In July 1982, I went to Denver to see a stock broker with Merrill Lynch who said he
wanted to buy the Peerless program. I told him of the July Sell S9s. He said I should come
back the next day and buy the software. I showed up. But he took the day off and did not
buy the software. What a jerk! So much for idle promises. Fortunately, another man I called
on that day named Andy was smarter. He bought the book and software immediately. Sure
enough, the DJI retreated back to the lower band.
In Ausust 1982, the DJI fell just below 780 to a false new low at the price channel's
lower level and then quickly recovered.
Our P-Indicator had shown that it was a false decline and we should Buy. That was
the Buy B8 in the chart above and below. Soon afterward, word spread that interest rates
would finally be dropped significantly by the Fed. Who did the FED Chairmen call first,
I have always wondered. We need not know. We can see their insider-informed buying
quite easily here.
The Fed let the word out in the Summer of 1982 that it would be loosening credit
for an extended period of time. This was first reported on June 4, 1982. GDP (US Gross
National Product had fallen 2.9% in the last quarter of 1981 and again in the first quarter of 1982. The FED finally decided it had to stop fighting inflation. Between July 1981 and November 1982,
for instance, the central bank brought the federal-funds rate (over-night loans to banks) down by
11 points from its 1980 high of because the rate of inflation dropped to 2.6% in June 1983.
Here are the Discount Rate changes:
5/5/1981 14.0% Fed seemed determined to drop the market
11/2/1981 13.0% Fed next decides to support market
12/4/1981 12.0% Fed supporting market for Christams rally.
7/20/1982 3rd Rate Cut 11.5% Bullish drop in Discount Rate after decline.
8/2/1982 4th Rate Cut 11.00% Market explodes upwards
8/16/1982 5th Rate Cut 10.5%
8/27/1982 6th Rate Cut 10.0%
10/12/1982 7th Rate Cut 9.5% Drop in rates in on-going bull market
11/22/1982 8th Rate Cut 9.0% Drop in rates in on-going bull market
12/15/1982 9th Rate Cut 8.5% Drop in rates in on-going bull market
