By Stewart Thomson
Those sure that Tuesday’s Dow action marked the bottom, (the “hammer” on the candle charts) were shocked 24hrs later, as the Dow posted a mirror image reversal day to the downside. This morning the Dow is once again surging, stunning the bears.

This is classic whipsaw action, a saw operated by the banksters, cleaning both shorts and longs off the stock market souvlaki stick. It is also only example number 800 billion, of why you must allocate your capital in a pyramid formation, not a huge price plop.

I have noted the danger of obsession in the market, and the greatest obsession in the gold community is: shorting the Dow. 1987, 1990, 1998, 2000, and 2007 are the 5 major shorting opportunities that have occurred since the great secular bull of the 1980s began, and has since been replaced by the secular bear in 2000.

Morgan Stanley’s incredible “Triple Sell Signals” have caught the bulk of these massive declines. My view is similar to theirs, but not identical; that a cyclical bull market began in the crisis lows of Oct 2008-March 2009. The current maniacal obsession with shorting the Dow here and now, is to me a PEANUT PLAY, one that has almost NONE of the characteristics of the 5 major Dow short plays of the past.

The secular bear has a Dow ceiling in the 14,000 area and a floor in the 7000 area, and has been ongoing since y2000. IF the euro crisis morphs into “Lehman 2” (I doubt it, but possible), the Dow could decline to the 7000 area again.

But IF it did, my question to you is: Are you going to use that opportunity to buy the Dow, or to repeat what you did last time at Dow 6500, and engage in a crazed shorting program into the lows while taking no money out of the financial system? A fall to Dow 7000 is a GIFT. Be prepared now, to accept that gift, with longside buys, if it is presented to you. Has anyone in the gold community actually set up a plan to buy the Dow IF it fell to 7000? The Horrific Answer: NO.

Where I differ, slightly, from Morgan Stanley, is I think there’s a realistic possibility that QE, quantitative easing (aka socialism) FAILS, and, no, that doesn’t mean the Dow goes to zero and team shorty pants makes unlimited money on their put options. What is means is the Fed is forced to bring out the bigger weapons to battle the ongoing asset price destruction steamroller, one they refer to using the wet noodle term of “deflation”. The bigger weapons are the dollar devaluation bunker busting conventional bomb, and money printing, which is effectively the Fed’s nuclear weapons arsenal. Both weapons require two men to turn the switch, as with real nuclear weapons. The US Treasury must be involved in any decision to devalue the dollar or print money to a point that it is a deliberate policy of dollar devaluation.

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