3 Words and 5 Red Lines That Get Us So Frenetic

• Posted by Greg Harmon
• on April 2nd, 2013

All Time High. Why is it that every time it happens the world gets so frenetic? I am talking about the stock market indexes hitting new all time highs. It brings out all of the crazy people looking for either a crash down to zero or a tripling over the next 18 months. People care what Mila Kunis is thinking about stocks, really? It also turns every cocktail party into a discussion about stocks. Your neighbor the nurse or teacher is now speaking with confidence about them. The ‘professionals’ start to tell stories that their barber/taxi

driver/babysitter is discussing stocks so it must be a top, calling it the ‘retail’ indicator. None of these is newsworthy for me. This happens about anything that gets people euphoric be it the Olympics, the Yankees, the Grammy’s or the latest Movie. What I find most interesting at these times is that professionals that have earned a lot of respect over long careers either get suckered into, or just succumb on their own, to moving deep outside of their expertise and rules and add to the craziness. I am talking

about long time bond professionals discussing stocks or fundamental analysts trying their hand at the technical analysis or technicians talking about PE ratios and dividend yields. There are many more cases. It is no wonder your neighbors are experts everyone else is too! Frenetic.

The first two chart above, of the Dow Jones Industrials ($DJIA) and the Dow Transports ($DJT), give a classic, 100 year old signal that the markets are going higher. 100 years. Yet the second these charts broke above the red lines craziness kicked in. All Time Highs. The Transports and the Russell 2000 ($RUT) could possibly move much higher with Inverse Head and Shoulders patterns, but lets stick to the near term. The S&P 500 ($SPX) just reaching the red line has not rocketed through it. So? And the Nasdaq 100 ($NDX) is a long way from the All Time High. But one thing they all have in common is that

they are trending higher. This could change soon or next month or never. But they are trending higher. That means they are going up. Right now. Here as we watch. Not reversing. Not into the stratosphere. But rising. What if we did not draw those 5 red lines or keep records of the All Time Highs? What would you think of these charts and indexes then? Just looking here and now.

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