DARTLINE™ – INVESTMENT MESSAGE BOARD

July 27, 2010, 4:00 pm EDT .. Closing Thoughts — The Standard and Poor’s 500 index closed down 1.20 to 1113.82, after index hit a session high just above 1,120, near midpoint between its 2007 historic high and a 12-year low hit in 2009. SPM+Game Theory PRO suggested major retracement to indicate near term resistance. Meanwhile, 43 percent of S&P 500 companies have reported earnings so far this period with positive trend. … Consumer confidence fell in July to its lowest point since February, hurt by worries about the job market, according to a report from the Conference Board, a private research group. See: Speakers Corner for complete overview. … Three versions of the truth. What is your truth? This illustrates that preconceived ideas often distort the actual truth. Two or more people may look at the same subject and yet see different things. Some look at stocks and see a new bull market as part of a V-shaped recovery. Others look at the same stocks and see a W-shaped recovery. Yet, others look at the same stocks and conclude the worst is yet to come. Since there are so many opinions formed over the same subject, investors can come to one of two conclusions: 1) There is no consistency among the total sum of conclusions, therefore it is impossible to ascertain an outcome with any degree of certainty – investing is basically an arbitrary process. 2) There are certain indicators with a track record of accuracy. Those indicators point towards the real direction without being clouded by preconceived viewpoints. If you have come to the conclusion that investing is an arbitrary process (conclusion No. 1), you should seriously re-examine why you are invested in the first place. If you believe that there exist indicators which allow you to ascertain the market’s direction, you will find it interesting to see what those indicators are and how they should be applied correctly. The first and most important lesson to be learned is that the vast majority of investors (individuals and institutions) are usually wrong, that’s right; wrong. Here’s why: The herding effect – apparent truth. The herding effect could be explained in one sentence: If it’s too apparent, it’s apparently wrong. Herding is a social behavior; in fact, it is a phenomenon that reflects a contagious emotional, collective feeling. This feeling (positive or negative) spreads among investors progressively. If this doesn’t make sense quite yet, hang in there – it will be the single most important contributor to your investment success. Right now the HERDING EFFECT with the full support of the financial media controls the direction of the market. As for fundamental values and the truth — they do not exist. Indeed, the market’s rigged and everybody knows it!  With the support of BTD, you can beat the brokers, the talking heads and win at the second oldest game on the planet.