always on the wrong side of the markets in the long run.

The astute investor always views financial disasters through a bullish lens.  Instead of panicking they take advantage of stock market crashes. 

Normality highly values its normal man. It educates children to lose themselves and to become absurd, and thus to be normal. Normal men have killed perhaps100, 000 of their fellow normal men in the last fifty years.
R. D. Laing
1927-1989, British Psychiatrist

Published courtesy of the Tactical Investor

 

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Banking system: Why is the Fed pumping money?

Banking system: Why is the Fed pumping money?

The US central bank has pumped more than $200bn (£160bn) into the banking system  this week – the first time there’s been such an intervention since 2008.

The Federal Reserve’s aim was to stabilise what is usually a calm part of the market.

Interest rates in the so-called “repo market” had shot up to 10% in some cases – although the cost of borrowing in that market more typically hovers around the benchmark rate set by the Fed – around 2%.

So what happened and should we worry?

First things first: what’s the repo market?
Banks, hedge funds and other players borrow money regularly on a short-term basis to ensure their books are in order, no matter what their daily activities.

The borrowers typically offer government bonds or other high quality assets as collateral, which they repurchase, plus interest, when they repay the loan – often the next day.

Those repurchase agreements give the repo market its name.

What happened this week?
This is a huge market, with some $3tn changing hands each day, according to the US Office of Financial Research.

Under normal conditions, interest rates in the repo market are low, since the loans are considered safe and there’s plenty of cash on hand.

But this week the cost of borrowing shot up – toward 10% in some cases. And the rate at which banks lend to each other – the Fed’s benchmark – exceeded 2.25%, the top of its desired range. Full Story

 

Climate strike: What US children are sacrificing for the cause

Young people poured on to the streets of cities across the world on Friday, to try to force political leaders to act over climate change.

But they aren’t just leaving it to the politicians – in New York City, activists explained what they were doing in their own lives to help. Full Story

 

Walmart ceases e-cigarette sales

Walmart has said it will no longer sell e-cigarettes in the US, amid mounting calls to ban the products entirely.

The retailer said its decision was due to “uncertainty” about the rules governing e-cigarettes, which US health authorities have linked to more than 500 cases of lung injury.

US President Donald Trump last week said the US would prohibit sales of all flavoured e-cigarettes. Full Story

 

Justin Trudeau: Canada PM seeks to put blackface scandal behind him

Canadian Prime Minister Justin Trudeau has sought to put the blackface scandal behind him with an announcement on gun control as he seeks re-election.

Flanked by cabinet ministers he said his party would ban military-style assault rifles if they win next month.

His campaign went into damage control on Wednesday night following the publication of a photo of Mr Trudeau wearing brownface at a costume gala. Full Story

 

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What part of the brain controls emotions?

What part of the brain controls emotions?

Brain Control & The Pleasure Slaves

What part of the brain controls emotions: However, the biggest threat is going to be a system that directly stimulates the parts of the brain that control pleasure. It’s going to be the most addictive drug on the planet, and it will be (totally)legal and the masters will control the masses like never before. The excerpts posted from an insightful article will save us time and give you a clue as to what lies in store for the masses in the future.

In the 1950s, the psychologists James Olds and Peter Milner modified the chamber so that a lever press would deliver direct brain stimulation through deep implanted electrodes. What resulted was perhaps the most dramatic experiment in the history of behavioral neuroscience: Rats would press the lever as many as 7,000 times per hour to stimulate their brains. This was a pleasure center, a reward circuit, the activation of which was much more powerful than any natural stimulus.

A series of subsequent experiments revealed that rats preferred pleasure circuit stimulation to food (even when they were hungry) and water (even when they were thirsty).

Focus on the last part of the above sentence and on the paragraph below, for it highlights the power of pleasure to overrule everything.  Humans will do whatever is deemed necessary in order to gain access to a machine that provides this level of pleasure and in doing so they will sign whatever document has to be signed giving up whatever little privacy they desperately cling onto today.

Self-stimulating male rats would ignore a female in heat and would repeatedly cross foot-shock-delivering floor grids to reach the lever. Female rats would abandon their newborn nursing pups to continually press the lever. Some rats would self-stimulate as often as 2000 times per hour for 24 hours, to the exclusion of all other activities. They had to be unhooked from the apparatus to prevent death by self-starvation. Pressing that lever became their entire world.

Perhaps the most egregious example was reported in a paper entitled “Septal stimulation for the initiation of heterosexual behavior in a homosexual male,” published in 1972. The rationale behind this experiment was that because stimulation of the septal area evoked pleasure, if it was combined with heterosexual imagery it could “bring about heterosexual behavior in a fixed, overt homosexual male.”

