Back near the turn of the 20th century my old friend Sinclair Noe on Financial News radio used to gather his staff for a round of milk and cookies every time the old Dow hit a new all-time high. In those days the Dow was nearly half of what it is now and did it which such regularity it became a standing joke. So now that the Nasdaq hit the long awaited all-time high this calls for a real celebration. How about some Godiva Chocolate Cheesecake? But since most of you are reading this on Monday morning I know you don’t need the sugar rush from such a monstrosity. Why don’t you just have a double espresso just for me?
So you probably figured out the all-time high in the Nasdaq is very important. The Dow and SPX have hit the 2000 levels with relative ease. But tech hitting its bubble high is really important. The Dow’s peak in 1929 was a result of a different mania; it was consumer products led by RCA radio.
Google RCA radio 1929 stock price and you’ll see a chart that rivals anything you saw in 1999. It should also not be lost on any of us it took the Dow nearly 25 years to recapture the 1929 high and the Nasdaq recovered 10 years ahead of schedule. In an era where politicians seek to develop their legacies, this one belongs to Ben Bernanke and his easy money policies. While markets are at historic peaks wasn’t it just the other day that Janet Yellen said that overall GDP this year would struggle to maintain 1.9%?
Maybe she didn’t say struggle but I’m doing a little interpreting for you. The fact we could hit another all-time high in tech so soon after the first one without that translating into a wonderful economy shows something is not right.
But before I get to that, here’s why the all-time high is so important. In terms of trading, it was the inevitable test. We came close early in the year, coming to within 100 points back in March but only ended up with pullbacks that didn’t do very much. Finally, starting in April the Nasdaq came close numerous times. In terms of quantum physics, it became a strange attractor, a magnet that had to be touched if for no other reason than the crowd had to see the reaction. They got there on the vibrational day of June 18 (golden spiral 6.18) is also very interesting. But now that we got there, in pure technical terms it could be just like any other very important long term marker. It is likely to be tested and tested again until the crowd decides this is cheap or if Bernanke’s legacy of easy money isn’t quite right.
Most of you know I supported Bernanke’s QE policies. Not because I wanted to but out of necessity. A healthy economy from the government side comes as a result of mixture of a balanced fiscal and monetary policy. In every era there is at least some collaboration between the president and Congress. Part of Bernanke’s legacy developed out of the ashes of the debt ceiling debacle in 2011 where nobody believed the politicians would allow for a default when it didn’t have to happen. That we came so close proves the insanity of this era. But the relationship between the president and Congress was shot right there to this day and Bernanke worked to overcompensate to help us out of that 2011 mess, which by the way nobody saw coming either. All of which gets me to my next point.