Nasdaq Hits New High — Is It Buying Season?

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On Wednesday, stocks rose on a broad rally following the Federal Reserve’s decision to not immediately raise rates.

But Chair Janet Yellen did say, in her news conference, that she expects a rate hike by December of a quarter percentage point. She said that 10 of the 17 voting members anticipate such a move before the end of the year.

And so the policy of easing goes on and the market responded: The Dow industrials rose 0.9%, the S&P 500 gained 1.1%, and the Nasdaq set a new closing high, up 1%.

The dollar fell 0.7% vs. a basket of 16 currencies.

Bank shares rose 2.9% due to the expectation of a rate hike this year and also the impact of a 2.9% jump in WTI crude oil’s price. Previous to the Fed’s announcement, the Department of Energy reported that crude oil stockpiles fell more than expected, thus the jump in the price of November crude oil, up $1.29 at $45.34 per barrel.

All eleven sectors of the S&P 500 gained, with energy and utilities both up 2.1%.

At the close on Wednesday the Dow Jones Industrial Average rose 164 points at 18,294, the S&P 500 gained 23 at 2,163, the Nasdaq jumped 54 points to a new closing high at 5,295 and the Russell 2000 gained 17 points at 1,245. The NYSE’s primary exchange traded 895 million shares with total volume of 3.6 billion shares. The Nasdaq crossed 2 billion shares. On the Big Board, advancers outpaced decliners by 6.3-to-1, and on the Nasdaq, advancers led by 2.7-to-1. Blocks on the NYSE increased to 5,081 from 4,774 on Tuesday.

Nasdaq new hi breaks Inflection Pt
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Nasdaq Hits New High -- Is It Buying Season?

Technically yesterday’s new high, which pierced the inflection point at about 5,260, confirms that the Nasdaq is in the lead again. This is further supported by the new MACD long-term buy signal and last Friday’s selling climax. Support is first at the 5,250-5,260 level and then the 50-day moving average at 5,186.

Conclusion: One sparrow does not make spring, and a breakout from one index may not result in new highs from other indices. But just as the sparrow is a harbinger of spring, Nasdaq’s breakout may be telling us to be long, especially in stocks like retail and biotechnology, that took a beating earlier.

We are finally approaching the historically best time of the year for stocks. October and post-Halloween have marked the end of the “Sell In May, etc.” strategy. And the last quarter of an election year has usually been a winner. Mark Hulbert’s study of Q4 performance led him to conclude, “The average Dow gain in the fourth quarter is a gain of 2.7% versus a 1.6% average for the other three quarters.”

A break from the narrow trading ranges of the last nine months, pushed by the Fed, could even lead to a continuation of strength based on higher earnings and an expansion of price-to-earnings multiples.

Thinking too far ahead? Maybe not.

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/2016/09/nasdaq-high-buying/.

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