The Trigger for the Collapse in Dow Jones’ Earnings Has Just Been Pulled
For a change I thought I start off with a chart of the Dow Jones, in dollars, along with its 52Wh High & Low Lines. As seen below, this week (Monday to Wednesday), three times the Dow Jones pushed up its 52Wk High Line. Since November 2023, inside the red rectangle, the Dow Jones has done this; pushed up its 52Wk High Line, ninety-eight times in the past three years. Pushing the Dow Jones up by 17,771 points, a thirty-three-month advance of 48.58%. Not bad for an index of thirty dividend yielding, blue-chip geezers.
This is what an advance looks like, an index pushing up its 52Wk High Line for a prolonged period of time. But not every day of an advance closes at a new all-time high. Most days in an advance close within 5% of their last new all-time highs, or inside of scoring position, as seen in the BEV frequency table below.
So, since 20 November 2023, 680 NYSE trading sessions ago, the Dow Jones has seen;
- 98 new all-time highs,
- 470 daily closes in scoring position,
so far in this advance. That is a lot of days propelling the Dow Jones into market history, since November 2023; 83.53% of the past 680 trading days. A darn fine performance, seldom exceeded.
How much more is the Dow Jones capable of, before something unfortunate happens? I don’t know. Looking at the chart below, this week the Dow Jones broke out of the Red Circle I placed around it, on its way to where no Dow Jones bull market has gone before.
Last week, I was talking about the Dow Jones at 55,000, maybe by Christmas. If the Dow Jones continues advancing as it did this week, we may see Dow Jones at 55K by next Friday, and Dow Jones at 60K in the next few weeks.
That’s crazy. However, when idiots control the financial system, crazy things can happen, and frequently do.
Above is my usual Dow Jones BEV chart. It goes without saying, when the Dow Jones in the top chart pushes up on its 52Wk High Line, the Dow Jones in the lower chart sees a new BEV Zero, a daily closing on the red BEV 0.0% line, a new all-time high. Inside the above red rectangle are 98 new BEV Zeros, and 470 daily closes in scoring position.
Below is the Dow Jones plotted in its daily bars. What a week! From last Friday’s close, to Wednesdays new all-time high, the Dow Jones advanced 1,863 points. How many times can the Dow Jones do something like this? Hard earned experience has taught me; the Dow Jones can do things exactly like this, more times than I believe is possible. But let’s not get greedy, expecting a repeat performance next week.
This week, the big winners were the gold and silver miners in the XAU, which advanced by 19.70% in a single week! Look at the XAU in the charts below, spiking up from last week’s close. What is this all about? I think it’s the XAU’s way of announcing to the world, the correction that began late last winter, is now over. Hopefully, we’ll see lots of crazy things happening with the gold and silver miners in the months to come.
Here is something interesting in the XAU’s Bear’s Eye View chart above. The cluster of BEV Zeros began on August 7th, a year ago, and finished on February 28th, for a total of forty-five new all-time highs for the XAU during these six months of trading. But note, in the middle of this cluster, the XAU pulled back to its BEV -20% line on November 4th, with a BEV of -19.52%.
Twenty-six trading sessions later, on December 11th, the XAU saw its next BEV Zero. So, in a little more than a month, the XAU went from its BEV -20% line, to a new all-time high.
I point this out, as at last week’s close, the XAU closed with a BEV of -34.54%, to then gap-up to this week’s close with a BEV of -21.65%. This was a huge advance, almost to where it was last November 4th. In BEV terms, the XAU closed the week next to its BEV -20% Line. No guarantees from me, but in the past year, the XAU has shown what it can do from its BEV -20% line – go to a new all-time high in only a month.
Looking at my table listing the BEV values for the major-market indexes I follow below, our bull-market advance experienced an excellent surge this week. Look at the many new all-time highs (0.00%) this week, that plus the NASDAQ Composite (#12) & 100 (#15) indexes are back in scoring position. The bulls should appreciate that!
The week closed with six of these indexes at a new all-time high, with the next ten indexes closing inside of scoring position. It’s been a while since we’ve seen a week like this, a really solid week for the bulls.
