The Dow Jones on Wednesday broke down to double digits in the BEV chart below (-10.11% / 23,924).  I was wondering if this was the week the Dow Jones was going to take out its -11.58% (23,533) from March 23rd.  But Friday came leaving the Dow at -8.84% / 24,262.

The problem for the bulls in this market is its volatility, as is evident in the OHLC bar chart below.  From November 2016 to January 2018, the Dow Jones made 99 new all-time highs over those 303 NYSE trading sessions. On average that's one new all-time high in every three days, which is a lot.

Look at daily volatility in the chart below from October to its last all-time high on January 26th. During the advance the Dow Jones advanced or declined from one day to the next in small steps. Then came February's volatility, and the stock market has been struggling ever since.

Sure, Friday's advance pushed the Dow Jones away from the low of March 23, but look at how it did it in the chart above; with a single day's advance that was larger than any seen by the Dow Jones from October to February. In my opinion that isn't bullish; nor is the current pattern of lower highs and lows so evident in this chart.

I can't say if the weakness seen above will continue next week. Maybe the next few months will bring a recovery to the stock market, though should the post-January volatility on display above continue, I doubt the Dow Jones will see a new all-time high.

The big problem I have in believing the market advance that began in March 2009 has any strength left in it is best seen in the chart below. From March 2009 to January 2018 the Dow Jones advanced 20,000 points over a nine year period. And that advance was totally artificial, fueled by three Quantitative Easings, a Zero Interest Rate Policy (ZIRP), “Operation Twist” in the bond market, and who knows what else happened in the market's back rooms.  

For the past nine years it's been one shenanigan after another, anything necessary to move this market up. And after nine years the policy makers' bag of tricks is now empty. Looking at the plots for the Fed Funds Rate and US Long Bond yield below, the seven years of ZIRP is on full display, seven years of Fed Funds Rate at or near zero as long bond yields continued to decline. But since 2016, interest rates and bond yields have bottomed and are now rising, with short-term rates rising faster than the longer term bond yields.

At the end of this week the yield gap between the 10 year and the 30 year Treasury bonds was only seventeen basis points. To appreciate the implications of this development look at the chart below. The last time the yield for the 30 year T-bond found itself below that of the 10 year T-bond was in November / December 2008 (Red Circle). Three months later the Dow Jones saw its second deepest bear market bottom since 1885.

Take a moment and look at the trend below, how likely is it that before 2018 concludes we'll see the yield gap between 10 year and 30 year T-bonds invert (break below zero) once again? I'd say there's a darn good chance it will, and that's not good for the bulls.

The data points in the chart below are computed by taking the US national debt of 52 weeks ago, and subtracting from it the national debt from the current issue of Barron's.  Or the billions of dollars the national debt has increased in the past 52 weeks. Congress always loved spending other people's money. But what happened after the October 2007 hasn't been the usual squandering of national resources seen before October 2007.