GREENMARK 101 FLASHED THIRD BUY SIGNAL OF DOW JONES INDUSTRIAL AVERAGE on APRIL 23, 2020 AND WILL TEST 27,096 WITHIN TWO WEEKS
GREENMARK 101 algorithm flashed its third major BUY SIGNAL for the Dow Jones Industrial Average (DJIA) within the Subjective Probability Index on April 23, 2020. The projected “test” of 27,096 defies all sense of logic and the science of investing. How the Dow Jones Industrial Average got here is not a mystery, and has nothing to do with fundamental analysts, which determine value, macroeconomics as the state of the economy and industry conditions or microeconomics like the effectiveness of the company's management. Also worthless is technical analysis which forecasts the direction of prices through an evaluation of historical market data such as price and volume. The secret sauce that propelled stocks higher was the Federal Reserve decision of March 23, 2020, to pump trillions of dollars into the domestic economy. Whether the effort helped the common citizen is an argument for a later time. What is clear $12 trillion surely supercharged the stock market. On March 23rd, our Subjective Probability Index DJIA flashed its first major BUY SIGNAL for 2020 at 18,774 and the second of April 3rd at 21,053. Back to the “secret sauce”: By the Federal Reserve and acts of Congress to replace the losses from the COVID-19 pandemic, the U.S. printing presses had to work overtime. $12 trillion later the federal government applied and borrowed vast sums very cheaply. The interest rate on inflation-protected bonds, which measures real borrowing costs, is minus 0.43 percent. Indeed, investors are paying the feds to hold their money. Thus, Washington can run big budget deficits without worrying about costs. Meanwhile, a substantial part of the $12 trillion in free money and has to go somewhere. Why not the stock market?
GREENMARK 101 algorithm estimates that at $8 trillion of new money has been the main factor to support higher common stock prices, and is naturally better than buying five year Treasuries at 0.37% yearly interest.
Suggestion: Key on 15 stocks of the DJIA components that have a natural cover from the pandemic.