Dow Jones Industrial Average Charging Into 2017

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On Wednesday, stocks fell on low volume and apparent disinterest. However, the selling was broad-based enough to drive the Dow Jones Industrial Average to its biggest loss since the election, falling 0.6% from its second-highest close on Tuesday. That close came within 0.25% of the much-heralded goal of the 20,000 line on the index.

Selling also resulted in a decline of 0.8% for the S&P 500, but the brunt of the decline was taken by the small-cap stocks that earlier this year led the market higher. The Russell 2000, the index that tracks small-caps, fell 1.1%, and the Nasdaq, with many mid-caps, fell 0.9%.

Crude oil (WTI) rose 0.3% to $54.06 per barrel, the result of an anticipated cut in production by major oil producers that is to begin in January.

Better-than-expected consumer confidence data drove the dollar higher. The euro fell 0.6% vs. the buck to $1.039 and the British pound sterling fell 0.3% to $1.224.

At the close the Dow Jones Industrial Average fell 111 points to close at 19,844, the S&P 500 lost 19 points at 2,250, the Nasdaq lost 49, closing at 5,439, and the Russell 2000 fell to 1,361, down 17 points. The NYSE’s primary exchange traded 623 million shares with total volume of 2.4 billion shares, and the Nasdaq crossed 1.3 billion shares. On the Big Board and the Nasdaq, decliners outpaced advancers by 2.7-to-1.

Russ 2000 (IWM) on first support
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Dow Jones Industrial Average Charting Into 2017

After piercing the resistance (now support) line at 134.50 and making a new closing high at 138.31 in late-November, it appeared that the small-caps would lead the Dow to an easy thrust through the Dow’s 20,000 line. But achieving a new high with the small-caps was an enormous achievement, especially when considering that the final run to a new highs began early in November at below 115 on the IWM, a 17% jump in just one month.

Conclusion: Unless we have a high-volume rally today, the big round number of 20,000 on the Dow will not be pierced this year. However, the technical base of the stock market is still strong, and yesterday’s low-volume selling can be chalked up to institutional portfolio balancing. This selling is common at the end of a strong year when money managers must sell equities in order to balance out their requirement to own no more than 60% in equities.

Thus, this week, we observed a rush to sell stocks and buy bonds, which could provide an excellent opportunity to grab some of our favorites at post-holiday-level prices.

To my loyal readers: Have a Prosperous and Happy New Year! My column will return on Jan. 3, 2017.

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/2016/12/dow-jones-industrial-average-charge/.

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