Expert Synonym In Finance Equates To Brain Dead

Expert Synonym

Expert states Millennials should prepare for Dow 50K

In finance, Expert Synonym should be brain or moron, for most experts are only good and issuing pie in the high targets or stampeding the masses.

It would seem, on the market’s race to Dow (^DJI) 20,000, that we’ve hit a little speed bump. It’s not so much “if” we will hit that psychological and magical level, it’s more “when.” But what does it really mean?  For traders here on the floor, it’s a significant benchmark in the Dow—one that will be celebrated with loud yells, confetti-like paper flying around, and high fives! After this three-minute celebration, it will be back to trading, and 20,000 will be in the history books.

Talk will start to focus on Dow 25,000, then 30,000. Yesterday, I heard someone talking about Dow 50,000 by the end of Trump’s eight-year presidency (eight years?!). What traders are truly preoccupied with is the market trend. There is a saying down here on the floor, “The trend is your friend,” and right now the trend is very friendly. The latest bullish sentiment out of the AAII (American Association of Individual Investors) shows bullish sentiment at 44.7% vs. bearish sentiment at 32.3%. However, bearish sentiment is starting to move, up +5.8% since the last read.  Government data out this morning showed the final read on third-quarter GDP at 3.5%, up from the initial read of 3.2%. Initial jobless claims came in at 275,000 versus 256,000. That is still below 300,000 for the 94th straight week (Any number below 300,000 indicates a healthy economy.). Full Story

As we stated in the Interim update, such proclamations start to make us nervous.  While this article covers a confluence of opinions, nevertheless the writer is feeling confident enough to come out with an entirely bombastic title.  This is what took place in 2011 in Gold. We also witnessed some nonsense in 2015.  One well-known trader stated that Gold would trade to 25K; another had the nerve to come out with a target of 50K. We penned a follow-up article where we asked these traders if they were under the influence of strong medicine when they issued these objectives for Gold.

How can one come up with such targets when Gold had not even made it to the 2K mark? You have to be insane or smoking crack to have the nerve to issue such insane targets. Years ago, we published extreme targets of 5K and at that the time we even felt slightly uncomfortable with these targets. Thus,  we repeatedly stated that they were extreme targets. In other words, a feeding frenzy could create an irrational phase where the markets are pushed a lot higher than they would normally trade.  Our primary targets fell in the 2500-3000 ranges.  Despite the massive amounts of new money created, we see no reason to raise these targets.  Along these lines, it is simply insanity to talk about Dow 50K when the Dow is not even at 22K. Dow 25K maybe, but the only reason one would mention Dow 50K is that one day they can come out and say you know what we said Dow 50K, XXXX years ago and it has finally come to pass

The rather rapid change in bullishness over the past nine weeks illustrates that like Bonds and Utilities the odds of the Dow experiencing a sharp market correction have risen.

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