Has The U.S. Economy Plunged Into A Depression?

Has The U.S. Economy Plunged Into A Depression?

“Face reality, and that means admitting that “the U.S. economy has plunged into a depression.”

This is already the worst economic downturn that America has experienced since the Great Depression of the 1930s, and we are right in the middle of the largest spike in unemployment in all of U.S. history by a very wide margin.

Of course, it was fear of COVID-19 that burst our economic bubble, and fear of this virus is going to be with us for a very long time to come.  So we need to brace ourselves for an extended economic crisis, and at this point, even Time Magazine is openly referring to this new downturn as an “economic depression”.

Needless to say, there will be a tremendous amount of debate about how deep it will eventually become, but everyone should be able to agree that our nation hasn’t seen anything like this since before World War II.

In order to prove my point, let me share the following 10 numbers with you…

#1 According to a study that was just released by the National Bureau of Economic Research, more than 100,000 U.S. businesses have already permanently shut down during this pandemic, and that represents millions of jobs that are never coming back.

#2 The Federal Reserve Bank of Atlanta is now projecting that U.S. GDP will shrink by 42.8 percent during the second quarter…

“A new GDP forecast from the Federal Reserve Bank of Atlanta for the three months through June estimates an unprecedented drop of 42.8 percent. The bank describes the data as a “nowcast” or real-time, compared with the official government report of GDP, which is dated. The first-quarter preliminary data, which showed a 4.8 percent dip, included a limited period of impact from COVID-19.”

#3 On Friday we learned that U.S. retail sales were down 16.4 percent during the month of April, and that is a new all-time record.

#4 U.S. factory output was down 13.7 percent last month, and that was the worst number ever recorded for that category.

#5 U.S. industrial production fell 11.2 percent last month, and that represented the worst number in 101 years.

#6 On Thursday, we learned that the number of Americans that have filed initial claims for unemployment benefits during this pandemic has risen by another 2.9 million, and that brings the grand total for this entire crisis to 36.5 million.  To put that number in perspective, at the lowest point of the Great Depression of the 1930s only about 15 million Americans were unemployed.

#7 According to the Federal Reserve Bank of Chicago, the real rate of unemployment in the U.S. is now 30.7 percent.

#8 According to a survey Fed officials just conducted, almost 40 percent of Americans with a household income of less than $40,000 a year say that they have lost a job during this crisis.

#9 One study has concluded that 42 percent of the job losses during this pandemic will end up being permanent.

#10 According to a professor of economics at Columbia University, the U.S. homeless population could rise by up to 45 percent by the end of this calendar year.

We have never seen economic numbers this horrifying, and more awful economic numbers are coming in the months ahead.

At this point, things are so bad that even Fed Chair Jerome Powell is openly admitting that he doesn’t really know how long this new economic downturn will last…

“This economy will recover…We’ll get through this. It may take a while. It may take a period of time. It could stretch through the end of next year,” Powell said during a rare televised interview that aired on “60 Minutes” Sunday night. “We really don’t know. We hope that it will be shorter than that, but no one really knows.”

In the months ahead, there are a few sectors that you will want to keep a particularly close eye on, and one of them is the commercial real estate market.  The following comes from Zero Hedge

“Fast forward to today, coronavirus outbreak, and the ensuing lockdown, has essentially frozen the commercial real estate market. Buildings that were once used for restaurants, offices, hotels, spas, and or anything else that is classified non-essential have seen soaring vacancies.

This is single handily sending the commercial property market into chaos. As vacancies soar, tremendous downward pressure is being put on almost every asset class tied to commercial real estate.

The latest TREPP remittance data compiled by Morgan Stanley showed a quarter of all commercial mortgage-backed securities (CMBS) could be on the verge of default.”

I am personally convinced that we are on the precipice of the greatest commercial real estate implosion in American history.

As the dominoes tumble, it is going to send wave after wave of devastation through the financial industry, and it is going to make the subprime mortgage meltdown of 2008 look like child’s play.

But at least bankruptcy lawyers will have plenty of work.  Last week we learned that J.C. Penney filed for Chapter 11 bankruptcy protection, and of course the bankruptcies that we have seen so far will just be the tip of the iceberg.

I think that politicians all over America are going to deeply regret overreacting to COVID-19, because nobody is going to be able to put the pieces back together now that our economic bubble has burst.

Sadly, very few people understood how shaky our debt-fueled economic “boom” was, and ultimately it didn’t take that much to push us into a new economic depression.

