Tuesday Jan 16, 2018
John Murphy noted a week ago that the markets have hit the highest level of relative strength since 1995, that is a 20+ year record.
So I went back and looked, what happened after 1995.The answer is that the market went up through 1999!
The blue boxes at left mark the start of RSI at 70+. But notice that RSI stayed at that level until the 1999 hiccup. And the DJIA moved from 4,000 to 10,000. See the article on page B1 of today's WSJ, Momentum Returns to Stock Market. James Mackintosh suggests that the removal of regulations and an expanding emerging market sector could be happening all over again/
S & P 100 OEX
NASD 100
Socionomic theory holds that maximum mood occurs ear the end of a move. Markets had been rallying since 1982. but most of the gains were recorded in the last two years 1997-1999 of that move. Look at the parabolic move up in the last two graphs from 1997-1999.
Okay granted the market has been rallying since 2011. And granted it is arguably parabolic now.
But history makes the case this could go on longer. Mackintosh notes that Merrill reports last week was the sixth largest equity fund inflow week ever.
This party has legs...
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