And so Patient B-19, a 24-year-old male homosexual of average intelligence who suffered from depression and obsessive-compulsive tendencies, was wheeled into the operating room. Electrodes were implanted at nine different sites in deep regions of his brain, and three months were allowed to pass after the surgery to allow for healing. Initially stimulation was delivered to all nine electrodes in turn. However, only the electrode implanted in the septum produced pleasurable sensations. When Patient B-19 was finally allowed free access to the stimulator, he quickly began mashing the button like an 8-year-old playing Donkey Kong. According to the paper,

“During these sessions, B-19 stimulated himself to a point that, both behaviorally and introspectively, he was experiencing an almost overwhelming euphoria and elation and had to be disconnected despite his vigorous protests.”

Lest anyone think that it is only men — creatures of inherently base urges — who would respond in this manner, another recorded case, performed by a different group, involved a woman who received an electrode implant in her thalamus, an adjacent deep brain structure, to control chronic pain. This technique has proven effective for some patients whose severe pain is not well-controlled by drugs. However, in this patient the stimulation spread to nearby brain structures, producing an intense pleasurable and sexual feeling:

“At its most frequent, the patient self-stimulated throughout the day, neglecting her personal hygiene and family commitments. A chronic ulceration developed at the tip of the finger used to adjust the amplitude dial and she frequently tampered with the device in an effort to increase the stimulation amplitude. At times she implored her family to limit her access to the stimulator, each time demanding its return after a short hiatus.”

So, not to put too fine a point on it, these patients responded just like Olds and Milner’s rats. Given the chance, they would stimulate their pleasure circuits to the exclusion of all else. You can read the full story by copying and pasting the link in your browser. http://bit.ly/2QfseXT

Brain Control With An AI interface

The new models will be run with AI programs monitoring to see which dosage is the most effective and what part of the brain can be stimulated the most and finally what stimulation makes you more susceptible to manipulation. People will willingly sign the contract without reading them.  The average person will be hooked on the spot and just to make things appear fair, almost everyone will be given a free 30-60 day money-back guarantee, but 90% will not need more than 1 hour to make up their minds. They will sign whatever disclaimer is needed to get the pleasure they seek.

Social media was the first step of this experiment, as it has been shown that social media leads to increase secretion of dopamine. It’s a vicious cycle. More dopamine release creates the need for even more stimulation, and that is why so many people are addicted to their smartphones.  Nature seems to have hardwired our brains to react to a host of factors that have a direct effect on the pleasure centres of the brain, from crack to wine, from sex to meditation and the list goes on.

The easiest individuals to manipulate are the ones that wear their emotions on their sleeves. Makes us wonder if this whole Alt-right and Alt-left setup act is just the prelude to the main act. What a way to end all things by offering a solution to heal the massive fissures created as a result of the polarisation wars.  Food for thought.

Additional research illustrates how powerful the urge to experience “pleasure” is in animals and by default, humans and why the big players want to alienate individuals and why communities are dying.  A sense of belonging to a group or community helps one deal with, and overcome such types of addictions.

With No Sense of Belonging Pleasure Impulses Increase

Alexander’s experiments, in the 1970s, have come to be called the “Rat Park.1 Researchers had already proved that when rats were placed in a cage, all alone, with no other community of rats, and offered two water bottles—one filled with water and the other with heroin or cocaine—the rats would repetitively drink from the drug-laced bottles until they all overdosed and died. Like pigeons pressing a pleasure lever, they were relentless, until their bodies and brains were overcome, and they died.

But Alexander wondered: is this about the drug or might it be related to the setting they were in? To test his hypothesis, he put rats in “rat parks,” where they were among others and free to roam and play, to socialize and to have sex. And they were given the same access to the same two types of drug-laced bottles. When inhabiting a “rat park,” they remarkably preferred the plain water. Even when they did imbibe from the drug-filled bottle, they did so intermittently, not obsessively, and never overdosed. A social community beat the power of drug. http://bit.ly/2PPrwBs

Courtesy of Tactical Investor

 

What part of the brain controls emotions?

The brain is a very complex organ. It controls and coordinates everything from the movement of your fingers to your heart rate. The brain also plays a crucial role in how you control and process your emotions.

Experts still have a lot of questions about the brain’s role in a range of emotions, but they’ve pinpointed the origins of some common ones, including fear, anger, happiness, and love.

Read on to learn more about what part of the brain controls emotions.

