State of US stock market in August

The DJIA reached an all-time high on July 20. The Dow Jones continued to be high but analysts are loath to put too much trust on the current market advances. There is a good reason for this. Trading volume is unsatisfactory and there is something off with the trading volumes in the market. It is to be noted that the trading volume continues to be the important indicator of any investor demand when it comes to shares that are traded in stock market. An increase in volume equals increase in demand whereas declining volumes correlates to decreasing demands. On the light of this fact, it can be safely surmised that there is no justification of the present relationship between market valuation for Dow Jones and the trading volume. It is now possible that one can see a new peak valuation for Dow Jones on not so original trading volumes. It is to be noted that record valuations for Dow Jones can be observed on the rising demand or rising volumes.

During the heydays of the high tech bubble, from the time period of January 2000, stock market valuations and trading volume are inverted. It is observed that rising market valuations happen on declining volumes and the declining market valuations happen on rising volume. This has occurred for the past 16 years, violating laws of demand and supply.

It is not hard to fathom the cause. The Federal Reserve, with complete tacit support of Federal Government, along with the financial media, has manipulated the stock market through the support of valuations ar the time of market inclines along with monetary inflation. Although the effect has been benign, it does not mean one should ignore it.  A little browsing through the economic history of the world shows that empires were smashed to smithereens by manipulating their currencies. This will be the same with the European Union and the United States. However, before it happens, there is a fair chance that the Dow Jones will be at its peak high in near future.

When it comes to the New York Stock Exchange or NYSE, the market advance is getting old. In contrast, the Dow Jones has exhibited a lot of volatility. If the central bankers have a free run, then the Dow Jones will be pushed above 19,000 and even a little further. It is to be noted that the September and the October months are frequently the beginning of market downfalls.

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