Stocks charge toward new highs after Bank of Japan's "QE"

Jeff Macke

Stocks around the world are screaming higher this morning after the Bank of Japan announced plans to expand its version of Quantitative Easing. The Nikkei 225 (^N225) shot up nearly 5% to levels not seen since 2007. Never a nation to be left out of a party, U.S. investors have driven futures to within shouting distance of record highs ahead of the open.

At this year's Halloween galas every bull is a sexy, slutty bull and bears are either going naked or not at all.

Even in the year of "V" bottoms, what we've seen in October has been wild. Remember, just two weeks ago the S&P 500 (^GSPC) was within a few ticks of an official correction. The Dow (^DJI) was down over 6% just in October and now only needs to close at 17,042 to post its sixth positive October in the last ten years.

Dana Lyons notes that the Dow Jones Industrial Average has gone from 6% down to positive territory in the same month just 15 times since 1900. It's about to do it a 16th time!
Dana Lyons notes that the Dow Jones Industrial Average has gone from 6% down to positive territory in the same month just 15 times since 1900. It's about to do it a 16th time!

I mention the Dow because it's the index of choice for historical rankings. According to some excellent work by Yahoo Finance contributor Dana Lyons this will be only the 16th time since 1900 that the Dow will close a month in the green after being down 6% or more. 15 times in 114 years!

I started this month by noting the statistical absurdity of tracking stats like "how does the Dow do in October of the midterm election years during the second term of a presidency." That's because the sample size is too small. The difference here is that Lyons is talking about every month for more than a century. There have been 1,380 trading months (not counting periods the market was closed for wars and such) since 1900. What we're watching has happened just 16 times.

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There may be folks initiating short positions today but the ones who came into this month bearish, or worse the people who shorted the tape two weeks ago, are Zombie fund managers. The path of maximum pain for the balance of the year is higher because there simply aren't enough people involved in this rally.

What happens then? If God knows he's not talking. Today is a Pagan holiday. Just grab a candy bar, sit back and enjoy what you're seeing; it could be a while before you get another chance.

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