Great Expectations For Gold, Silver And The Precious Metals Mining Companies In 2020

I’ve been missing in action for the past month, during which many interesting things have happened in the market, such as the Dow Jones making eight new all-time highs as it advanced 893 points since December 20.  

How much more can the Dow Jones advance before gravity once again pulls it down into correction territory? Let’s call that below the -10% BEV line below, or 26,413.29, a loss of 2,934.81 points in the Dow Jones (see table in chart).

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 635\Chart #1   DJ BEV 2013_20.gif

Who can say? The best answer I can give that question is the Dow Jones will continue advancing until it once again sees frequent days of extreme volatility, or Dow Jones 2% days, days the Dow Jones moves +/- 2% or more from a previous day’s closing price. Until then, don’t be surprised should the Dow Jones rise well above 30,000.

Below I have plotted the Dow Jones (Blue Plot) with its 200 count (Red Plot), or the number of 2% days the Dow Jones has seen in a running 200-day sample. We saw low volatility (low values in the 200 count) in the 1990's until volatility began rising in 1997. The Dow Jones then peaked in early 2000, and then saw a big 38% market decline in October 2002 as the 200 count reached 49 in April 2003. So, the 200 count proved to be a leading indicator for a bull market top, and a lagging indicator for a bear-market bottom.

Post April 2003 with the 200 count in decline, the Dow Jones then inflated to its sub-prime mortgage bubble high in October 2007. As expected, in the summer of 2007 the Dow Jones began seeing 2% days. At the Dow Jones’ bull market peak in October its 200 count had risen to eight and the count would continue increasing until it reached 84 in April 2009; one month after the March Dow Jones 54% bear market bottom. Again the 200 count gave a heads up to a bull market top, and a safe reentry signal after a bear-market bottom.

The same happened with the 200 count during the bull market of the 1920's and the Great Depression crash.

No market indicator is 100% dependable, and a rising 200 count may only signal a correction, as was the case in late 2018 when the Dow Jones’ 200 count increased to 19 on an 18% market correction. But following the Dow Jones 200 count since January 1900 proves it has worked well during all the significant market tops and bottoms, and that’s good enough for me.

This chart is amazing.These bear markets of 2000-2002 and 2007-2009 saw big bear market bottoms. In fact the bear market of October 2007 - March 2009 was the second deepest market decline the Dow Jones has seen since 1885, exceeded only by the Great Depression’s 89% market crash.  

But in afterglow of the 22,801 points the Dow Jones has advanced since its March 9, 2009 bottom, this chart no longer displays the bear-market drama everyone felt in October 2002 and March 2009 at those big market bottoms.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 635\Chart #2   Dow Jones & 200 Count.gif

Let’s see how the major market indexes I follow performed in 2019 (table below), from January 2, 2019 to January 2, 2020.The gold miners in the XAU were clear winners in 2019, but even the bottom dwellers in the list advanced by at least 19%. Question: can 2020 repeat the performance of 2019?I can’t say, but if the “policy makers” continue doing in 2020 what they did in 2019 it just might.  

All the same I’m keeping an eye out for Dow Jones 2% days. Should we get five or six of them during a two month period I’d find that concerning. The Dow Jones’ last 2% day happened in August, and it’s getting moldier every day.

Next are the BEV values of the Major Market Indexes seen above for last week. I highlighted the new all-time highs (BEV Zeros) in pink, and there are lots of them. Thursday and Friday saw fourteen BEV Zeros, with #15-17 in scoring territory (within 5% of a new all-time high).   

The financial indexes (#18 & 19) are near to single digit percentages from their last all-time high, which for the NYSE Financial Index occurred on June 4, 2007. The NYSE Financial Index then saw a 79.86% bear-market bottom in March 2009. It may have gone down to -100% BEV level, a total wipeout of the big Wall-Street banks had Dr. Bernanke not rescued Wall Street from their sub-prime mortgage woes with his three QEs. Eleven years later, the NYSE Financial Index is finally approaching a new all-time high.

Since November, the Dow Jones once again is seeing one new all-time high after another. As of the close of this week the Dow Jones has seen an additional twenty-three new all-time highs in the past two and a half months.  

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