NYSE Margin Debt 1979 To Present

By Mark J Lundeen – Re-Blogged From Gold Eagle

The Dow Jones Index in the BEV chart below closed this week a bit below last week’s close; 1.06% instead of last week’s 1.00%, down six cents on the dollar, or basically unchanged from last week.  As I said last week the bulls aren’t in a hurry, but I’m sure the bulls remain optimistic that the Dow Jones will make history sometime in the weeks and months to come.

What happens after that is the question.  Last October the Dow Jones made a handful of BEV Zero’s, and then began a three month 18% correction, as seen in the BEV chart below.

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Boeing Is About To Sink The Dow Index

By Rick Ackerman – Re-Blogged From Silver Phoenix

Are these guys good, or what! On Wednesday, with Boeing shares getting clobbered, DaBoyz somehow managed to close the Dow six points higher on the day.  That may not sound impressive, but considering that Boeing is by far the most heavily weighted stock in the Industrial Average, the feat was akin to getting a 747 Dreamlifter airborne with two engines out and a half-dozen Abrams battle tanks in its belly.  The effort was rewarded with exactly the kind of headline Wall Street needed to distract the herd from the urgent distribution that has been occurring daily: Dow Tacks on a Modest Gain in Quiet Trading. This innocuous report belies the increasing likelihood that the steep recovery begun on December 26 is about to breathe its last.

 

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33AD: The Year the House of Maximus And Vibo Went Bust

By Mark J Lundeen – Re-Blogged From Gold Eagle

This was a constructive week for the Dow Jones, up 1.49% in the BEV chart below.  That doesn’t sound like much; but remember low volatility in the stock market is when the Dow Jones does the thing the bulls like most – advance towards new all-time highs.

A few more weeks of this and we’ll see the Dow Jones once again at the red BEV Zero line.  But don’t be surprised if it doesn’t happen until later in the year.  I don’t expect the Federal Reserve wants to ignite another feeding frenzy in the stock market; they have problems enough to cope with as it is.

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Buffett: Dow One Million

By Daniel Amerman – Re-Blogged From http://www.Gold-Eagle.com

In a recent speech, Warren Buffett came down boldly on the side of optimism when it comes to both the economy and financial markets. What he said was “being short America has been a loser’s game…  And it will continue to be a loser’s game.”

And to throw down the gauntlet against some the current negative talk in the markets, Mr. Buffett boldly predicted something quite extraordinary – which was that in 100 years “the Dow will be over a million.”

Is that even remotely believable, or is Mr. Buffett getting carried away by his own optimism?

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Why You Should Be VERY Careful With Stocks Here

By Graham Summers – Re-Blogged From Gains, Pains, & Capital

I want to warn you to be very VERY careful with stocks right now.

The common narrative is that the US is entering a golden age in its economy and that this growth will drive stocks ever higher.

The reality is that GDP growth has collapsed. The third quarter of last year (3Q16) was the quarter everyone thought signaled a new beginning with growth of 3.5%. However, the very next quarter’s growth (4Q16) collapsed to 1.9%.

And thus far this quarter 1Q17 is tracking at 1.8%

Put simply, growth is NOT coming soon if at all. Even Trump’s top economic advisor has admitted that GDP growth of 3% is unlikely until the end of 2018.

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Dow Euphoria

By GE Christenson – Re-Blogged From The Deviant Investor

Following President Trump’s speech the Dow Jones Industrial Average (Dow) easily broke 21,000, and closed at another all-time high – 21,115.

The Dow closed up for the 12th consecutive day on Monday February 27, another three decade record.

Excel calculated the Dow’s daily Relative Strength Index (RSI – 14 period), a technical timing oscillator. It reached 97.75 (maximum = 100.00) on March 1, an exceptionally “over-bought” reading that has occurred nine times since 1950.

The weekly RSI also reached a very high “over-bought” reading as of March 3, the end of last week.

Margin debt recently registered an all-time high on the NY exchange. Price to earnings ratios have risen into “nosebleed” territory, and the last 1% correction in the S&P was in November – a long time ago. Many other market extremes and highs in confidence indexes are evident.

YES, THE EUPHORIA IS PALPABLE!

The Dow reached new highs the normal way – levitated through the creation of massive unpayable debt and the expectation of huge profits (for traders). Daily sentiment has reached a peak and indicates we are at or near a top.

