Tuesday July 18, 2017
The DJIA peaked July 15, 21957, sixty years ago.
The DJIA and the SPX peaked August 25, 1987, 30 years ago.
Here is a look at the SPX and the Transports. An article in today's WSJ notes that the Transports are confirming the Dow Theory that both the Industrials and the Transports need to make new highs. Well they were doing that in 1987 five years after the rally kicked off in, yes, August 1982. and then for no apparent reason, investors panicked out of the markets. So called portfolio insurance was partially blamed for actually increasing the sell off analysts searched for reasons for the crash.
Market Top Year 2000 - 17 Years ago
Here is how it played out in March 2000. The real story then though was the NASD with dot.coms talking the NASD to 5,000 for the first time ever.
NASD Year 2000
NOtice the index managed to double in the last six months of the rise. Social mood is the most intense at tops and bottoms, here is the classic example.
Same chart for the top in 2007
Social mood was clearly more intense for the tops of 2000 and 2007 than in 1987 when not near as many were participating in the stock market.
Still all the charts show a rise to a top, then a sell off followed by a final failed rally that does not achieve the former price peak. Then as we know a collapse followed.
Okay so much for the history lesson. What about today? Here is the NASD where tech stocks have powered the market to new all time highs.
That's a pretty good run for nine months!
DJIA and DJT
Finally here is where we are today in the Industrials and Transports. We report you decide, with 60-30-17 year cycles all converging, what could go wrong?
ACA Cycle
The Affordable Care Act (which has been anything but) was signed into law in March, 2010. We are now seven years out from that event. After campaigning for the last seven years to repeal it, Mitch McConnell today admits the failure
of an improved plan. He simply does not have the votes to do what he party has promised for since March, 2010. Nothing scientific here, just wondering if this is another puzzle piece in the junction of all this coming together in this time frame.
Energy
Yesterday oil prices failed to vault the 50day moving average.
The trend is down with lower highs and lows. News of course is that the market is over supplied. I substituted Apache APA in the bottom panel. Notice APA's failure to cross its 50 day MA as well.
I have been criticized for way too many early calls for a top. But the cycles are here now and should be respected. As I said, here is the history, you decide what is best at this juncture.