Don't Count on a Market Correction in this Environment

For a change, stocks took a little dip to open the week, but it was certainly nothing by which anybody was rattled or otherwise deterred from buying ever more expensive stocks.

Since the Great Financial Crisis of 2007-2009, the favorite acronym of traders has been BTD, otherwise known as Buy The Dip, which is exactly what is to be expected when markets open on Tuesday.

Almost without fail - actually, fully without fail - US equity indices, since March of 2009, have never fallen much more than a few percentage points before ramping back to new all-time highs. While there have been occasions in which the dip in stocks has persisted over a period of weeks or months, there has been no failure to recover in recent years.

Anybody invested on more than a casual basis is aware that central bank largesse and stock buybacks have been the primary drivers of stock market prosperity, and even with the Federal Reserve beginning to engage in the process of unwinding its balance sheet - selling off much of its horde of $4.5 million in bonds and other sketchy assets - there seems to be little to scare investors away from he equity bandwagon.

It's largely a controlled environment, nothing like the heydays of the 50s and 60s, when America was a growing concern and didn't need monetary boosts to fuel investment markets. Today's markets and investors are completely synthetic, consisting mainly of larger brokerages and funds of all types, from sovereign wealth types to hedges to mutuals to pensions. The general public and governments are so heavily invested in stocks that a collapse in markets would likely trigger catastrophic consequences to all parties. Private individuals would be harmed by pension promises unable to be met, while the large funds would face liquidation, bankruptcy or dissolution. Governments, likewise would be under attack for making pledges to the populace that could not be manifested over time, such as social security and other entitlements.

It is for those reasons, and the overall interconnectedness and fragility of markets that corrections do not occur. People in power would be without and instead of order, there would be chaos, and that is something that central bankers and their cohorts in the government realm simply cannot stomach.

At the Close, Monday, October 23, 2017:
Dow: 23,273.96, -54.67 (-0.23%)
NASDAQ: 6,586.83, -42.23 (-0.64%)
S&P 500: 2,564.98, -10.23 (-0.40%)
NYSE Composite: 12,384.42, -46.10 (-0.37%)

30 Years After the Crash: New All-Time High for Dow Industrials

Get your party hats out?

Dow 24,000 here we come!

At the Close, Thursday, October 19, 2017:
Dow: 23,163.04, +5.44 (+0.02%)
NASDAQ: 6,605.07, -19.15 (-0.29%)
S&P 500: 2,562.10, +0.84 (+0.03%)
NYSE Composite: 12,380.32, +9.30 (+0.08%)

30 Years Later, Is the New Reality Sustainable?

Thirty years ago today, US equity markets were rocked by the biggest one-day collapse in stocks, when on October 19, 1987, the Dow Jones Industrial Average fell 22%.

With suitable hindsight, investors and analysts now say the Black Monday crash of '87 was fueled by what was then called program trading, in which computers were keyed to buy or sell when stocks hit certain, predetermined levels.

Much more sophisticated today, computers do the bulk of all trading on Wall Street, using algorithms which accomplish much the same effect as old-fashioned limit orders.

The Dow and other indices have been soaring to fresh all-time highs on a near-daily basis and the fear is that what has fueled the rally of the past eight years is running close to empty.

Freshly-minted money from the world's central banks and stock buybacks from some of the most unstable and overpriced listed companies (see McDonald's (MCD), for instance) have driven stocks to unfathomable levels. A pullback is inevitable, the trick primarily laying in the timing of such an event.

For now, Wall Street wallows in its great, contrived success.

At the Close, Wednesday, October 18, 2017):
Dow: 23,157.60, +160.16 (+0.70%)
NASDAQ: 6,624.22, +0.56 (+0.01%)
S&P 500: 2,561.26, +1.90 (+0.07%)
NYSE Composite: 12,371.02, +21.05 (+0.17%)

Stocks Keep Rising...

Are we entertained?

At the Close, Tuesday, October 17, 2017:
Dow: 22,997.44, +40.48 (+0.18%)
NASDAQ: 6,623.66, -0.35 (-0.01%)
S&P 500: 2,559.36, +1.72 (+0.07%)
NYSE Composite: 12,349.97, -9.55 (-0.08%)

Stocks Continue to Soar; Dow Closing in on 23,000

Maybe, in some strange, new world not yet discovered, the spectacular gains in pieces of paper known as stocks is considered awesome and grand.

Oh, wait, that's this world.

The Dow Jones Industrial Average crossed the 22,000 mark just over a month ago on September 11. Since then, there have been 18 sessions in which the Dow finished higher, as opposed to just seven in which it closed lower. Additionally, the down days were much smaller, percentage-wise, than the up days.

Party on!

At the Close, Monday, October 16, 2017:
Dow: 22,956.96, +85.24 (+0.37%)
NASDAQ: 6,624.00, +18.20 (+0.28%)
S&P 500: 2,557.64, +4.47 (+0.18%)
NYSE Composite: 12,359.52, +7.52 (+0.06%)