Dow Jones Industrial Average To The Moon?

David Fry's picture




When you get this close to a record it’s just a matter of time before it gets taken out generally. Why today? Well, China reversed course psychologically by now stating it would expand “deficit spending by 50%” after just Monday putting the clamps theoretically on their housing bubble. That provided a big lift to Asian and European shares. With the latter more ECB talk about defending the eurozone and euro was fed bulls. Global markets also feasted on Fed Vice-Chair (the woman who would be king?) Janet Yellen that QEternity is not gonna change.


The Fed then added another $3.3 Billion in POMO Tuesday to keep things going.  


Zero Hedge added a nice table outlining economic conditions as they existed during the prior high in October 2007. It’s an interesting comparison. So, what’s different this time? QE and ZIRP.

  • Dow Jones Industrial Average: Then 14164.5; Now 14164.5
  • Regular Gas Price: Then $2.75; Now $3.73
  • GDP Growth: Then +2.5%; Now +1.6%
  • Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
  • Americans On Food Stamps: Then 26.9 million; Now 47.69 million
  • Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • US Deficit (LTM): Then $97 billion; Now $975.6 billion
  • Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion
  • US Household Debt: Then $13.5 trillion; Now 12.87 trillion
  • Labor Force Participation Rate: Then 65.8%; Now 63.6%
  • Consumer Confidence: Then 99.5; Now 69.6
  • S&P Rating of the US: Then AAA; Now AA+
  • VIX: Then 17.5%; Now 14%
  • 10 Year Treasury Yield: Then 4.64%; Now 1.89%
  • EURUSD: Then 1.4145; Now 1.3050
  • Gold: Then $748; Now $1583
  • NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

Market leaders on the rally were Cisco (CSCO), tech (XLK), small caps (IWM), transports (IYT) and homebuilders (ITB). The dollar (UUP) was slightly weaker and gold (GLD) rather flat. Commodities (DBC) rallied with energy (USO) and grains (JJG). Bonds (TLT) were weaker as stocks rallied. 


We posted a short ETF in Focus video featuring DIA (SPDR DJ Industrial Average ETF) and later our colleague David Gillie posted an in depth analysis of gold: “A Casualty of the Currency War”.  


Volume despite a record high wasn’t impressive but that’s the way things have been during since QE3 has been in effect. Breadth per the WSJ was positive naturally.



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rsnoble's picture

We need to stop all the 'non-belief', seem we foget on a daily basis that the feds keep dumping in $.  I have to tell myself that everyday.  Stupid can buy more stupid.

andrewp111's picture

The final blowoff of a bubble market is always the biggest, isn't it?

BeetleBailey's picture

IBD says the market is back in a "confirmed rally" as to NASDAQ's perfoemance yesterday....a "follow through"...more like a "suck anyone stupid enough to get in".....

ebworthen's picture

I will not support the casino, I would rather end up under an overpass or dead.

I you are investing in this lie, you are partially to blame for the theft, the legerdemain, the immorality, and corruption.

Grand Supercycle's picture

DOW / SPX very overbought now though.

Grand Supercycle's picture

DXY daily chart retracement still expected & DOW megaphone wedge continues so more equity upside and SPX short squeeze likely.

Bullish warning for DXY monthly long term chart continues and this will not change.


Grand Supercycle's picture

CRUDE OIL & COPPER have not participated in recent equity rally and we know what that warns of...


BlueCheeseBandit's picture

You gotta pay the troll toll to get into that boy's hole.

Leto II's picture

Master of Karate and Friendship, for everyone

disabledvet's picture

"stocks higher on no news again" really does just about sum it up. "and nothing will push stocks higher than the continuation of this fact." contrary to popular wisdom equities don't want "news worthiness." and I can't think of any story that is business related going on five years now. In fact I really can't think of one since the Internet Mania. As impressive as the Doe and S &P have been it should be remembered that the NASDAQ hit bottom at around 1200. "we got more than one equity market" here in the USA. Almost all have zero of course. All I can say is "if your looking for explanations then you're not in it." I can give you a million...the best being "we're all worse off." anywho if the bears are only now awaking to the fact that "this has been a bull market for many years now" then I wish them the best of luck trying toplay the game from their side. "the record is resistance...and now it's support." and indeed "resistance is futile."