Where do emotions come from?
The limbic system is a group of interconnected structures located deep within the brain. It’s the part of the brain that’s responsible for behavioral and emotional responses.

Scientists haven’t reached an agreement about the full list of structures that make up the limbic system, but the following structures are generally accepted as part of the group:

Hypothalamus. In addition to controlling emotional responses, the hypothalamus is also involved in sexual responses, hormone release, and regulating body temperature.
Hippocampus. The hippocampus helps preserve and retrieve memories. It also plays a role in how you understand the spatial dimensions of your environment.
Amygdala. The amygdala helps coordinate responses to things in your environment, especially those that trigger an emotional response. This structure plays an important role in fear and anger.
Limbic cortex. This part contains two structures, the cingulate gyrus and the parahippocampal gyrus. Together, they impact mood, motivation, and judgement. Full Story

What part of the brain controls emotions?

We are emotional beings. From happiness to sadness, fear, anger, love, and everything in between.

These feelings seem to happen automatically and sometimes feel outside the realm of our control. But emotions are very much a mental process.

Have you ever thought about what part of the brain controls emotions?

We know all about the brain centers that control breathing, balance, and speech.

But what the less tangible aspects of our behavior? What about our emotions?

Here’s all you need to know about what part of the brain controls emotions.
The prefrontal cortex is responsible for planning future action.

So if you thought about robbing a bank, your prefrontal cortex would help you process the idea and connect it to an appropriate emotional response.

Your emotional response is generated in the amygdala. Feelings of anxiety and fear would likely motivate you to change your mind.

If the amygdala is damaged, you lose control of base impulses. In fact, you may even begin to act in an inappropriate way. Disinhibited behavior, hypersexuality, and risk-taking are behavioral consequences of a damaged amygdala.

The left hemisphere of the brain processes while the right hemisphere identifies. For example, if you felt as if you were falling in love, your right hemisphere would identify the feeling, but your left hemisphere would help you decide on how to act. Full Story

The Stock Market Data and Investor Sentiment

stock market data

Stock Market Data 101

In some ways, today’s stock market data is like MUSK; the guy is erratic and TSLA’s erratic stock price action clearly validates this point.  He was caught smoking weed on camera, and he called Vernon Unsworth a “pedo guy”; in 2018 he stated he wanted to take Tesla private and was sued by the SEC for securities fraud.  Last but not least, Tesla is still losing money selling cars. Hence, the logical conclusion would be that one should short the stock, and if you did that, you would have lost your shirt, pants and your knickers.

In 2020, bears lost north of $8 billion as a result of their shorts. The recent parabolic spike in Tesla’s stocks price was due to a massive short squeeze. On the same token, this market should have crashed long ago, and those that bet against it have paid dearly. The moral of the story is simple; when it comes to the market, the focus should be on the psychological state of the masses and not on logic.  In Tesla’s case, if one applied Mass Psychology, one would have noticed that the stock has a cult-like following and secondly, the bad news was not having a massive impact on the price of the stock. Sure the stock let out a large dose of steam, but that is natural for a stock that has been on a tear.

stock market cycles and investor sentiment

Investor sentiment and Market Cycles

This chart quite accurately captures the state of the mass mindset; however, the funny part is that very few put this information to use, including the individuals/organisations that create these lovely charts.

According to the Wall Street Journal, there is a record 3.4 trillion in cash sitting on the sidelines.  This money will eventually find its way into the market and push markets higher, but the more important factor to pay attention to is that the crowd is still far from bullish.  Looking at the sentiment below; the only consistency we can find is that there is no consistency. Bullish sentiment has not remained above 60% for 3 weeks in a row for years on end. In fact, we can’t recall seeing the sentiment above 60% for three weeks in a row since the inception of this bull market and that is a very telling development indeed.

This sentiment data was tabulated before Friday’s sell-off; therefore it appears that the crowd was already spooked before Friday’s sell-off further cementing the view that a sharp pullback has to be viewed as a blessing in disguise. Market Update Jan 31, 2020

sentiment data

If you compare the current sentiment data to that in the last update, bearish readings remain unchanged but bullish readings rose a bit. Now does that make any sense; the crowd panicked and then turned bullish and the markets surged to new highs and the bears still dominate. This type of action clearly pinpoints that the main dominant theme is that the masses are still uncertain.

Media Hysteria over the Coronavirus: what gives?

According to Worldometers

Quick facts:

  • Every year an estimated 290,000 to 650,000 people die in the world due to complications from seasonal influenza (flu) viruses.
  • This figure corresponds to 795 to 1,781 deaths per day due to the seasonal flu.

