Dollars Paper And Dollars Gold 1925 To 2018
Mark Lundeen | Jan 14, 2018 05:15AM ET
It doesn’t look like it in the Dow Jones’ Bear’s Eye View (BEV) chart below, but in the past three weeks the venerable Dow has increased 1,100 points (4.39%). Three Fridays ago the Dow Jones closed with a 24K handle. Twoweeks later it has almost blown through 25,000, closing the week at 25,803.When a market series makes ninety-four new all-time highs in only fourteen months, things like this happen.
How much longer can this continue? Don’t ask me! I’m great on the WHAT in my market predictions. It’s the WHEN a market is going to do it is where my prognostications fall apart. Let’s see, in the past two weeks the Dow Jones has advanced by 4.39%. That’s a big move in a bull market.
However, in bear markets the Dow Jones can move that much, and much more in a single trading session. So, I think I’ll continue being short-term bullish until the Dow Jones once again begins seeing days of extreme volatility – daily percentage moves up or down of 2% or more.
Don’t be surprised if the Dow Jones finds itself over 30,000 before it once again sees these days of extreme volatility, but then it may happen next week.
Here’s a scary chart. Since the November 2016 election (fourteen months ago) the Dow Jones (Blue Plot below) has overlaid its 52Wk High Plot (Green) as it advanced in its last seven-thousand points. You can see the problem in the Dow’s BEV chart above; not a single 5% correction going back to July 2016.
This isn’t how markets are supposed to work. So, how are they supposed to work? Look at the Dow’s BEV chart above and its point chart below. During bull market advances the Dow Jones is supposed to make a few 52Wk Highs, and then see a correction in the advance. Since the 14% correction of February 2016 (BEV chart above), the Dow Jones, my proxy for the general stock market, has refused to correct. My fear is when it does break below its BEV -5% line above, all hell is going to break loose.
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