And now every additional crisis that comes along is just going to escalate our economic troubles.  This is going to be one very long nightmare, and there will be no waking up from it any time soon.

Even before COVID-19 came along, homelessness had become a massive problem in many of our major cities, and now tent cities are rapidly multiplying in size.

There is going to be so much economic pain in the months ahead, and it could have all been avoided if we had made much different choices as a nation.

But we didn’t, and so now we all get to pay the price.

Mr. Snyder wrote this article and I respect his opinion. I am not taking issue with his story, but he is a respected conservative voice in a world of noise.

So, I ask you, what if he is correct in his judgment and collapse is coming sooner than later?

Are you prepared for what is going to happen to your retirement and investment account values?

Are you sheltered from those accounts declining 40%? 50%, 60%, or more.

The Wealth Preserver Membership can protect your account from any stock market collapse. Please know that until it does collapse, your investments continue to grow as usual. 

Powerful Crypto Trade Signals

Powerful Crypto Trade Signals

Powerful Crypto Trade Signals

Bitcoin and cryptocurrency investors are gearing up for the long-awaited bitcoin halving this month—which will see the number of new bitcoin entering the market cut by half.

The bitcoin price has soared this week and is now a strong contender for 2020’s best performing assetclimbing to over $9,000 per bitcoin for the first time since late February.

However, while many traders are betting the bitcoin price will climb as a result of this month’s cut to supply, the latest bitcoin bounce may have happened for entirely different reasons.

 

Bitcoin

Bitcoin Monthly Trade Signals
Bitcoin Weekly Trade Signals
Bitcoin Daily Trade Signals

Ethereum

Ethereum Monthly Trade Signals
Ethereum Weekly Trade Signals
Ethereum Daily Trade Signals

Litecoin

Litecoin Monthly Trade Signal
Litecoin Weekly Trade Signals
Litecoin Daily Trade Signals

We offer powerful crypto trade signals for more than 40 Cryptocurrencies.

The daily, weekly, and monthly charts with trade signals can be used with A Pros 5 Minute Trade Secret to increase the performance of the actual coin by up to and more than 3800% during the same time frame.

Even without all the coming news, InterAnalyst Members have been making incredible bullish profits and avoiding the bearish declines since 2017.

Another Leg Down?

Another Leg Down?

We have seen a hefty relief rally but does Another Leg Down loom? For those who are Wealth Maximizer Pro members, you have caught the nice profitable rally, contratulations.

I am seeing some “disturbing” signs that the market is very close to re-testing the lows that we previously have made, or, will it form another leg down loom?.

At the very least, it is 98% certain we will come to test the lows around 2250 at any moment in time. It is possible that we have another final leg down, and I believe that we likely will.

It is important for you to remain patient instead of panic buying and falling into bull trap.

During this last leg down, simultaneously, Gold and Silver will likely sell-off for liquidity reasons. People are now and will continue to liquidate their hidden savings.

Here’s why we know that the last leg down is coming:

The VIX remains incredibly elevated (60+) despite big pops in the markets and has not subsided. This tells you another sell-off is looming. Whats more, it’s supported by many other technical and fundamental factors.

For the market to continue up and ignore these factors would be unprecedented.

Prepare for another drop to the eventual bottom.

Marxism, Buffett, Dalio, Stalin & The Bottom

Marxism, Buffett, Dalio, Stalin & The Bottom

As always, the Democrats just can’t stand the fact that Trump might take credit for helping people and have blocked and relief package. Democrats claimed in true Marxist fashion in the Senate that the GOP’s push to set aside $425 billion for loans to help select companies and industries, dubbing it a “slush fund” for the Treasury to direct as it sees fit. They said the bill is tilted toward corporations instead of working people. What they fail to even address is that those working people rely upon small businesses the Democrats hate so much which provides 70% of their employment.

Small businesses have been ordered to close down. They cannot pay employees and nobody has suspended their rents. The destruction of small businesses will be devastating to the economy and this is all about playing politics. I am saddened.

The closing for March, if down from last Friday may spark more serious liquidation as Hedge Funds dump everything and some may more to suspend withdrawals as is taking place in European bond funds. The Solus Alternative Asset Management LP, Hedge Fund, known for its investment in retail chain Toys “R” Us, informed its investors that it is shutting its flagship fund and will restrict redemption’s as it works to sell off holdings.

