Mr. Shelburne was my favorite teacher of all time. He taught me Latin II (yes, they still teach that in public school) and then 10th-grade English. He also happened to be one of the humblest, kindest, and funniest men I've ever met – a gem of a man.
Like lots of high school English students, we studied Shakespeare's masterpiece, "The Tragedy of Julius Caesar." And because Mr. Shelburne read and taught the play with us, it's still my favorite Shakespeare play.
I mention this because we're fast coming up on the "Ides of March." Of course, "Beware the Ides of March" was the prophetic warning given by the oracle in the play, the very day Caesar was stabbed to death by disgruntled senators.
The play is probably the only reason any of us remember March 15, but I'm looking at some charts and numbers that suggest investors and traders are going to remember this month for some altogether different, much happier reasons from now on…
Turns Out Bears Should Beware the Ides of March
To understand where we're headed, we have to look at the last two weeks. This time is remarkable because we've seen 12 days of consecutive new all-time highs for the Dow Jones Industrial Average.
This hasn't happened since 1987; we've tied the record.
Now, I know what you're thinking: "Ah, D.R., wasn't the 'Black Monday' crash back in '87? When the market dropped, like, 22% in a single day?"
We'll you're absolutely right, it's true. But Black Monday happened a full nine months after the consecutive high run that started the year.
What's more, by the time the markets crashed on Oct. 19, 1987, the markets were ridiculously, cartoonishly, almost unfathomably stretched to the upside – up a whopping 43% for the year. And as my Stealth Profits Trader readers know, the market works like a rubber band; an extreme stretch precedes an extreme snapback.
Besides, as a modest consolation, the Dow actually finished up 2% for the year in 1987.
We talked two weeks ago about the fact that markets rarely crash from all-time highs. Some more technical formation is usually required involving pullbacks, rallies to lower highs and, importantly, a reduction in market participation or "breadth." So take the bearish howls you hear from certain analysts with a grain of salt.
Here's what I think is really going to happen…
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.