What do we know about new all-time highs? We know they’re not a characteristic of a downtrend.
I often get that guy that comes to me and says, “Well every new downtrend must start from a new high”. Yes, and that must be a great way to go through life.
You see, markets trend. That’s why Technical Analysis works. That’s why this is so valuable. Because if you can recognize the direction of the underlying trend, you’re already way ahead of the pack. The likelihood for a trend to continue in its path is exponentially higher that for it to reverse. A 4-year old can recognize if a chart is going up, down or sideways. It’s the adults that have more trouble with this.
As I went through all my weekly charts this weekend, I noticed an interesting underlying theme: New Highs.
Here is the S&P500. Either way you look at it, we’re seeing new all-time highs hold for the first time in almost 18 months:
Click on Charts to Zoom in
Same with the Dow Jones Industrial Average:
The Nasdaq 100 new all-time highs:
Here is the Dow Jones Composite Average breaking out to new all-time highs:
Technology, the largest component of the S&P500 is leading the way – new all-time highs:
It’s not just Tech, but another sector where investors are playing offense is Consumer Discretionary – all-time highs:
Dow Jones Internet Index, all-time highs:
Consumer Staples all-time highs:
Look at Financials. What do we know about this? We know it’s not a breakdown….
Looking outside the U.S., here is the Global 100 also going out at new all-time weekly closing highs:
I know I’ll get hate mail for pointing out that stocks are not in a downtrend. I’ll also get accused of being a permabull. To be clear, I could not care less whether stocks double or get cut in half from here. Gold can go to zero tomorrow and it won’t matter to me. We’re just looking at market behavior to get an edge by being on the right side of the trend.
If we’re above the former highs in these indexes, it’s hard to be bearish equities. Come talk to me if they fail. But I don’t think they will.