The week closed with the Dow Jones down 6.71% from its last all-time high in the BEV chart below. How hard would it be for it to make a new all-time high from here? Not very hard one would think, but I don't have a horse running in this race so I'm not emotionally involved whether the Dow Jones does or doesn't see a new all-time high. I'm on the side of the bears because I know who the bulls are; a bunch of cheaters funded by monetary inflation flowing from the federal reserve.
That said, I know “cheaters never prosper”, or so Sister Mary Clair told we students in the fourth grade. Still, it's interesting seeing these cheaters sleazing the stock market ever higher from the lows of last March. And as seen in the following charts, what a fine job they're doing too.
Remember, volatility is the slayer of bull market advances. From October to January, everything was just fine, until the Dow Jones began experiencing large daily moves in the chart below. Then beginning in April daily volatility became subdued. Note how this week's last three trading days finally broke above the upper trend line, in three tiny baby steps.
This has been a year of correction in the stock market. However 2018 hasn't seen much of a correction. In the BEV chart below the Dow Jones' last correction lasted from May 2015 to July 2016; twice attempted but failed to break below its BEV -15% line. So far in 2018 the Dow Jones hasn't even broken below its BEV -12% line; that plus it's been correcting for only four months.
What's next? Do we see the Dow Jones rising up to new all-time highs sometime in July or August? If that's what the cheaters want, that may just happen. However, looking at the gains the Dow Jones has made since March 2009 in the chart below; a nine year advance without a proper correction, reasonable people are wondering just how much higher the “policy makers” can stack this house of cards before gravity pulls it down.
Yep, I'm a big-bad bear on the stock market, but I'm enjoying the show the bulls are putting on.
Note on my DJTMG data below. In some charts and tables I have 76 groups and others I have 84 groups. The difference is from whether I included the main groups along with the sub-groups. For instance the DJTMG's Energy sector contains an overall group called Energy, and the sub groups such as Oil Majors and Drillers. Those graphics using only the sub-groups have data for the 76 sub-groups I used from the DJTMG. The graphics that contain 84 groups contain the overall groups along with their sub-groups.
So why are there only 74 groups in the DJTMG's top 20 table below? It's a long story I don't want to take the time to tell. However my DJTMG data is good data; take it for what's it's worth.
Let's look at the Dow Jones Total Market Group (DJTMG) top 20, or the number of the 74 groups I track that find themselves within 20% of their last all-time highs.
At week's close the top 20 in the table below was at 50. That's not far from where it was in late January (53) when the market topped out. But the true status of the market is seen in the distribution of groups within five columns spanning from BEV-Zero to -15%; the columns containing the groups of the top 20.
The table above illustrates how the current correction, beginning in Barron's February 5 issue kicked groups over to the right, into columns increasingly farther from the BEV Zero column. And as of this week the top 20 still hasn't recovered where it was in Barron's March 12 issue. The same is true for the Dow Jones, where on Friday March 9th it was only -4.81% from its last all-time high, but this week closed with a BEV value of -6.71%.
My point being, although we're seeing the Dow Jones advance, looking at the table above I can't say we'll see a recovery in the broad stock market back to where it was in late January. The DJTMG's 52Wk Highs and Lows the table below tells the same story. This week we saw nine new 52Wk Highs and three new 52Wk Lows.
But in Barron's 15 January 2018 issue the DJTMG saw 49 new 52Wk Highs in the table below. Then look at the averages for the 52Wk Highs and Lows in these tables (#44 above and #58 below). At the close of the week, these 76 groups in the table above are on average 9.12% from making a new 52Wk High, while in mid-January (table below) they were only 2.35%.
That's a significant amount of deflation the stock market has seen in the past four months. Note how #50 in May above is down -10.52%, while #50 just last January below is down only -0.38%. Nothing extreme during a correction in the market, but the bulls have a lot of work to do if they intend to reflate the broad market back to where it was last January.