Dow record high

How robust is the recent U.S. stock market rally?

The Dow Jones Industrial Average is fast closing in on 27000

Can these recent stellar performances by the DOW, S&P 500 and NASDAQ continue? Is the U.S. stock market about to make an indignant stage exit? Are we at an interval or the finale?

I just can’t help but think that there is something lurking behind the scenes tha’st going to make an appearance and spoil the party.

What evidence do I have of this?

Well, what goes up must come down, right? Probably, but that’s not a good enough reason. The ‘almost’ eleven year old rally started with the DOW at around 7000 in 2009. It’s now close to 27000 – that’s up 20000 points in eleven years (I’ve rounded these figures).

That’s an increase of about 385% over the period and about 35% per year averaged out. That’s huge by any standard, and yes please I’ll have some.

Economic data

Economic data of late has been weaker than expected, indicating a potential slowdown and not just U.S. data. Trade wars and tariffs are talk of the town. The likelihood of the Fed reducing interest rates has increased. Pursuit of protectionist policies are top of the agenda.

And, just how good are individual company performances right now? It seems to me that tech’ companies are holding up much of the economy. U.S. company reporting season starts again mid July 2019. It will be very interesting to see what this quarter delivers. Then we have bond yields falling and gold rising and concerns of geo-political tensions too.

Safe havens

In times of uncertainty and in challenging market environments, investors tend to move assets from perceived risk, such as equities, into safer havens like gold and government bonds. And, that appears to be exactly what is happening right now.


Then we have Trumps tweets, seemingly moving markets on a tweet by tweet basis. This can’t be good long term.

Look, I don’t profess to have a crystal ball but, there certainly appear to be a few things adding up that may build to scupper this rally.

Fear of missing out

I do think that if I were heavily invested in the stock market, now may be a good time to re-consider. The fear of missing out or FOMO can’t work forever!

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