Stocks Continue Making All-Time Highs as Congress Ponders Shutdown or Stop-gap Funding On September 30

The Shiller PE (CAPE) closed Thursday at 39.86, the second-highest level ever, as stocks march to new all-time highs on a near-daily basis.

A day after the Fed lowered the federal funds target rate to 4.00-4.25%, stocks flew higher, if only to solidify the narrative that they are the only game in town, that any wealth creation during these tumultuous times will be achieved by buying and holding U.S. stocks. This was surprising to absolutely nobody.

With Friday's opening bell approaching, stocks are once gain poised to finish the week on the positive side of the ledger. Through Thursday's close, the Dow is up 308 points, the NASDAQ has put on 329 points, the S&P 500 is ahead by 47, and the NYSE Composite Index is up 130. These are all at all-time highs.

Exclusively to Dow Theorists, the Dow Jones Transportation Average is up just 14 points on the week and is nowehere near a record high. In fact, since the start of September, the Trannies have been trading between the 50 and 200-day moving averages, with the notable feature of a death cross in late August and the 200-day average in a declining posture. Why this is important in terms of Dow Theory, is because it signals a non-confirmation of the primary trend.

While the Dow Industrials certainly have achieved escape velocity, reversing the bearing trend to bullish upon making new highs last month, the Transports have failed to do so. The Transportation Average must confirm the primary trend reversal of the Industrials. Otherwise it is a false flag, so to speak, indicating that the bearish trend that originated in December of 2024 is unanchored by market fundamentals.

While Dow Theory is considered old school and inapplicable to modern markets, it does bear notice if only because the companies that move people, goods, and energy are showing signs of weakness. If things don't move, things don't sell. Critics will propound on the notion that the global economy is more tech-based, and, to a large degree, that is true. However, tech still relies on energy, and energy is required for the production of food, otherwise known as human energy. Nothing stands alone in the globally-connected economy. That's why low oil prices are constitute a warning to the bulls. While cheap oil is a boon to manufacturing and production, a consistent low price also indicates a lack of demand, translating into a stagnant economic environment, which is something that was on the Fed's agenda when they decided to cut interest rates on Wednesday.

Just because stocks are going up doesn't automatically mean the underlying economy is strong. Often, Wall Street veers far from general economic trends as stock trading is an emotional experience, operating under the guise of momentum, greed, fear, and, occasional price rigging (OK, price rigging, or manipulation, may be more than just occasional, but that might sound too conspiratorial).

There are more waring shots to those with a more cautious approach to investing. The massive one-sided insider trading that's been underway during this final push to fresh highs in stocks is a red flag. Corporate executives are selling shares at a strong pace at the same time their companies are buying back shares to boost the EPS and thus, the stock price.

Warren Buffett continues to sit on an enormous cash horde of more than $350 billion, the thinking that if the greatest value investor of this generation is sitting in cash, looking for bargains, then he must be anticipating a pullback.

Not to souond like Chicken Little, procaliming the sky is falling, most indicators and cheerleading by the usual talking heads are insisting that the current rally has more room to run, and indeed, it might. New highs on a regular basis aren't normally the time to be thinking about bailing out, but, if the general understanding of playing stocks is to buy low and sell high, now would seem an appropriate time to at least trim some holdings. There is every possibility that the current bubble will exceed the all-time high on the Shiller PE, which is 44.19, at the peak of the dotcom bubble in December 1999. If that's the target, there's still plenty of room for stocks to run and investors with an eye for the exits might want to hold a little longer, at least until the U.S. congress plays its version of government shutdown no-hold 'em poker as the 2025 fscal year comes to an end on September 30 and the 2026 fiscal year beings October 1. After today, that leaves just six legislative sessions before they put up or shut down. Odds favor a last minute deal, since that's what always happens. Republicans and Democrats will fold like the cheap suits they really are in order to keep the grift and the graft flowing.

With the opening bell approaching, stock futures are foretelling a slight positive lean at the open. Gold and silver are recovering from the usual post-FOMC beatdowns, and WTI crude oil is hovering near the lows of the week, below $63/barrel. This week looks like a safe bet for the bulls, with the possibility of watershed moments next week or on Tuesday, September 30, when congress and the president have to decide on whether or not to keep the plates spinning or partially shut down the government. This is without a doubt a risk-takers kind of scenario.

At the Close, Thursday, September 18, 2025
Dow: 46,142.42, +124.10 (+0.27%)
NASDAQ: 22,470.72 +209.40+(0.94%)
S&P 500: 6,631.96+31.61 (+0.48%)
NYSE Composite: 21,504.35, +64.45 (+0.30%)