The Dow At 25,000 – Year Of The Earth Dog

On December 4th I wrote: The last time I used Terror in the Dow was from the Twilight Zone episode when William Shatner sees a gremlin on the wing of the airplane he’s flying in. 

That was when the Dow tried for 18,000.  

Investors got super bullish as the Dow tried to clear 18,000.

Yet, each time that level pierced, it could not hold for very long.

By August 2015, the gremlins forced a crash landing and the Dow fell to 15,370.

It took nearly one year more for the Dow to try 18,000 again.

Here we are in January 2018. The Dow pierced 25,000. Thus far, no gremlins on the wing of the plane causing terror.

However, besides the birth of a new Dow Jones Industrial Average level, we also have the upcoming birth of a new Chinese Astrological Year…

The Year of the Earth Dog.

“When the year of Dog arrives, the fire enters the grave, hence it brings setback to optimism, which in turn will cause setback in the economic atmosphere.” Raymond Lo

I will write a lot more about this in the coming weeks. For now, suffice to say that we have had 5 years of fire as the ruling element (Fire Rooster still in play). This year, the element switches to water.

And our dog is just a puppy.

Why does that have the power to ignite Terror in the Dow at 25k?

Recently, I have written about higher interest rates and a lower US dollar and the potential implications for hyperinflation and an economic slowdown.

With NFP tomorrow, doubtful we will see any signs of an economic slowdown. However, we could see a boost in interest rates. Without wage increases (we have yet to see evidence of any) the dollar could fall.

Plus, global demand has boosted commodity demand-possibly more inflationary down the road.

I have written about an overheated economy and how the tax reform could have an initial positive impact-obviously-yet in the long run, could fizzle out.

Today, the AAII survey shows that individual investor sentiment is “outright gleeful.” The market has the fewest bears since 2014 and the most bulls since 2010.