The Nasdaq Has This Bull Market By the Horns

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Stocks rose Tuesday, bolstered by a positive report from an unexpected source — housing starts jumped 15.7% in July from June. The consumer price index (CPI) was in line with expectations, rising 0.1%, indicating that inflation is under control, and that also encouraged buying.

Home Depot (HD) reported better-than-expected earnings. This, along with a surge in housing stocks, sent iShares US Home Construction (ITB) up 2.4%. Lowe’s (LOW) jumped 2.1% in anticipation of its quarterly earnings report today.

At Tuesday’s close, the Dow Jones Industrial Average rose 81 points to 16,920, the S&P 500 gained 10 points at 1,982, the Nasdaq jumped 19 points to another new high at 4,526, and the Russell 2000 gained 6 points at 1,162. The NYSE’s primary market traded 555 million shares, the third slowest day of the year, with total volume of 2.6 billion shares. The Nasdaq crossed 1.5 billion shares. On the Big Board, advancers outpaced decliners by 1.75-to-1, and on the Nasdaq, advancers were ahead by 1.2-to-1.

Nasdaq Chart
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Chart Key

The Nasdaq’s resurgence has driven it to a new 14-year high. And by piercing the support line at 4,486, which forms a triple-top, accompanied by a new MACD buy signal, the index has taken the lead over the more conservative indices.

As noted by MarketWatch’s Michael Ashbaugh, “The breakout confirms its primary uptrend.”

Initial support now rests at the triple-top break at 4,486, and then the 50-day moving average at 4,403. The new near-term target is 4,642.

NYSE Chart
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The NYSE Composite is in a powerful bull channel. Tuesday’s break above its 50-day moving average at 10,904 is a strong positive, as is Friday’s MACD buy. But compared to the Nasdaq, it and the other senior indices, like the Dow and even the S&P 500, are lagging the explosion of buying in mid caps and big technology stocks like Apple (AAPL), which also broke to a new high.

Conclusion

As our readers know, I have been bullish regarding the major trend since January with a year-end target of 2,200-plus for the S&P 500 and 17,779 for the Dow. But the “Wharton Wizard,” Dr. Jeremy Siegel, did me one better on Tuesday. He forecast the S&P 500 would move over 2,300 before year end and the Dow would go to 18,000-plus and possibly hit 19,000.

Siegel went on to say that the market is currently selling at 16.5 times 2014 earnings and that to get to Dow 18,000, it would only need to sell at 17.5 times earnings. He also pointed out that earnings are expected to increase by another 6% to 10% in 2015. “We live in a world of uncertainty and bull markets actually climb the wall of worry,” Siegel said.

The secular bull market plods on, and with it, “all surprises are to the upside.”

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2014/08/daily-stock-market-news-nasdaq-takes-lead/.

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