Craig Hemke’s Surprising Revelation In The Palladium Market

At week’s close the Dow Jones was within 3% of making a new all-time high in the Bear’s Eye View (BEV) chart below.  Still, the stock market lacks the excitement most investors seek. But such excitement usually signals the end of a bull market, not its beginning.  So, seeing the Dow Jones crawling up week after week in tiny baby steps is actually very bullish.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 589\Chart #1   DJ BEV 2013_2019.gif

Currently I’m not in the stock market.  At present I prefer my market risks in the precious metals market.  But if you’re in the stock market the current technical situation is pretty much risk free, if not exciting.  Since early January daily volatility in the stock market, as measured by the Dow Jones, has become very favorable to the bulls.  

Of course as we saw how after October 3rd’s last all-time high in the Dow Jones, it wasn’t hard for Mr. Bear to change the landscape on Wall Street from bullish to bearish.  So keep an eye out for those days of extreme volatility, the dreaded Dow Jones 2% days in the weeks and months to come.

Keep in mind this is a market that has been going up since August 1982. That’s a long time. The day is going to come when most retail investors, pension beneficiaries and holders of whole life insurance policies are going to come face to face with the reality that Wall Street can have multi-year big bear markets too.  The 1890's were bad years for the bulls, as were the 1930's. From 1966 to 1982 the Dow Jones attempted to break above 1000, and stay above 1000 five times, and failed.

If in August 1982, as the Dow Jones began its current monster advance, had you predicted the Dow Jones would rise above 26K in 2018, no one would have taken you seriously. Yet at the close of this week once again, the Dow Jones finds itself above 26K to no one’s surprise.

But the history of the stock market is one that is full of surprises, mostly unpleasant ones. So I’m going to assume 2019, even with all its early promise of capital gains, isn’t going to be a year where one can profit from buying and holding on to a position in the stock market for the long term.  Given any excuse to sell and go away - I’d take it and lock up what profits I have. But until we once again see the Dow Jones moving 2% or more from day to day, I think the bulls are okay.

Here’s the Dow Jones in daily bars. Compare the daily volatility in the Dow Jones prior to, then after October 3rd’s last all-time high. The table lists the Dow’s days of extreme volatility, and anytime the Dow Jones moves more than 2% from a previous day’s closing price, it’s a news-making event.  Since January 4, the stock market hasn’t been making any news, but it has been going up.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 589\Chart #2   DJIA OHLC.gif

I circled last week in the chart above. Does that look like the Dow Jones going up to you?  That’s the exact type of market action that keeps most retail investors out of a market advance as it’s totally lacking any excitement. If that is so, and being so is strongly bullish, why aren’t I bullish on the stock market? Well, as a spectator I am, for only the short term; only as long as the “policy makers” can control market volatility and keep manhandling stock-market valuations higher.

Take a moment to study the earnings for the Dow Jones below. What qualified as earnings in 1978 was totally different than today in 2019. Every time the financial market has a problem, they change the accounting rules. You might say that’s what makes our current “free markets” regulated markets.

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