Dow Closes Freakishly High: the Calm Before the Storm?

The Dow Jones Industrial average closed at a record high today: 11,723.74. The highest ever. Ever!

According to CNN: “The Dow Jones industrial average closed at its highest level ever Tuesday, and also made a new trading high, knocking out records from more than 6-1/2 years ago, thanks to a nearly 4 percent slide in oil prices.”

Appropriately enough in response, oil and gold prices slumped.

Before you get too excited, the NASDAQ is close to 50 per cent below its record high. Still, though, as CNN says in the same piece, “Investors are likely betting that lower energy prices will mean lower inflationary pressures, which in turn makes it more likely that the economy will slowdown, but not head into a recession, as has been feared.”

Despite their Maalox and their gruff protestations, stock professionals are, by nature, optimists. They have to be to stay in the business, right? Writers, on the other hand -- especially fictionists -- don’t have these restrictions.

I’m looking into my crystal ball again. And, of course, I don’t have any inside information and only time will tell how well it was working today. But here’s what I’m seeing when I peer inside: short term jubilance at an ebullient market, followed by a darkness so deep it will be tough see out the other side.

To me this day -- and perhaps this month -- feels like the calm before the storm.

Comments

The market can probably ignore reality for another month or two...amazing, isn't it?
manystrom said…
"Darkness so deep it will be difficult to see to the other side."

Sadly, I think you are right.

Economy doing well? Dow new high? No, this was just a Phony New High,. All headline and no substance, just like everything else these days.

Check it out:

20 of the 30 Dow stocks are still 20% or more below their all time highs. Dig beyond the headline and it is an ugly picture indeed. 14 are down 40% or more. None of the Dow components made a new high today, and only 3 are anywhere close.

The numbers don't lie. This is NOT a bull market, and the GOP can't hold it up forever.

Anyone investing their hard earned money should think twice before buying now. In fact, it would be a better idea to sell, while prices are still high. The new highs on this market may be atypical of the rest of the market (as you mentioned - the Nasdaq is still down over 50%), but I assure you, the internals are not. This market is rotting from the inside, but it sure is pretty with that headline new high, isn't it?

It is just a media ploy. The GOP is manipulating the market because if they lose the House and the Senate, there will be hell to pay.

The only thing standing between this week market and a crash is the election. But after that, it doesn't matter who wins -- look out below!!!

I think the inverted yield curve and the falling price of oil are both forecasting a recession that will be deep and painful.

- manystrom

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