On Thursday, the post-election rally appeared to have stalled as volume contracted and breadth favored the sellers. Almost all markets were impacted: Bonds, currencies and commodities had a lack of follow-through.
However, despite this week’s lethargy, the Dow Jones Industrial Average had surged 8.6% since Election Day, but since then the advance has made little ground. But, despite the recent slowdown, December is up 4.2%, the best advance for December since 2010 when it gained 5.2%.
On Thursday, the DJIA lost 0.1%, the S&P 500 lost 0.2% and the Nasdaq, the former leader, fell 0.4%. Unless buyers emerge next week, the Dow will miss piercing the 20,000 line. However, the last week of the year has been a break-even, with three of the last six years’ “last-week” up and three down.
However, many investors are positive regarding the outlook for 2017 due to lower corporate taxes and less regulation, promised by the new administration.
At the close, the Dow Jones Industrial Average was off 23 points, closing at 19,919, the S&P 500 fell 4 points to 2,261, the Nasdaq closed at 5,447, down 24, and the Russell 2000 tumbled 13 points to close at 1,363. The NYSE’s primary exchange traded 724 million shares with total volume of 2.9 billion shares, and the Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by 1.4-to-1, and decliners on the Nasdaq were ahead by 1.9-to-1. Blocks on the NYSE were slightly higher at 5,484 vs. 5,416 on Wednesday.
As pointed out by Michael Ashbaugh, despite a low VIX reading, which often occurs at market tops, “VIX does not signal when a market top is in, just that the sentiment backdrop is consistent with a potential top.” Nevertheless, the overall trend of the major indices is still consistently bullish, and the low activity in the week before a major holiday holds little significance.
Conclusion: Despite what appears to be apathy on the part of buyers just before the holidays, the charts that I’ve shown our readers are replete with bullish flags. These flags indicate a rally is due either next week or at the beginning of the New Year.
And speaking of “The Holidays,” I wish each of our readers a Texas “Y’all have a Merry Christmas and/or Happy Hanukkah.”
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.
