This article is an edited ([ ]) and revised (…) version of an article by Don Swenson to ensure a faster & easier read. It may be re-posted as long as it includes a hyperlink back to this revised version to avoid copyright infringement.
Will the Dow "Melt-up" to 45,000 - 65,000 by Late 2017 & Throughout Most of 2018?
Those who think that a melt-up is coming first base this theory on past history with bubble markets. Most of our past bubbles (Japan, NASDAQ, 1929, 1637 tulip, etc.) suggest that a doubling or tripling from here is in the cards. This would mean a Dow of 45,000 or possibly as much as 65,000 prior to the great crash of all history. These thinkers believe that getting out of the stock market now would be foolish as the start of this melt-up is just beginning. They believe it will grow into a mania phase later in 2017 and most of 2018. Stay for the ride is the mindset!
Is a Crash Coming This Fall?
The other school of thought is that the mania and bubble situation has already arrived and we now must think in terms of getting out of all stocks and into safe-haven investments - now. This mindset is predominate at this moment in time, but the melt-up theory is growing with many as I write.
There are some $70 trillion dollars sitting on the side-lines which could jump into our stock markets at some point (say the mania thinkers). This would be the catalyst for this mania phase which many think is developing as I write. The big buyers in this mania phase would be our Central Banks (this is the assumption) as our Central Banks now trade all our markets.
- Japan already owns some 20% of their Nikkei 225 index and some 40% of all their own government bonds.
- China is heavily into their stock markets
- as are Switzerland and other Central Banks.
Many think the U.S. Fed will follow as the markets start a correction phase then move to mania. With some $70 trillion on the side-lines now, this theory seems to have some merit.
All this could happen this fall or it might be delayed until after a mania stock market phase initiated by our Central Bank trading desks (say 18 months down the road). With unlimited $$$$$$$$$$$$$$$$ to pump into our markets, it is possible that human nature will buy into a wealth effect as the markets MELT-UP to 45,000 Dow and then 65,000 Dow. With money being mere digits (imaginary) this outcome is certainly possible!
Conclusion
The future, however, is impossible to predict with any assurance. Will a melt-up develop or has the melt-up already happened? The future is unknown and I certainly don't know with any assurance. My sense is that we are NOW at a crucial fork in the road and either our Central Banks must commit fully to this melt-up mindset or it might not happen. Personally, I am betting on a fall 2017 crash. The 18 month melt-up mania phase is beyond my ken to discern. Watch the markets for signs! I will do likewise! Think for yourself! Enjoy the ride UP or DOWN! I will do likewise! I am: https://kingdomecon.wordpress.com.
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said, there are those who think that we will have a major ?melt-up' to 45,000 or 50,000 prior to a historical crash. Personally, I am uncertain which it will be and am waiting to discern what our Central Banks will do! Here's why.