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BUYING STAMPEDE
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"Space, the final frontier. These are the voyages of the Starship Enterprise. Its 5 year mission, to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before." Captain James T. Kirk; from the TV series Star Trek (1966)

Except in this case it was a 4-year mission that caused the D-J Industrial Average (INDU/14539.14) to boldly go where it had never been before when, on the anniversary of its March 2009 low, the Dow crossed above its all-time closing high of 14164.53, recorded on 10-9-07. As repeatedly stated, that confirmed the D-J Transportation Average's (TRAN/6281.24) move to a new all-time high in mid-January and registered the fourth Dow Theory "buy signal" since that Dow bottom in March 2009. We are also working on another record in that today is session 52 since the "buying stampede" began with the back-to-back 90% Upside Volume Days of 12-31-12 and 1-2-13. Recall that since 1950 such back-to-back days have seen the S&P 500 (SPX/1563.23) 6.1% higher one month later 83% of the time and 12.8% higher three months later 100% of the time (see chart). For the record, we are currently up a little over 10% YTD.


Click to enlarge

Yet, there is another record on the verge of "boldly going where no man has gone before," that being a move of consecutive days in a row on the upside. As written earlier this week, it is rare for the Dow to go in any one direction for more than 9 consecutive sessions, and yesterday was day 10 in this current upside skein. Indeed, in my notes of over 50 years, there have only been 25 other occasions when the Dow has rallied for 9 consecutive sessions (or more), the longest being 14 straight sessions on the upside that ended on 1-20-1987, which strangely enough was the last time we had back-to-back 90% Upside Volume Days at the beginning of a new year like we saw this year. I wrote about this eerie coincidence back in early January noting that in 1987 this 90% upside volume "two-step" started a rally that would lift the senior index by over 24% into early April. Interestingly, since 1950, there have only been 12 other instances that the DJIA was better by more than 8% in the first quarter and the index finished the year in a positive mode at 100% of the time! Therefore, I continue to invest, and trade, accordingly.

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POSITION:  No positions in stocks mentioned.

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