Tuesday ended with all four major indices closing at all-time highs as the anticipation of a new expansion cycle hit Wall Street. The Dow Jones Industrial Average closed above 19,000 for the first time. That led The Wall Street Journal to comment that at its current pace, the Dow would post a stronger annual performance than the S&P 500 for the first time since 2011.
The manufacturing sector has responded well to the election of Donald Trump, and banks are also the focus of investors’ anticipation of strong results. As for the banks: Buyers appear to be anticipating a rate hike before the end of this year. And that hike, along with loosened bank regulation, equal a more stable growth picture for the sector. According to the CME Group, there is a 94% probability of a rate increase in December.
However, crude oil (WTI) fell 0.4% for the day following reports that Iran, Iraq and Indonesia are not ready to go along with an agreement to reduce production. WTI closed at $48.07 per barrel, down 20 cents. And another commodity has been the focus of buying due to a growing Chinese demand. Copper (December) was up 1% on the Comex yesterday, which led to a jump in the stocks of copper miners like Freeport-McMoRan Inc (NYSE:FCX), up 4.2% yesterday to a new annual high.
At the close the Dow Jones Industrial Average gained 67 points to 19,024, the S&P 500 rose 5 at 2,203, the Nasdaq added 17 points, closing at 5,386 and the Russell 2000 closed at 1,334 for a gain of 12 points. The NYSE’s primary exchange traded 917 million shares with total volume of 3.9 billion shares, and the Nasdaq crossed 1.9 billion shares. On the Big Board, advancers outpaced decliners by 2.4-to-1, and on the Nasdaq, advancers led by 1.6-to-1. Blocks on the NYSE increased to 5,438, up from 4,816 on Monday.
All major indices broke to new all-time closing highs yesterday. However, most impressive of all was the chart of the Dow Jones Industrial Average. It was the first to hit a new all-time high on Nov. 10. Its weekly chart shows a clear and powerful bullish “W” breakout with a minimum target of 20,000. That may seem overly optimistic, but it is just slightly over 5% from yesterday’s close. Also, note the above-average volume, an unusual occurrence in a shortened holiday week.
Conclusion: Breaking above 19,000 is the break of an inflection point, accompanied by relatively high volume. I like to see quality lead the way, since it shows commitment on the part of major investors. And, after trading highs are achieved, it often leads to a run of group rotation buying.
Advice: I wouldn’t chase the big-caps now, but go for the next tier of mid-caps, like our “Trade Of The Day,” since there are more opportunities in those sectors for large percentage moves.
Again, my favorite sectors: Retailers, Mining, Construction, Financial, Food & Restaurants and Transportation, especially Truckers on a pullback.
May each of you have a wonderful Thanksgiving. God Bless America.
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.