Sources and info:

Why the hysteria when so far roughly 3K individuals have succumbed to the coronavirus? What gives? Weaponised news, that’s what gives.

Conclusion

If you are an investor with a long term view then all sharp corrections should be viewed through a bullish lens as history indicates that markets revert to the mean.  This massive sell-off is driven by fear and when the fear subsides the markets will resume their upward trend. The trend as per our Trend Indicator is still positive, so Tactical Investors should view all sharp pullbacks through a bullish lens.

Courtesy of Tactical Investor

Coronavirus: Fear returns to stock markets

Global stock markets have fallen sharply as investors continue to worry about the broader economic effects of the coronavirus.

London’s FTSE 100 share index fell more than 3% and there were similar declines in other European markets.

In the US, upbeat data on hiring and unemployment failed to buoy investors.

The Dow Jones Industrial Average closed almost 1% lower, while the Nasdaq slumped 1.8% and S&P 500 ended down 1.7%.

The monthly report from the US Labor Department found US employers added 273,000 jobs in February – significantly beating expectations – while the jobless rate fell back to near a 50-year low of 3.5%.

The report also revised up estimates of job gains in January and December, finding 85,000 more than previously understood.

The surveys, however, reflect data collected before the outbreak intensified. In recent weeks, global travel has plunged, while work, school and shopping has been disrupted in many countries.

Despite the strong data, markets were focused on the impact of the virus. “Today’s jobs report is old news,” said Sarah House, senior economist at Wells Fargo.

The economic strength signalled in the report is a “little like the saying, the car was in fine condition before being involved in a collision”, said Mark Hamrick, senior economic analyst for Bankrate.com.
Earlier on Friday, markets in Asia had seen big falls, with Japan’s Nikkei share index dropping by 2.7%.

The 3.6% drop in the FTSE 100 wiped out the gains seen earlier this week on the index. Full Story

 

US stocks halted after falling 7%. Global stocks plunge as oil crashes and coronavirus fear spreads

Hong Kong/New York/London (CNN Business)Global markets are plunging after the implosion of an alliance between OPEC and Russia caused the worst one-day crash in crude prices in nearly 30 years, fueling panic triggered by the escalation of the coronavirus epidemic.

The S&P 500 (SPX) fell about 6%. The Dow (INDU) fell as many as 2,046 points. The Nasdaq Composite (COMP) was down 5.4%. The New York Stock Exchange halted trading for 15 minutes after stocks plunged more than 7%. They retraced some of their losses after the market reopened.
The sell-off carried over into Asia Pacific, where Australia’s S&P/ASX 200 ended 7.3% lower on Monday, the index’s biggest plunge since October 2008. Japan’s Nikkei 225 (N225) sank 5.1% and Hong Kong’s Hang Seng (HSI) lost 4.2%, while China’s Shanghai Composite (SHCOMP) shed 3%. The yield on the 10-year Treasury note, meanwhile, fell below 0.5%, hitting record lows. The panic began after Saudi Arabia shocked oil markets by launching a price war. The kingdom is trying to retake global market share after Russia refused Friday to go along with OPEC’s efforts to rescue the oil market from a plunge in demand caused by the coronavirus outbreak.
Making matters worse, the novel coronavirus continues to weigh heavily on investors as it deals an unexpected shock to the economy. The virus has infected more than 108,000 people and is throwing many countries into turmoil. Full Story

Who’s buying stocks? Executives at TripAdvisor, Newell Brands and other companies are buying at low prices

In his investing book “The Vital Few vs. the Trivial Many: Invest With the Insiders, Not the Masses,” George Muzea argues that the best time to purchase stocks is when “those in the know” are buying, and “those not in the know” are selling.

People in the know are corporate insiders like directors and top managers who get daily reports on sales trends and projections, and who can read the body language and other signals inside companies.

They’re buying like crazy in the coronavirus-led bear market, which has pushed down the S&P 500 Index by 12% Monday alone.

I’ve tracked insider buying on a daily basis for over 10 years, because it’s a big part of how I select names for my stock newsletter, “Brush Up on Stocks,” launched in 2010. The current wave of insider buying is as big as any I’ve seen during the great panics of the bull market — all of which were followed by rebounds.

Importantly, insiders are going straight to all the sectors that will supposedly get hit hardest by the virus: air travel, amusement parks, restaurants and economically sensitive areas like basic materials, energy and industrials. They are doing so with repeated, large purchases. There’s virtually no insider buying in classic defensive areas like consumer staples. Full Story