Even Warren Buffett’s Berkshire Hathaway may have lost more than $70 billion on its 10 biggest investments. This type of decline shows that the buy-and-hold strategy fails in a serious market correction. Ray Dalio, who will go down in history for his proclamation that “cash is trash” on January 21, 2020, has lost probably more than $4 trillion in Bridgewater.

Where the 2007-2009 Crash took out Lehman Brothers and Bear Stearns, this time we will see Hedge Funds go down in flames. This undermines liquidity and makes the market vulnerable because market-makers pull back just to survive. 

We are headed into a Global Recession which could become even worse than the Great Depression. Here’s why?

This time we have politicians taking advice from the medical industry. The medical people who do not understand that you cannot shut down the economy on this grand scale because of the devastation is insurmountable to people, their jobs, and wiping out their pensions. This economic shut down on such a massive scale is far worse than if the Corona death toll was even 8%.

Never before has the economy been crashing with such speed for this is orchestrated by people who only look at how diseases spread and not how the economy contracts.

See the source image

Yes, it is true that if we all stayed home we can even beat the common cold. But the post-coronavirus world is going to be far more damaging to the future than any of these people understand.

To have the Democrats playing politics in the middle of the is just insane.

Liquidity is collapsing everywhere. Bank failures rose after the 1929 crash because liquidity failure with a declining velocity = less money with even less money moving around the economy = recession and potential depression.

A monthly closing on Oil below $20.50 will warn of the economic recession ahead as people stay home and this command of quarantine and social distancing may undermine the very cooperation which is the foundation of civilization. 

If people are afraid to interact and suspect everyone, that is precisely the atmosphere created by Stalin during the Communist era.  We are voluntarily limiting and quickly losing all rights including the freedom of assembly. Even Twitter has shut down those who dissent against the coronavirus and this is calling into question our freedom of speech as well.

InterAnalyst will help guide everyone out of this time of insecurity and political misdirection via selfish ignorance.

Look at the chart below:

Finding The Bottom

As the markets find the bottom, it will be laced with volatility and insecurity with the media frightening you to the point of insecurity. this is not done for YOU as an InterAnalyst member. It is done for those Buy and Holders who never exited at the top and now have been scared into submission. 

However, as an InterAnalyst member,  you recognize that it likely will become the best entry point of your life! Yes, insecurity will be there but you know the stock market is going nowhere!

The stock market never lies and it always returns when there is “blood in the street” and the bottom arrives.

Thus, follow the guideline to a risky to safe entry back into the coming slingshot move.

Step One: Wealth Maximizer Pro (Daily Charts)

When the Daily chart delivers a green signal, jump for joy, then choose to enter a position or wait to see if the daily signal is holding for a few days for stability. If we are at or close to a bottom, volatility will be very high so prepare for it if you choose to trade it.

Step Two: Wealth Maximizer (Weekly Charts)

When the Daily is followed by a Weekly green signal you know that the economy is attempting to settle and gain strength.

You should begin to feel a bit more secure. Entering a bullish position here is a bit less risky because the weekly signal has some economic strength attached rather than pure daily volatility. You can even wait another week to see if it develops more strength.

Step Three: The Wealth Preserver (Monthly Charts)

Once the Green signal has elevated from the Daily to the Weekly and the Weekly has moved into a second or third week of a bullish trend, you may select to beat the green monthly Wealth Preserver signal by entering a bullish position before month end.

If you look at The Wealth Preserver chart above, ask yourself whether you remember the days or weeks Just prior to the bottom green signals in 2003 and 2008?  NOPE, right. You don’t remember them, but what you would have remembered is getting in after preserving your money at the prior top, before the full devastating decline those bear markets delivered.

The same is true now. 

So, the bottom is going to come. You must be patient, it will arrive, it always does!

Enter in when you feel most comfortable, but recognize that the Wealth Preserver has proven to be deadly accurate at economic turning points.

The phrase to be true: “Better Safe, than Sorry!” 

Obviously, entry at any point has its risks, but as you look closely at The Wealth Preserver chart above, making a move using the monthly charts is rarely a poor decision…ESPECIALLY OFF THE BOTTOM.

This time it is coming with a slingshot.

The Virus Peak & Stock Market Bottom

The Virus Peak & Stock Market Bottom

I cannot make any claims about the virus itself and this post is the reaction of major stock markets. A good explanation I’ve found on epidemics and exponential growth is this one on YouTube which I recommend watching if you are not already up to speed.

