Time for Traders to Get Aggressive

Advertisement

On Tuesday, the Dow Jones Industrial Average joined the S&P 500 in a surge to new record highs. What’s more, the Nasdaq broke back in the black for the year and the Russell 2000 led with a 1.3% advance. This indicates investors are flocking to more speculative investments, which is considered a good sign for the overall rally.

The second-quarter earnings season unofficially kicked off with a better-than-expected report from Alcoa Inc (NYSE:AA). The stock jumped 5.4%.

The Dow Jones Transportation Average put in a strong showing, up 2.2%. The rally was helped by United Continental Holdings Inc (NYSE:UAL), up 8.8%, and American Airlines Group Inc (NASDAQ:AAL), up 11.2%. American Airlines announced its income will get a boost from new co-branded credit cards.

Energy was the best-performing sector, up 2.5%, as oil soared 4.6% to $46.80 a barrel. Exxon Mobil Corporation (NYSE:XOM) gained 1.1% and CONSOL Energy Inc. (NYSE:CNX) jumped 3.7%.

The move to riskier assets hit safe havens. Gold dropped 1.5% to $1,334.10 an ounce. And the yield on the benchmark 10-year Treasury note had its biggest two-day loss since December, closing at 1.53%.

At Tuesday’s close, the Dow Jones Industrial Average rose 121 points to 18,348, the S&P 500 gained 15 points at 2,152, the Nasdaq was up 34 points at 5,023, and the Russell 2000 advanced 16 points to 1,206.

The NYSE Composite’s primary exchange traded 980 million shares with total volume of 4.1 billion. The Nasdaq crossed 1.8 billion shares. On the Big Board, advancers outpaced decliners by 2.4-to-1, and on the Nasdaq, advancers led by 2.6-to-1. Block trades on the NYSE increased to 6,117 from 5,022 on Monday.

IWM Chart
Click to Enlarge

Chart Key

Three successive gaps up broke the iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) through resistance at $119. Higher-than-average volume accompanied the gaps, and MACD is currently on a buy signal. The all-time high at $129.10, made in June 2015, is 7.8% away, but momentum is strong. So, it seems likely IWM’s move to new highs is about to occur.

Conclusion

With the Federal Reserve in a quandary as to what to do now that the jobs number were strong, and with the Brexit threatening corporate earnings, especially for companies with large trade business, investors ran from debt to equities. A Vanguard economist was quoted in The Wall Street Journal saying strong earnings would be “the icing on the cake” for the Fed to hike interest rates in December.

But it’s a long time between Q2 earnings and December, and anything can happen.

It’s time for traders to get aggressive. Buy stocks but keep something in reserve for a much-needed consolidation.

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/2016/07/daily-market-outlook-time-traders-get-aggressive/.

©2024 InvestorPlace Media, LLC