Look at the XAU at #20. Closing at the bottom of the table, is called closing as Tail-End Charlie. But this week, Tail-End Charlie advanced by eleven BEV Points. That is a huge advance. How much more time will pass before the XAU is once again making new BEV Zeros in this table? I don’t know. But if the XAU was making new all-time highs before the end of September, I wouldn’t be surprised.
In the performance table above, this week was also a strong week for gold and silver bullion, up nicely from last week’s close. Should this continue, it won’t be long before gold, silver and the XAU are once again at the top of this table.
Since 1929, there has been a strange relationship between US Currency in Circulation (Red Plot / CinC: paper dollars in circulation) and the earnings for the Dow Jones, Blue Plot in the chart below; where for about every $1 billion dollars of CinC inflation, the Dow Jones sees about $1 in earnings. We should expect the never-ending flows of inflation from the Federal Reserve, to flow into corporations’ earnings. But seeing it flow into the Dow Jones’ earnings at a rate of $1 billion CinC to $1 Dow Jones’ earnings, seems odd to me.
This relationship between Dow Jones’ earnings, and CinC monetary inflation isn’t bolted together, but it is there, especially for the fifty years from 1929 to 1979. Following 1979, their relationship changed, where CinC leads Dow Jones’ earnings, until earnings for the Dow Jones catches up to CinC, where four times (4 Red Stars), Dow Jones’ earnings soon collapsed, following its conjunction with CinC.
And now at this week’s close, what do we see below? The fifth conjunction in CinC & Dow Jones’ earnings since 1979.
What happens now? Will Dow Jones’ earnings continue surging, to levels far above CinC in the chart below, something it has failed to do since 1979? Or, will Dow Jones’ earnings once again collapse, as it has done four time before since 1979? What will it be? Because it will be one, or the other.
If I must give my personal opinion of what will come next for the Dow Jones’ earnings, the century of data seen below, strongly suggests it will soon collapse, for the fifth time since 1979. That seems more likely than seeing Dow Jones’ earnings surging above CinC.
How much Dow Jones’ earnings have collapsed following their post-1979 conjunctions with CinC, is best seen with a Bear’s Eye View (BEV) chart for the Dow Jones Earning above.
Keep in mind, the above BEV chart is for Dow-Jones’ earnings, * NOT * the Dow Jones itself. The 4 red stars above, mark those times the Dow Jones earnings conjoined CinC; with $1 Dow Jones Earnings = $1 billion in CinC. At each of the four conjunctions above, Dow Jones earnings collapsed by at least 50%. Is the fifth conjunction that happened this week, the pulling of the trigger to a massive collapse in the Dow Jones earnings, and so for stock market valuations too?
Historically speaking, a collapse in earnings for the Dow Jones, isn’t necessarily a bearish thing to happen for the Dow Jones. That sounds wrong, but it’s true! The same goes with rising earnings, which are not necessarily a bullish indicator for the Dow Jones.
In fact, from 1968 to 1984, chart below, timing profitable entry and exit points for the Dow Jones (Blue Plot below), using its earnings (Red Plot), proved to be disastrous.
In the upper chart, below, our current Dow Jones’ bull market began in August 1982, as earnings for the Dow Jones were collapsing by 90%. Making the first Red-Star conjunction seen in the charts above, a
* ONCE IN A LIFE’S TIME BUYING OPPERTUNITY. *
But not so much so for the other Red-Star conjunctions seen above.
Above, the Great Depression Crash began in September / October 1929, on rising earnings for the Dow Jones. The greatest year in Dow Jones history, where from July 1932 to July 1933, the Dow Jones advanced 163%, occurred as Dow Jones earnings went negative. As soon as the Dow Jones once again saw positive earnings, the greatest year in Dow Jones history was over.
What is going on here? If you actually read what the creator of the Dow Jones Average, Charles Dow said a long time ago, and what market commentators published in Barron’s said many decades ago about the Dow Jones; it was created to predict future economic activity. In other words, the Dow Jones was created to predict future trends in earnings. Using that as an insight into the charts posted above; the trends in the Dow Jones predict trends in corporate earnings, see if this data plotted above makes more sense.
And so it was, until CNBC began its quarterly clown show, focusing on corporate earnings, to predict future trends in market valuations.
