Wall Street’s Pending $100-Trillion-Dollar Margin Call

For the 772nd time since January 1982, the Dow Jones closed at a new all-time high, or BEV Zero (0.00%) in its Bear’s Eye View chart below, the third since its 37% correction of last March.

Just looking at the Dow Jones’ BEV chart below, and seeing what it has done following the three previous times it has broken below its -35% BEV line since 1982, we should anticipate a good quantity of new all-time highs in the coming years.

Do I really believe that? Heck no. What the Dow Jones BEV chart below is missing is a bear market bottom that goes deep below its BEV -70% line to correct for all the “liquidity injected” into the stock market since 1982.

However, that is only my opinion, and my opinion isn’t worth much in today’s market. But looking at the Dow Jones for the past forty years as Mr. Bear does below; where every new all-time high is equal to a big fat Zero, or BEV Zero (0.00%), and every daily close not a new all-time high is registered as a percentage decline from its last all-time high, for the past four decades that is exactly what has happened: the Dow Jones corrects to something below its BEV -35% line, and then rebounds back to new all-time highs for years to come.

What’s amazing in the BEV chart above is for the past four decades the Dow Jones closed at a new all-time high or within 5% of one for 50.06% of its past 9,816 daily closings (Left Freq Table).  Looking at this data from January 1900 to this week’s close (Right Freq Table), the Dow Jones closed at a new all-time high or within 5% of one in only 26.7% of its 32,694 daily closings of the past 121 years. So I see the market advance since 1982 as a huge inflationary bubble that ultimately will be followed by a deflationary bear market decline, similar to if not worse than the Dow Jones saw in the depressing 1930s.

But when? I can clearly see the what, it’s the when part I’m having difficulties with, so I’m not the guy to answer that question.

Here’s the BEV values for the major market indexes I follow. Friday saw twelve of them closing at Bev Zeros. For a geriatric bull market, I’m quite impressed.  But I’m not ready to sell my gold and silver miners and buy Apple or Amazon just yet or anytime soon.

If you’re looking for advice on when to buy and sell in the broad stock market, you’re just going to have to go somewhere else as I have an iron hand on my tiller, keeping the pending disaster in financial markets to the fantail as I set my course by this market’s setting sun.

But that doesn’t mean there aren’t people making money investing in this market, as I’m sure there are. I’m just assuming the next few decades will be much different from the last four.

As precious metal assets and their miners have had as bad a time as everything else has had it good since 1982, I think it prudent that people sell into the strength of the current market advance and shift their funds into gold, silver and PM miners.  And then have the patience to wait for a shift in the market’s paradigm concerning the benefits of central bank interference in the market, as central banking finally destroys the global money supply with unlimited monetary inflation.

What with the Dow Jones Transport Average being at the #1 spot in the table above? Look at its earning in the chart below; in the past two years the Transports’ earning has decline from $1000 down to nothing in October. So much for believing earnings are a leading indicator for price action.

And look at the advances off last March’s 37% market correction. We have the Dow Transports with its zero earnings up 90% in the past nine months and almost everything else up by over 50%. I remember back in the 1970s when financial advice to novices (such as myself) were told to seek a 10% annual gain in the stock market for long-term compound interest gains.  People today investing in insurance stocks (#19) are feeling robbed with their puny nine month advance of only 55%.

Seeing gains such as those above are not normal, nor will they prove to be long lasting.  But as long as the FOMC continues “injecting liquidity” into the financial system, who knows when this is going to stop?

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 681\Chart #3   DJTA Earnings 1978 to 2022.gif

Looking at the Dow Jones’ in daily bars below, we see the effects of it closing above 30K; I had to increase my Y-Axis up to 30,750. 

How far could the Dow Jones advance from here?  As it has advanced by 62.53% from its lows of last March, in the spirit of the season let’s be generous and assume it will advance by another 62.53% in the next nine months. That will be a Dow Jones at 49,257 by August.  

Could the venerable Dow do that?  With a little help from its friends at the FOMC, administering “injections of liquidity” as required – damn right it could.  And if it does, no one in the mainstream financial media will find such a move alarming.

C:\Users\Owner\Documents\Financial Data Excel\Bear Market Race\Long Term Market Trends\Wk 681\Chart #2   DJIA OHLC.gif

Two weeks ago I accepted the possibility that gold, silver and their miners required a bit more time in the penalty box before they could come out and advance into history. On a Saturday night I didn’t think the BEV -10% line would hold, and lucky me I got that right on the following Monday. That doesn’t happen often!  But I was expecting gold to break below its BEV -15% line in the chart below, and so far that hasn’t happened.

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Disclosure: None.

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