by Gary Christenson, Deviant Investor:
Following President Trump’s speech the Dow Jones Industrial Average (Dow) easily broke 21,000, and closed at another all-time high – 21,115.
The Dow closed up for the 12th consecutive day on Monday February 27, another three decade record.
Excel calculated the Dow’s daily Relative Strength Index (RSI – 14 period), a technical timing oscillator. It reached 97.75 (maximum = 100.00) on March 1, an exceptionally “over-bought” reading that has occurred nine times since 1950.
The weekly RSI also reached a very high “over-bought” reading as of March 3, the end of last week.
Margin debt recently registered an all-time high on the NY exchange. Price to earnings ratios have risen into “nosebleed” territory, and the last 1% correction in the S&P was in November – a long time ago. Many other market extremes and highs in confidence indexes are evident.
YES, THE EUPHORIA IS PALPABLE!
The Dow reached new highs the normal way – levitated through the creation of massive unpayable debt and the expectation of huge profits (for traders). Daily sentiment has reached a peak and indicates we are at or near a top. Read Bob Moriarty.
Official national debt is nearly $20 trillion. Regardless, President Trump promised something for everyone:
- More military spending, which will create larger deficits and more debt;
- Middle-class tax relief; (Larger deficits and more debt…)
- $1 trillion infrastructure spending; (More debt…)
- Education bill for more school choice etc.; (More debt…)
- The Wall; (More debt…)
- And more promises that require massively more debt.
The Dow likes more debt, until reality strikes.
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