by Sam Collins | November 15, 2013 2:57 am
All major stock indices broke to new highs Thursday after the nominee for the position of Fed chair indicated that there would be little change in policies under her leadership. Ben Bernanke will step aside in January, and there appears to be little opposition to the appointment of Dr. Janet Yellen.
Stocks advanced despite a surprising disappointment in earnings from Cisco (CSCO). The stock fell 11% and dragged down the tech sector, which was the only market sector in the red in the S&P 500. Twitter (TWTR) rose 5%, its largest gain since the initial public offering a week ago.
Initial jobless claims increased to 339,000, up from an original reading of 336,000 the week before and above expectations of 332,000.
At the close, the Dow Jones Industrial Average was up 55 points to 15,876, the S&P 500 gained 9 points at 1,791, and the Nasdaq rose 7 points to 3,973. The NYSE traded 3.1 billion shares and the Nasdaq crossed 1.9 billion. Advancers led decliners by 1.9-to-1 on the Big Board, but decliners were ahead on the Nasdaq by a slight margin.
The price action of the Dow industrials since Nov. 6 has been positive but sluggish. However, Thursday’s new high is a powerful statement by the bulls.
Support now rests at the breakout line at 15,700, then the 20-day moving average at 15,619, and finally, the 50-day moving average at 15,391.
After meandering within a tight trading range for two weeks, the S&P 500 made its direction known with a convincing break from its first support line at 1,775. MACD flashed a buy signal. Additionally, buy signals were triggered on almost all of the other internal indicators: Momentum is positive, the stochastic issued a buy, and RSI is not overbought.
Conclusion: This week’s breakouts by virtually every widely followed index should be enough to convince the average investor of the power of the bull. The market now appears to have cleared enough barriers for us to expect that the Santa Claus rally has begun early this year and will continue into mid-December, followed by a pause during the holidays, and perhaps a strong push into the new year.
On reflection, I stated the following on Jan. 24 of this year: “The target for the S&P 500 was stated on Jan. 18 to be 1,589 or higher, and now the target for the Dow industrials is determined to be 14,764 or higher — that’s 6.3% above Wednesday’s close for the S&P 500 and 7.2% for the Dow.
“The train is picking up steam, and if you are an investor who is not yet on board, you had better make plans to join us on the next stop, i.e., pullback. This train is headed north.”
Many thought that I was too optimistic, and not a single email or response estimated that stock gains would actually be better than that early prediction. Fear restrained many investors from achieving the best returns stocks have offered in a decade.
Now is the time to put fear aside and participate in what is probably the end-game with the greatest profits still ahead.
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.
Source URL: https://investorplace.com/2013/11/daily-stock-market-news-santa-claus-coming-wall-street-early/
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