All Three Major Us Indices Have Broken Record Highs
by Palisade Global Investments Ltd.
The last time the S&P 500, Dow Jones Industrial Average (DJIA), and NASDAQ closed simultaneously at record highs, each index tumbled for the next 2.5 years: -40.33%, 25.04%, and -75.04%, respectively. Now after the 2008-2009 Financial Crisis, each indexed has recovered and then some, and poised once again to correct in a big way. In fact, if the market were to correct in a similar way as we saw in 2002 and 2009, we can expect the S&P 500, DJIA, and NASDAQ to drop -64.65%, -60.72%, -75.80%, respectively.
During the 2000-2002 market drop, there was a negative correlation between the S&P 500, DJIA, and NASDAQ with the HUI, meaning when the indices dropped, the HUI or gold stocks increased. As seen in the above chart, there has been an extreme divergence between the performance of US Indices and gold stocks. While the HUI has recently closed the gap in a big way, it is apparent there is still a long ways to go.