Dow Jones Industrial Average Still Going Up — Maybe Way Up

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On Wednesday, stocks opened lower in light trading, but in the afternoon, strong block-buying entered the market, and by the close the Dow Jones Industrial Average and the S&P 500 held at a new high. Thus, a slow opening turned into the biggest rally since the presidential election.

The lower opening that extended through the morning was a result of a comment by President-elect Donald Trump to Time Magazine that he wants lower drug prices. That comment sent drug prices south and the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) down 2.9%. However by the close, a rally by the technology sector, up 1.3%, pulled other groups along with it. By the close the Dow industrials gained 1.6%, and the S&P 500 gained 1.3% in one of the most energetic reversals of the year.

Crude oil prices fell 2.3% to $49.77 per barrel, but energy shares rose 0.2% on the S&P 500.

At the close the Dow Jones Industrial Average gained 298 points at 19,550, the S&P 500 rose 29 points to 2,241, the Nasdaq jumped 61 points to close at 5,394, and the Russell 2000 closed at 1,365, up 12. The NYSE’s primary exchange traded over 1 billion shares with total volume of 4.5 billion shares. The Nasdaq crossed 2.1 billion shares. On the Big Board, advancers outpaced decliners by 3.2-to-1, and on the Nasdaq advancers led by 1.8-to-1. Blocks on the NYSE rose to 5,814 from 3,548 on Tuesday.

DJIA breaks from cup & handle
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Russell 2000

 

Isn’t “retrospect” wonderful? We can now see that for six months, the DJIA has been forming a classic, shallow, Cup-&-Handle formation. It is one of the strongest bull market formations, but because of the shallow nature of this one, it escaped most technicians. Note the last three days of supportive high volume.

DJIA weak AM strong PM
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This three-minute chart of yesterday’s trading shows very sluggish trading until noon, when a blast of volume hit the market, driving the Dow to a new high at 2 p.m. EST. Then a bit of profit-taking occurred until a half hour before the close, which received a huge blast of block trades in the last minutes of the session.

Conclusion: Yesterday’s breakout on very high volume with an increase in blocks is confirmation that the market is headed higher, and perhaps even much higher. Clearly Wall Street likes what it perceives to hear from the president-elect. The honeymoon is on and we should enjoy it. Aside from the occasional technical reversal, we should buy into dips and hold our profitable positions. The bull is definitely back.

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-going-up/.

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