Official national debt is nearly $20 trillion. Regardless, President Trump promised something for everyone:

  • More military spending, which will create larger deficits and more debt;
  • Middle-class tax relief; (Larger deficits and more debt…)
  • $1 trillion infrastructure spending; (More debt…)
  • Education bill for more school choice etc.; (More debt…)
  • The Wall; (More debt…)
  • And more promises that require massively more debt.

The Dow likes more debt, until reality strikes.

Previous Peaks in the Dow: (National debt in $ billions.)

Date                      Dow          Official National Debt          Ratio Dow to Debt

Jan. 1973              1,067                   450                                      2.37

Aug. 1987             2,746                 2,330                                     1.18

Jan. 2000            11,750                 5,776                                     2.03

Oct. 2007            14,198                 9,055                                     1.57

Mar. 2017            21,115               19,960                                     1.06

To keep the Dow rising, create debt and don’t worry, be happy…

But it takes more debt to buy each Dow point than it did several decades ago. How much debt will be needed to levitate the Dow to 30,000? Will it require $40 trillion in debt? And what are the consequences of massively more debt? Stagflation is on the horizon.

Consequences of the spending problem according to Ron Paul:

“That leaves only one solution: printing money out of thin air.” [But] “printing money out of thin air destroys the currency, hastening a US economic collapse and placing a very cruel tax on the working and middle classes as well.”

His solution for US government policy:

“… end the US military empire overseas, cut taxes and regulations at home, end the welfare magnet for illegal immigration, and end the drug war. And then get out of the way.”

These ideas will encounter fierce resistance, so much that his plan is clearly “dead on arrival.”

CREATE MORE DEBT!

More debt is guaranteed by a century of fiat currency devaluations, a borrow-and-spend congress, the executive branch, central banks that love debt, and an economy that runs on debt and credit. Expect continued dollar devaluation and more Dow highs after a nasty correction/crash.

While the Dow corrects and the U. S. economy struggles in a fiat currency induced coma, gold and silver prices will rise.

CONCLUSIONS

  • The Dow has reached another all-time high powered by borrow and spend euphoria. A bubble in search of a pin… Read Speculative Blow-offs.
  • By many measures including daily sentiment, P/E ratios, technical indicators, and consecutive daily highs, the Dow is peaking and due to correct. Perhaps the correction/crash will occur soon, or near the next Fed meeting, or after the March 15 budget ceiling deadline, or whenever the HFT machines decide to crash the market.
  • Expect massively more “money printing” and debt creation.
  • Ever-increasing spending and more debt and currency in circulation will push the price of gold to new highs. Fear and panic will eventually force withdrawal of “funny money” from the stock markets and bond markets. Some of that fearful money will purchase gold and silver for safety, preservation of capital, and protection against further devaluation of fiat currencies.
  • The stock and bond markets will correct but the debts will remain.
  • Gold and silver will surge higher, probably through the balance of this decade.

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Letter to President Trump

cropped-bob-shapiro.jpg   By Bob Shapiro

I sent a note to President Trump via http://www.Whitehouse.gov. Let’s see if he takes it to heart.

Dear President Trump,

The Dow Jones Average just passed 20,000 and it sounded like President Trump was taking credit for it. I think that was a mistake.

During the campaign, candidate Trump said, in no uncertain terms, that the stock markets were a great big bubble, and he was very right. The FED has continued to pump up the money supply. Though the FED stopped QE3 in 2014, it has been buying stocks with its printed money ever since.

After two rate increases, in Dec 2015 and in Dec 2016, interest rates still are historically low, causing massive distortions in our Economy. One distortion is that ultra low rates incentivize corporate bigwigs to buy back the company stock, pushing up the stock price and increasing the value of officers’ stock options.

The markets still are in a major stock bubble, even if there is some euphoria over President Trump’s moves so far. Part of what this means is that a major correction is not very far down the road.

I would suggest that Mr Trump “amplify” what he said about Dow 20,000. He should acknowledge that market players correctly are viewing his actions so far as bullish for the markets, but that the markets still are in a bubble. He could say something like, “The Dow easily could fall in half before the effects of my policies actually become apparent. So, the markets are going higher, but first they have to work off the froth caused by the FED’s stupid policies during the Obama years.”

It would be a shame for this Administration to take the (stock market) fall due to mistakes made under POTUS 44.