Tim Woods Says It Ain't Gonna Work

The following passages are taken from Tim Woods editorial today on FinancialSense Market Wrap:


By every historical measure the equity markets slipped into a secular bear market in 2000. As a result, we began to see efforts by the powers that be to keep the market afloat. I have stated all along that manipulation will ultimately not work. I have also stated all along that all this will do is make matters worse in the end. Well, I would think that everyone can now see, matters are indeed much worse. Yet, the Fed, the Treasury and the politicians continue to think that they can “fix” the problem by throwing more money at it. They do not understand that they can’t “fix” this economic crisis. They also do not understand that it is their trying to “fix” things in the past that has created the current situation. All markets as well as the economy must both inhale and exhale. They are trying to prevent the exhaling and it ain’t gonna work.

What we are dealing with is the wrath of Kondratieff Winter, which is about the purging of excess credit. Along with that comes deflation and along with that global stock markets enter into extended declines. Real estate declines, economic growth slows, commodities decline, bankruptcies accelerate as the excess credit is purged from the system, the banking system is shaken, the free market is blamed and we move toward national fascist political tendencies. We are now seeing each and every one of these symptoms of K-wave winter. For the record, I did not make up these symptoms to fit the current situation. I have original writings by Nikolai D. Kondratieff and the signs of K-wave winter were quoted from a book by David Knox Barker titled, The K-wave and was published in 1995. Don’t think the powers that be aren’t aware of Kondratieff Winter. They know full well what we are facing and that is why they have tried to hold back its wrath as diligently as they have since 2001.

Now, from a Dow theory perspective, I have been saying that when the averages moved below their August 2007 secondary low points, on November 21, 2007, that under classical Dow theory, a primary bearish trend change occurred. According to William Peter Hamilton, the great Dow theorist of the 1920’s who called the 1929 top, said that when the averages move below their previous secondary low points, the stock market barometer is forecasting stormy conditions. Interestingly enough, most major averages around the world also topped and entered into primary bearish trends in conjunction with this Dow theory primary trend change.

Let’s now move to the Dow theory chart below. When the non-confirmation between the averages occurred in July, many insisted that that non-confirmation was bullish. I even read articles claiming that the primary trend was bullish in accordance to Dow theory. I have maintained that under orthodox Dow theory nothing has changed the primary bearish trend that was confirmed on November 21, 2007 and that the non-confirmation was merely a warning of a possible trend change, but that it was NOT in and of itself bullish. This has since proven correct. This topic was also addressed in the September 19th WrapUp. There are many that view the Dow theory as some antiquated relic of the past that is no longer relevant. There are others that claim to be Dow theorists, yet they have never read the writings of our Dow theory founding fathers, which again were Charles H. Dow, William Peter Hamilton and Robert Rhea. Anyway, I guess my point here is that the Dow theory first signaled stormy conditions last November and it has proven correct once again. It has also helped me to guide my subscribers through this economic disaster and it is anything but an antiquated relic of the past. If someone says this, then they don’t truly understand Dow theory.

Read rest here: It Ain't Gonna Work