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“Give me control of a nation's money and I care not who makes the laws.” Mayer Amschel Rothschild

I thought the quote above fit right into today's situation.  And, of course, the Federal Reserve has control of our money in the USA.  But the very extent of the Fed's control is unprecedented ... My PTI sees the market heading higher.  I checked with the latest statement by Fed head Bernanke, and it's clear that come hell or high water, Ben Bernanke will do everything in his power to send this market higher.  This market lives and dies by the latest edict from the Fed.

Last but far from least, I received Barron's Saturday morning, and right there on the upper right-hand corner of the cover page I read the fateful words, “Dow 15,000 Very Likely By Year End.”  Ah hah, Barron's not only gave us a number, but they also gave us a time.  The time is -- “By the end of the year.”

Yes, I know that this market is uncorrected during its long rise from the 2009 low, and I know that there are risks in buying an uncorrected advance that is becoming uncomfortably long in the tooth, but my suggestion is that my subscribers should take a chance (after all, Columbus took a chance) and take a position in the DIAs.  If you buy the DIAs, I suggest that you place a mental stop loss 8% below your purchase price.  Losses in investing are inevitable, but losses should always be limited.

By taking a position in the market, you'll be casting yourself on the side of the optimists, and you'll also be casting your vote on the side of Ben Bernanke and the Feds.  Besides, it's fun to be able, for once, to place yourself on the cheerleaders side of the US markets, and it makes sense to be on the side of America's Federal Reserve.  Didn't my old friend, Marty Zweig warn us not to fight the Fed.  And I might add, certainly we should refrain from fighting this particular Fed, a Fed led by an academician who has sworn that he will prevent another Great Depression.

I said above that this market lives or dies by the edicts of the Fed.  If Ben Bernanke's Fed has any intention of taking its heavy foot off the gas, my guess is that the Fed will provide the markets with ample early hints and warnings.  So what is there to do?  The answer is self-evident.  We buy the DIAs and watch our profits grow.  Isn't this what Howard Marks of Oaktree says to do?  For more on Marks, read the current issue of Barron's.  And according to the article, Howard Marks is so insightful that one of his biggest fans is Warren Buffett.

Wait, I didn't mean to place a sarcastic overtone on the above.  I really believe that subscribers should take a flyer on this market.  After all, after weeks of flirting with a new high in the Industrial Average, the Dow finally confirmed the previous record high of the Transportation Average.  With the Industrials and the Transports both in record high territory, I think being in the market is justified under Dow Theory.

My intuition tells me that there will be an early period (around now) of erratic and uneven scary advance, this to occur while formerly battered investors work up the nerve to enter this market.  Then the action will smooth out as the crowd gathers courage and confidence.  Finally, in the last stage of this advance we might see the stock averages rise in parabolic fashion.  This will be the time to pack our bags and get out.

Money will come into this market from four sources:  (1) from the formerly battered sidelined public that will not be able to resist a rising Dow and the cheering that goes with it, (2) from funds and mutual funds that, up to now, have been under-invested, (3) from the shorts that will be systematically driven from their short positions, and (4) from bond holders who are forced to switch to stocks for the dividends.

Is buying this market like holding a license to steal?  Not exactly, because nothing is perfect and no market action is absolutely certain.

For a review of the Dow and the Transports, see below --

Gold shows signs of coming alive.  Check MACD and its histograms.  April gold closed up 1.1 to 1578, which was good enough for today's action.

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with James Turk, Jim Sinclair, John Embry, Gerald Celente, Dr. Stephen Leeb, Rick Rule, Ben Davies, Andrew Maguire and Marc Faber are available now.  Also, be sure to listen to the other recent KWN interviews which included Egon von Greyerz, Felix Zulauf, Eric Sprott and Art Cashin by CLICKING HERE.

Eric King

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