So, if today everyone expects stock market valuations to trend with earnings, a collapse in Dow Jones’ earnings may be just what Mr Bear ordered as a trigger, for his next big-bear market. Regardless of what Dow Jones’ earnings are doing, or not doing, the stock market today is currently grotesquely overvalued, making Wall Street a very dangerous place to keep your money.
Gold, or Silver bullion would be a better place to keep your money in, so let’s look at some gold and silver charts below, beginning with a historical comparison between gold and the Dow Jones.
Gold (Red Plot) is currently in a 30% market correction, as seen below. Yet, gold still leads the Dow Jones by a massive margin, even as the Dow Jones continues advancing. An advance that has not seen a significant market pull back since March 2020. It seems to me an investment in gold or silver in August 2026, offers much less risk to capital, than an investment in the stock market.
Gold is also leading silver in the chart below, though that wasn’t always true. During the 1969 to 1980 precious metals bull market, silver outperformed gold by a good measure.
Since 1980, silver has sadly lagged advances in gold. There are some that believe silver will ultimately catch up to gold. These silver bulls expect silver’s gains to someday exceed golds by a good amount. I agree with that. Though so far in our current precious metals bull market, those who staked their investments in gold, have profited greatly by limiting their exposure to silver, as seen below.
That may continue to be the case in the years to come. And then, maybe the correct way of interpreting the data seen plotted below is, that silver is currently ridiculously undervalued to gold, making August 2026 a historic time to buy silver.
Next is my BEV chart for silver. So far in its current correction, silver saw a big decline in its valuation, something over 50% in its BEV chart below. But, and it’s a Very Big BUT, but 40% of that 50% correction, occurred in the first six days of silver’s correction. Whiskey – Tango – Foxtrot!!!
Look at that sheer vertical collapse in silver’s correction below. From a BEV Zero, to its BEV -40% line, in only SIX DAYS! Well, that is what happens when the COMEX silver pits allow goons to do what they do so well – dominate the silver market by selling unlimited digital silver into the market. Digital silver that will never become real silver that can satisfy actual market demand.
A day of reckoning is coming to the silver market. A day, possibly many days of advancing silver I want to profit from, that will likely result in silver catching up to the advances in gold, seen in the chart above.
Oh! Be still my beating heart!! Look at gold’s amazing breakout below, blasting out of the black circle I placed gold in. No doubt about it, tonight I’m going to celebrate this week’s performance for gold, the XAU and silver, with an extra generous glass of Wild Turkey 101, and a good cigar.
Thanks to my pal 3B, I can do that in style tonight. What a guy, thanks B. May you, and your nearest & dearest, be forever victorious on the pickleball court!
I can’t think of anything else to say about gold’s BEV chart above. Possibly speculate whether gold by next week’s close, will close closer to its BEV -20%, or -15% line. Looking at the table in the chart above, gold’s BEV -15% line is $4,658, about $310 from this week’s close. That would be nice, but I’m not going to jinx the market by making that a prediction. So, I’m moving on to gold’s step sum table below.
This week, gold’s 15-count closed each day at a +5. After waiting for months now, has gold now entering into a market period where daily advances will finally overwhelm daily declines? I hope so.
The price of gold acts like it’s enjoying those daily advances, advancing $295 from last Friday’s close. Thursday was the only day this week, where the price of gold went down, by $0.07 from Wednesday’s close. Is gold’s correction that began late last January, finally over? It’s looking more, and more that way.
The Dow Jones saw three new BEV Zeros this week, its 96th to 98th since the Dow Jones entered scoring position in November 2023. The Dow Jones closed the week with a 15-count of +5, something to be expected with all of the daily advances are seen above.
Also seen above is a stale +7, 15-count on July 6th. Since May 18th, when the Dow Jones’ 15-count went positive, and stayed there for the most part these past three months, the Dow Jones’ 15-count has seen a +7 eight times.
A 15-count of +7 is an overbought market, and markets don’t like being overbought, or so I thought until I saw what the Dow Jones has done since mid-May of this year. The Dow Jones, my proxy for the broad-stock market, has been running hard all this year, and shows no indication of it slowing down anytime soon.
That may be true, but I expect the smart money is still on gold, silver, and their miners as 2026 approaches 2027. The next few months should be very interesting.
God willing, I’ll be back next week with more charts, tables, and market commentary.
Mark J. Lundeen
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