The LT Indicant crossed above the LT Trip Line in January 1951. This is
normally a sell signal. Economic fundamentals and other factors were positioned
to induce a bear market. In January 1951 the consumer price index increased 1.2%
from the prior month for an annualized inflation rate of 14.2%. However, trader
emotion did not turn negative. Although there was no robust stock market
activity in the early 1950's it was trending in a bullish direction.
Consequently, the Indicant's long term trading model advised investors to remain
in the market.
As you can see from the above chart, the LT Indicant increased toward the LT
Trip Line in 1957-1958 and the emotion factor turned negative. This can be seen
where the Dow fell below the Lag Curve on three different occasions in the
1950's. Please look at the chart and notice the arrows pointing to that
condition.
However, the economic fundamentals remained in place as the LT Indicant
remained below the LT Trip Line. Consequently, there were no LT Indicant sell
signals in the 1950's.
It is interesting to note that the market achieved a major milestone in
November 1954. The Dow Jones Industrial Average eclipsed its previous high for a
monthly close of 380.3 set in August 1929. It took twenty-five years for the
stock market to return to its previous high. This alone is a valid argument
against buy and hold positions. Most of us are aware of the lunacy of political
leadership in the U.S. and around the world. The LT Indicant tracks the
stupidity of political leadership and when this stupidity becomes dynamic, the
LT Indicant will advise you to sell.
It is impossible for decision makers who are not bound by competitive
pressures to make good decisions. One reason for the stock market's explosive
growth in the 1990's was due to a lack of cooperation between the executive and
legislative branches of the U.S. government.
The underlying reason for all prior stock market collapses can be traced to
an origin of political stupidity. It was the elected politicians who put James
J. Hill out of the rail road business in the early 20th century and thus the
reason for many years of suppressed economic growth. This added to a growing
dislike for Americans from the Pacific orient. This disdain along with a growing
government and related controls directly suppressed people all around the
world.
