The Dow Jones saw some action this week. Wednesday, the day after the mid-term elections it advanced by 2.13% from its previous day’s closing price, our fourth day of extreme volatility since early October. Everyone was happy about the nice daily gain. But I’m only noting that days of extreme market volatility (Dow Jones 2% days) are in the main a bear-market phenomenon, be they negative or positive.
In any case, the Dow Jones saw a nice bump up from Friday last week, which ended with the Dow Jones at -5.81% in the BEV chart below. With the Dow Jones closing this week only -3.31% from its October 3rd last all-time high, it’s hard being short-term bearish. So I continue expecting the venerable Dow Jones to make additional new all-time highs before the end of 2018.
One thing in favor of an advancing Dow Jones is its trading volume is still very high, as it has been since it began its current decline in early October. But I attribute this volume (demand for stocks) to artificial support from the FOMC.
It’s just a fact of life that for a long time now the “policy makers” have been supporting the stock market with pseudo-demand for what Wall Street is selling any time the stock market is down, and pseudo-supply for the gold and silver markets whenever the old monetary metals threaten to break above some predetermined parameter set by their “policy.”
Here’s an article from ZeroHedge on a J.P. Morgan trader in the gold market. This isn’t really news. Bill Murphy and Chris Powell from GATA have been reporting on manipulation in the gold and silver markets since the late 1990’s. And to be fair with ZeroHedge, they also have been covering market manipulation for a long time. This same long time where the mainstream financial media has been dismissing such things as “conspiracy theories”, where in fact they have been market reality for a very long time. But this too shall pass.
Still it’s nice seeing such market intelligence being reported by someone. All we need now is for the government regulators to begin prosecuting these law breakers for being the criminals they are. The reason they haven’t done this so far is our government regulators are in on the scam.
Next is the Dow Jones in daily bars; volatility still hasn’t returned to what it was before the October 3rd top. Thinking about all the excitement the stock market has at a market top one would expect to see big daily moves in the Dow Jones. In fact however, if you actually look at the data it’s just the opposite, that advancing markets advance typically on low daily volatility as you see from June to October below.
Seeing the daily volatility for the Dow Jones greatly increase after the October 3rd top (big daily bars) is typical of a major market decline.
I’m not going to argue with success, such as the remarkable market recovery off the October 29th market bottom. But seeing this advance happen in large daily moves is a point to be concerned about.
NYSE 52Wk Lows have contracted to double digits since the end of October (table below). And two days this week saw more 52Wk Highs than Lows. That’s something we haven’t seen since September 21st.
