The mind wants to know all the world,
and all eternity, even God.
The mind’s sidekick, however,
will settle for two eggs, over easy.
–Annie Dillard, The Abundance
Riffing on my favorite TV meteorologist (Look it this picture, folks, isn’t Hurricane Zenia a beauty? Great looking storm, and she’s only a cat 4 now, should be a 5 when she crushes us tomorrow), I have to tell you, this is not just any old stock market top, it’s the most phenomenal top I’ve ever seen. Ever. In all of history. When it starts down, there will be no hiding from it. Gonna send us all into the poorhouse, whether we own stock or not.
There, I’ve said it, and that’s the last pessimistic comment I’ll make until along about 2025, give or take a decade, when the ensuing bear market hits bottom. It is reasonable to lean against the prevailing view when things get over done. This is something I’ve been doing, as you know.
I’m going to jump the gun (and quite possibly be wrong) this afternoon. It appears that the last few squiggles in the Dow Jones Industrial Average are tracing out an ending diagonal triangle. It is a news based rally, the news being that the tax bill has enough votes to pass. Hooray, you say–more money for rich people who will do nothing for the economy, more money for corporations, who will pay out more dividends to rich people and do nothing for job creation, and, of course, less money for anyone who works for a living.
Adding to the “good” news is the consensus of Wall Street economists and strategists that the economy and the markets will do swimmingly well in 2018. Investor optimism has not been this high since 2007. Valuations are in the clouds. investment portfolios have the highest allocation to stocks, and the lowest to cash since records have been kept. And, as always in a major speculative market top, there is an irresistible bubble to stir the animal spirits. Bitcoin, a cryptocurrency, can now be traded in the futures exchanges, a sure marker for a long term top in something that millions want to buy, even they don’t know what it is.
The package, extremely high valuations, universal bullishness, and wild trading in a bizarre speculation is exactly what to expect if the market is, indeed, going to complete an ending diagonal triangle in the next few hours. Should this happen, here’s what the text says:
“Dramatic reversal ahead!”