Looking at the current situation it appears that the market has room to fall further as the economic fallout continues and the virus spreads.

If the virus starts to slow down, it won’t be long before stocks find a bottom given the huge amount of stimulus that central banks are providing.

The most important thing is that we need to see the number of new daily cases start to flatten out.

Currently the virus is spreading at an exponential rate and that is causing businesses and services around the world to enter lock-down.

That has dire consequences for company profits.

Exponential Growth

To summarize some of the information in the mentioned video above, exponential growth means that as you go from one day to the next you have to multiply by some constant.

In the case of coronavirus, daily cases have been increasing by about 1.15 to 1.25 times the previous day’s cases. This results in an exponential curve with the number of new cases increasing on a daily basis. In fact, a virus provides a textbook example of exponential growth since what causes new cases are existing cases. However, there comes a time when exponential growth has to slow down.

For example, as millions of people become sick there are fewer people that can be infected so the rate of new cases must decrease. Likewise, measures such as hand washing and limiting gatherings also have the effect of reducing the spread.

So an exponential curve will eventually level out at an inflection point and turn into what’s called a logistics curve. At this point the number of new cases each day levels out and then starts decreasing. We have already seen this happen in China and now it is happening in South Korea too.

 New cases in China leveling out. Source: John Hopkins University.

Growth Factor = No. New Cases Today / No. New Cases Yesterday

A value over 1 indicates that we are still on the exponential part of the curve and there may be higher magnitudes of new cases ahead of us. In other words the growth is not slowing down.

This is the case right now in the USA and Europe. Whereas a value of 1 means that growth is leveling out and a value under 1 means new cases are decreasing.

Taking China as an example, the coronavirus spread began at an exponential rate which has gradually leveled off thanks to drastic shutdown measures.

With new cases appearing to have peaked the country has been able to get back to work and reboot its economy. Meanwhile, the United States and Europe have only just started to see new cases increase, indicating that they are likely to be near the beginning of the exponential curve.

What does all this mean for the stock market now?

I think we need to see the growth rate of new cases in the US and Europe start to level off before we can put in a major stock market bottom. So we need to see the daily growth rate drop to one or below and then stay there, perhaps for a week or so.

Once that happens I think we will see a bottom in stocks and a significant relief rally thanks to the huge amount of stimulus that is being provided by central banks.

It is because of this stimulus that we will see the slingshot. Importantly, though, I don’t think we need to see growth rates level off for the whole world.

It would be enough to see growth rates in the US and Europe start to slow for a bottom to be put in.
That’s because these areas (plus China) account for the vast majority of global GDP.

To keep on track of this I am using the coronavirus dashboard developed by John Hopkins University which seems to provide the most up to date and reliable figures that I’ve found. The dashboard provides the latest statistics on new cases which can then be used to calculate growth rates. 

For example, new cases outside China was 100.5k on Monday March 15th, higher than the previous day’s 81.7k cases and higher than the 75.1k cases on Saturday, a growth factor of 2.8.

Analyzing these numbers it doesn’t seem all that surprising that 10% drop in US stocks that day coincided with a huge daily growth rate of 2.8 times (this is for locations outside Mainland China).

Final Thoughts

Ultimately, virus growth rates and the stock market are linked and so long as the curve is exponential the markets are going to struggle.

Stock markets are likely to rally every time the virus looks to have been defeated, even when it’s not.

The data isn’t entirely accurate so there is likely to be some false starts. It’s also possible that the market will be able to lead a flattening in the virus whether it is caused by luck, government intervention or some other reason.

But eventually the market will get it right, it always does.

That being said, when stocks are up and the exponential curve has leveled off, review your Daily, then your Weekly charts with signals for Green Light Trade Signals because that will mean we are close to a bottom, or the bottom may be in!

Credit: Mr. Marwood, thank you for your research.

Did You Avoid The 30% Bitcoin Sell Off?

Did You Avoid The 30% Bitcoin Sell Off?

Did You Avoid The 30% Bitcoin Sell Off?

Take a look at our Daily and Weekly Trade Signal charts right from our members area.

The signals allowed our Bitcoin trading members to preserve 30% or more of their money just in the last 2 weeks and, more importantly, avoid today’s slaughter.

(click to maximize images)

 

The signals allowed our Bitcoin trading members to preserve more than 30% of their money just in the last three weeks and, more importantly, avoid today’s slaughter.

