The stock market continues to make new highs, yet none of the signs which accompany a market bubble are evident. Investors are asking, ‘When will the Dow finally correct?’ By ‘correct’ they mean ‘decline.’ However, a market correction doesn’t always entail a decline for the major averages and can sometimes take the form of a lateral consolidation or trading range. That appears to be the case for the 2-month period from December through early February when the Dow and S&P made little headway.
In fact, in January the Dow Jones Industrial Average (DJI) recorded its tightest trading range of only 1.1% in over 100 years. This continues a prolonged sideways pattern in the Dow and other averages since mid-December when the post-election rally reached a plateau. The question everyone was asking was whether this plateau was merely a temporary ‘pause that refreshes’ in an ongoing rally or the end of the rally and the prelude to another market setback. The Dow provided the answer to that with the last week’s breakout above the top of the trading range ceiling. It has rallied each day since, putatively on the hopes generated by President Trump’s forthcoming tax-related announcement.
This post was published at GoldSeek on Tuesday, 14 February 2017.
Follow on Twitter
Recent Comments