Dow Jones Industrial Average Marks Another Record High

Dow Jones Industrial Average Marks Another Record High

Dow Jones Industrial Average Marks Another Record High

$DIA, $SPY, $QQQ, $VXX

  • The Trump Effect is preventing a US stock market crash

Robert Shiller is warning investors that just 1 aspect is keeping today’s high-flying stock market from crashing like it did in Y 1929.

The Yale University economics professor explained that there’s one vital characteristic protecting investors from losing their nest eggs, and that is Market Sentiment.

“It’s not just a matter of low interest rates, it’s something about the American atmosphere. It ispartly the Trump atmosphere,” said Professor Shiller

“The market is about as highly priced as it was in 1929,” he said arguing valuations are extremely expensive.

“In 1929 from the peak to the bottom, it was 80%  down. And the market really wasn’t much higher than it is now in terms of my CAPE [cyclically adjusted price-to-earnings] ratio. So, you give pause when you notice that,” said Professor Shiller, who also helped develop the widely-followed S&P/Case-Shiller Home Price Indices.

Professor Shiller developed the cyclically adjusted price-earnings (CAPE) ratio market valuation measure, which is calculated using price divided by the index’s average historical 10-year earnings, adjusted for inflation.

“Investors love this. I can’t exactly explain – maybe it has something to do with prospective tax cuts. But I don’t think it’s just that. It’s something deeper, and it’s pushing the American market up,” he added.

“I don’t want to encourage people too much to put a lot into the most expensive market in the world,” said Shiller. “The US has the highest CAPE ratio of 26 countries. We are #1,” he said.

“I wouldn’t call it healthy, I’d call it obese. But you know, some of these obese people live to be 100 years, so you never know,” said Professor Shiller.

Warren Buffett’s optimism has not been dampened for the country’s prospects over the long term, even 100 years into the future.

“Whenever I hear people talk pessimistically about this country, I think they’re out of their mind,” Buffett, the chairman of Berkshire Hathaway Inc (NYSE:BRK.A) said Tuesday night.

Mr. Buffett said he expects the DJIA to be “over 1,000,000” in 100 years, up from Wednesday’s record close at 22,412.50.

He said that is not unreasonable, given how the index was 81 a 100 years ago.

Wednesday, the major US stock market indexes finished at: DJIA+41.79 at 22412.59, NAS Comp -5.28 at 6456.04, S&P 500+1.59 at 2508.24, with the DJIA and S&P 500 posting fresh record highs on the day.

Volume: Trade on the NYSE came in moderate with 837-M/shares exchanging hands.

  • NAS Comp +19.9% YTD
  • S&P 500 +12.0% YTD
  • DJIA +13.4% YTD
  • Russell 2000 +6.5% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.42) Bullish (0.42) Bullish (0.40) Bullish (0.46)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.47) Bullish (0.33) Bullish (0.33)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.41) Bullish (0.39) Bullish (0.31) Very Bullish (0.53)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.41) Neutral (-0.21) Bearish (-0.35) Very Bearish (-0.67)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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