Oh, if you are a monthly trader or one who just wants to avoid massive declines before they happen to you, you can look at our monthly charts as a member as well.

As they say… a picture is worth a thousand words and following the signals could be worth millions.

 

The Charts & Signals Above Are 100% Real From Our Members Area.

Try a free 15-Day Trial Immediately

A 100% Legal Insider Trading System

A 100% Legal Insider Trading System

A 100% Legal Insider Trading System is legal is because directors are allowed to purchase and sell shares in their companies provided they do so in a timely manner and disclose their transactions with the SEC. It would make sense that company directors are best placed to evaluate the value of their businesses so the insider trading anomaly has been a fruitful line of inquiry for many researchers over the years.

In 1976, a paper from Finnerty concluded that increased insider purchases led to excess returns of 4.6% in the first six months while insider sales led to excess returns of -2.4%.

In more recent research from Jeng, the authors found that sales did not produce any meaningful results but insider purchases led to annual excess returns of as much as 11.2% over the S&P 500.

However, subsequent research from the Handbook of Equity Anomalies used the same methodology and produced annual returns that were nearly 7% lower between 1978-2005.

Nevertheless, the anomaly still shows grounds for development particularly in smaller cap stocks that are out of the realm of big firms.

In one study from the same book mentioned above, small cap stocks that had seen intensive insider purchases produced excess returns of around 5% in the first month, with most of those coming in the first 10 days.

This is illustrated in the following chart taken from the book:

The Insider Trading Trading Strategy

Most of the return from insider trading comes in the first 10 days. Src: The Handbook of Equity Anomalies. Wiley.

The Insider Trading Trading System & Strategy

There are a number of online resources you can use to track insider trading such as Insider Monkey and SEC filings. You can then go long small cap stocks with strong insider purchases. You need to be quick as most of the return comes in the first few days.

Have fun.

Eye-Opening Spoiled Fish Trading

Eye-Opening Spoiled Fish Trading

I was watching YouTube and my feed was taken over by Eye-Opening Spoiled Fish Trading videos and in between were advertisements for trading services and trading chat rooms promising quick and easy profits.

YouTube has become a cesspit of snake oil salesmen and fake trading gurus.

Fish (Noun): An inexperienced or unskilled player, especially such a player who loses significant amounts of money; a live one.

YouTube Spoiled Fish Trading Alert: Trading is not easy and you cannot make millions of dollars in your pajamas, on your iPhone, whilst simultaneously travelling the globe.

I know it’s hard to believe but it’s true.

The only explanation for all this hustle is that YouTube must have become a fertile breeding ground for fish.

So how can you avoid becoming one?

Let’s start by highlighting some of the shady characters currently doing the rounds on YouTube so you know who and what it is you have to look out for.

1. The Spoiled Fish Trading Smooth Operator

Top of the list is the smooth operator who knows all about internet marketing. These guys usually broadcast themselves from a beach or New York penthouse with wads of cash spread out on the bed.

A good way to lure fish is to show wads of cash spread out on a bed.

They claim that trading is so easy, all you have to do is follow their signals and take their courses and you will become their next millionaire student.

Some of the videos these guys make are so laughable that you think it must be a spoof. You keep waiting for the big ‘reveal’ but it never comes.

Without doubt, the smooth operator is the most dangerous character on YouTube.

Many run illegal practices like front running and demo trading.

And they get away with it by using clauses that tell you not to bad mouth their services. Top prize goes to the guy who pretends to have spoken at Harvard University when in fact the whole thing is a ruse set up by actors and other con artists.

2. The Clueless Millennial

Next on the list is the clueless millennial. These guys mean well but they don’t have enough experience to be talking markets.

The last time the market went down these guys were in kindergarten.

They don’t realize that their strategy (aggressive averaging in) is a ticking time bomb.

Ironically, being born in an era of online means most of these guys got their trading knowledge from, you guessed it, YouTube.

The result is a cyclical regurgitation of stale trading info.

Top prize in this category goes to the guys and gals buying leveraged ETFs and cryptocurrencies on every dip. Because everything goes up eventually, right?

3. The (So-Called) Live Trader

This trader broadcasts his impressive trading abilities for everyone to see via YouTube live stream. He is therefore a shining beacon of transparency and skill. Or is he?

Apart from being incredibly boring to watch, these traders cause a lot of harm since many of these charlatans are actually operating demo accounts. New traders (aka fish) see the profits being made on these demo accounts and think that trading is easy and viable.

