Does One Market Day Matter? OR Does Market Unbalance Matter More? - Weekly Blog # 965

 

 

 

Mike Lipper’s Monday Morning Musings

 

Does One Market Day Matter?

OR

Does Market Unbalance Matter More?

 

Editors: Frank Harrison 1997-2018, Hylton Phillips-Page 2018

 

 

 

The View of History Matters

Ask politicians or the media about the most important date in the US economy and almost all will say October 24, 1929, when the Dow jones Industrial Average (DJIA) fell -13.5%. This was the world-famous Market Crash. By December of that year the market had fully recovered.

 

The media generated the largest possible headlines for the global tragedy. Never mind that the US was in a slow-down for at least a year and the farm community for more. We were in a recession, but that wasn’t big news. Politicians saw the “crash” as a siren call to change the economy through government action. While they felt they were helping, they took a recession into a depression. The depression bottomed out in 1931, but it did not end until 1942 with WWII’s impact. Politicians, economists, and market analysts focused on the DJIA, the most well-known Wall Street indicator consisting of under 30 industrial stocks.

 

We could be repeating the same type of mistake today as an outgrowth of what happened in the market on Friday!! Look at the parallels, remembering that history doesn’t repeat but rhymes. Starting in 2025 there was an acceleration in the number of corporations moving their primary stock listings out of the New York Stock Exchange (NYSE) and into either the NASDAQ or the Texas Stock Exchange. Hilton Hotels, Walmart, and recently announced General Motors have moved or are moving from the NYSE to the NASDAQ where over 3000 companies are listed. The NASDAQ Composite outperformed both the DJIA and the NYSE Composite. (Due largely to many companies on the NASDAQ being involved with “AI” and having a relatively short history of popularity.)

 

We have been very conscious of this movement in part because NASDAQ is a stock owned in the retirement accounts we manage. Its recent performance makes it the best performance of sixteen stocks in the portfolio. The NASDAQ Composite has more stocks in it than both the Dow Jones Industrial Average and the S&P 500 and has produced more exciting performance than the older indices. I believe it could and maybe should become the major market indicator.

 

This view is now gaining credence, particularly since it dropped 2% on Friday while the DJIA and Russell 2000 showed gains. There are some politicians who want to change the rules of the game in favor of the “AI” complexes with their rich managements.

 

Two weeks ago, I was warned that the NASDAQ Composite had a chart showing a recent stock price bottom barrier of 29000. (Demonstrating I can be wrong it immediately gained close to 1000 points before retreating on Thursday and Friday. On Friday, the index broke materially below its former down price barrier. It must still drop a couple of hundred points to generate a confirmation signal indicating a major decline. If the market declines and earnings are sustained in the following periods, we will probably hold onto our positions. If prices drop 50% or more, we will probably buy more.)

 

I am aware of JP Morgan’s finding that 80% of expected funding is for “AI” data centers, leaving only 20% for other users of “AI”. There is a risk that a future group of politicians will follow FDR’s depression tactics of a deficit fix, which would be meaningfully over the current $41 trillion and rising.

 

As usual I plea for help from subscribers if you feel I am wrong. Your comments are most welcome.

 

 

Did you miss my blog last week? Click here to read.

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