Not Much To Fear Right Now
That probably doesn’t sound very “smart.”
The Dow Jones Industrial Average closed at a new all-time high on Friday, 40,003.59.So, what happens next?
According to data compiled and analyzed by Carson Group, the Dow usually goes up.
By Ryan Detrick’s count, the Dow has made 1,414 new highs since 1900.
One month after a new all-time high, the index is positive 61.6 percent of the time, with an average gain of 0.6 percent.
Three months later, it’s up 67 percent of the time, with an average gain of 1.8 percent.
Six months after a new high, the Dow is up 70.5 percent of the time an average of 3.9 percent.
And it’s positive 70.2 percent of the time a year later, with an average gain of 7.8 percent, which roughly approximates the Dow’s long-term average annual return.
It’s also not so tech-heavy, suggesting other sectors are doing well too.
We’re also happy to note too that this bull market is a global phenomenon: According to Bloomberg, 14 of the world’s 20 largest stock markets have hit all-time highs recently.
There are signs of cooling in the US labor market. And this too is a good thing. The unemployment rate remains near multi-decade lows, and wage growth continues to outpace inflation.
We’ll hear from multiple Federal Reserve speakers over the next couple of days, and we’ll see the minutes from the most recent Federal Open Market Committee meeting on Wednesday.
The highlight of the week will likely be the earnings report from the last of “The Magnificent Seven” to report this season, Nvidia $NVDA. That’s after the close on Wednesday. More on that below.
Success over the long term in this game is all about risk management. There’s never a time for complacency.
It’s OK to be realistic, though. And, right now, reality looks fine. Permabears sound more sophisticated, but I prefer what the data tell me.
Someday this bull market’s going to end.
It’s unlikely that day is today.