They come to believe that good trading is about watching the market and acting on impulse.

Buying options or futures contracts because…

“Hey, I was doing so well for the last 6 weeks! I can do this.”

All the while they were utilizing a system that has no correlative alignment proven reliable. Thus, should not have worked from the start.

Sadly, they blamed an intermediate term signalling system because it was not designed to function within their “own short term” option or futures trading.

They hope, dream and think their own system can be tamed inside a historically proven trading system.

Sorry, Taming is not how it works.

4. The Clueless Chartist

There are literally thousands of videos on YouTube that show you how to trade particular indicators and chart formations.

They never give you concrete rules or tell you how profitable a chart pattern is.

Why?

Because as time passes charts change with market winds just like the clouds.

Shhh,,, please do not tell anyone this secret; but “the wind is unpredictable.”

Have you ever seen the clouds move and change shapes? This is precisely what charting is. Guessing which way the winds blow in 1 minute, 5 minutes, 1 hour, 8 hours, 1 day, 5 days, 1 month, and 1 year from now.

Which begs the question, do any of these YouTube guys really know what they are talking about?

5. The Copycat Merchant

Lastly, there is the copycat merchant. This is the guy who manages to piggyback off other people’s content, making themselves look good when really they don’t have a clue.

Top prize in this category goes to the guys who take down a video following a DMCA complaint only to upload another exact copy under a different username days later.

copy-catI hadn’t realized the situation on YouTube had become so bad. Good trading content is out there but it’s being swamped by hours of garbage.

These characters waste your time, send you down the wrong path and cause you to lose money and they don’t seem to care about it. A lot of the time they get away with it through the use of disclaimers.

Here is one such paragraph buried deep in a disclaimer of a well known YouTube trader:

This disclaimer was taken from a well known trading website.

In others words, these guys are going to show you trades in their chat room but they’re not going to tell you which are real and which are fake.

Even a fool knows this is a bad deal.

Unfortunately, fish don’t read disclaimers.

 

So what can you do?

The best thing you can do to avoid being conned is to seek out trading content that is science based, not based on squiggly lines or emotional appeal. But they are hardly ever backed up by data and statistics, analytics, and decades of time tested Nobel laureate supported scientific proof.

Don’t base your preference on popularity or number of views because there is a clear negative correlation between these things.

There is a negative correlation between trustworthiness/trading ability and number of views on YouTube. Before going on YouTube be aware that a lot of the content is poor and ask yourself whether it’s worth your time.

Instead, look for content that is backed up by data. For example:

  • Does it show historically back-tested performance results?
  • Does it show win rate and maximum loss?
  • Is the sample size large enough or historically long enough?
  • Can you replicate the results yourself with time?

Good trading is not easy, you need a proven system. Good trading is statistics, process and discipline, and a long history of proven performance.

A 100% Legal Insider Trading System

Dogs Of The Dow Trading System & Strategy

The Dogs Of The Dow Trading System & Strategy has been around since at least the early 90s and exists in a couple of different forms. The strategy involves tracking the 30 stocks in the DJIA and each year selecting the 10 stocks with the highest dividend yield. Each year the portfolio is rebalanced so that you always hold the 10 stocks with the highest yield.

Since dividend yield often moves inversely to price, this is essentially a contrarian strategy where you are selecting some of the weakest performers from the index.

According to this analysis from Steve Auger, the Dogs of the Dow strategy has been an effective one, outpacing the Dow index by a decent margin since 1999:

Dogs Of The Dow Trading Strategy

Dogs Of The Dow Trading Alternative Trading Strategy

Another variation of this strategy is to go long stocks that have been removed from market indexes.

For example, when the S&P 500 announces constituent changes, go long the stocks that have been removed.

These ‘dogs’ often see compulsory selling by fund managers who track the market indexes and this heavy selling leaves them technically oversold and potentially undervalued.

This anomaly has been documented in the UK market with success. Research from Jay Dahya in 2006 found that “deletions to the index are associated with a negative price response, which is fully reversed over a 120-day period after news of the removal from the index.”

Dogs Of The Dow Trading System & Strategy:

Go long the 10 highest dividend yield stocks in the DJIA and rebalance each year.

Alternatively, track stocks that have been removed from major indices like the S&P 500 or FTSE 100 and go long after heavy selling pressure around the announcement. Hold for up to four months to capture the full reversal.

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