The DOW hit its all time high late January of 2018 at 26.5600 or so. If we believe that the market has been on the run due mostly to cheap government money. And if we believe that each 1% of interest rate erode 10% of consumer house buying power, or long term borrowing, then the market should not make it to 25270 any time soon.
That is based on the fact raise interest rates twice within the last 6 months, one late December 2017 and March of 2018.
The if one consider the recent low of February 23900 as a lower range, then we can be within 2700 points. If that equal 6 sigma then our sigma is 450 points.
6/6/2018 update. The market jumped 346 points today to 25146, very close to the upper bound assumed above. DXD ended up at $32.07 a share. I think part of the last two days climb is attributed to APPL and the hype around technology stocks. (DOW 30).
6/7/2018 DOW is at 25241 that is couple of points from 25270? Nasdaq was down 54 and S&P is down a couple of points.
6/11/2018 at 2pm the dow is at 25373 and the nasdaq is 2787. So we are beyond the uppper limit I had set.
GE is leaving the DOW and being replaced by Walgreen. There is bunch of "reasons" given for such change but reality I think GE was just not looking good for the index.
Recently, all of the Sudden, our yard stick became the Russell 2000 and the NasDaq. The Russell 2000 is an index of small cap stocks. The NASDAQ-100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index.
The DOW is not weight averaged. It is the sum of stocks, 30 divided by a multiplier. So higher price stocks have larger impact on the price of the index.
I am not sure how DXD price will be impacted by the change. I am going to try to get rid of DXD before June 26th.
Of course I did with minimal gain. Then it went up to 34.70+. Dang :).
I did make some money on TZA though :).