Market Update For June 5, 2017

As expected, the Dow Jones saw two new all-time highs this week (Thursday and Friday). Just how much higher can the stock market go?  On a point basis I really don’t know, could be enough to surprise me.  But on a practical basis, for only as long as the central banks making this happen can continue manipulating market values higher without discrediting the faith-based systems their “monetary policy” and units of currencies are based on.  

I’ve seen market commentators claim that central banks have been monetizing hundreds of billions of dollars of stocks and bonds a month for years. I believe it.

One thing is for sure, one day either these central bankers or Mr. Bear are going to pull the plug on the liquidity  as the financial markets are floating ever higher on. Then it becomes a whole new game.

The Dow Jones ended the week with two new all-time highs, so we can say the bull box seen below is now closed. But looking at the Dow Jones (Blue Plot below) from years past, there have been times where it advanced with more enthusiasm than we’re seeing at the end of the week. From November 2016 to March of this year it was a standout advance for the Dow Jones.

Currently this market looks more like a contented cow chewing its cud than a rampaging bull.  After an eight year, 14,659 point advance, how much more can we expect?

The Dow Jones Total Market Groups (DJTMG) saw 29 of the 74 groups I follow reach new all-time highs this week.  For the market advance that began in March 2009, this series peaked at 30 in Barron’s 20 May 2013 issue.  Normally, that should have been that as the bull market matured and then expired in the years that followed.  

But these are not normal times.  Four years after May 2013’s peak, is the DJTMG going to see a new and even higher peak in new all-time highs?  I wouldn’t rule it out.  But if that happens, and most likely it will, it won’t be a good sign. Quite the opposite, as it will be a liquidity driven (inflationary) market extreme that one day must be corrected for by Mr. Bear.