Thursday marked the fifth consecutive advance for the stock market’s S&P 500. Investors’ shift from bonds to stocks is due to a change in economic outlook, because of President-elect Donald Trump’s vow to cut taxes for corporations, deregulate most industries and provide additional fiscal stimulus.
The Dow Jones Industrial Average gained 0.3%, the S&P 500 rose 0.2%, and the Nasdaq jumped 0.4%. The small-cap Russell 2000 leaped to a 1.6% gain. All four indices closed at record highs.
The market has tended to be flat in the morning, picking up steam in the afternoon sessions. Yesterday it appeared be stalled due to a statement from the ECB that its asset purchase program will be extended through December. It was explained later that the extension would be at a reduced volume, and U.S. markets rallied. The euro fell 1.4% vs. the buck at $1.06.
At the close eight of the S&P 500’s eleven sectors ended in the black. Energy (+0.5%) and materials (+0.7%) led. Crude oil jumped 2.0% to $50.85.bbl. Long-term government bonds fell, and yields rose on the 10-year Treasury note to 2.39% from 2.35% on Wednesday.
At the close on Thursday the Dow Jones Industrial Average closed at 19,615 for a gain of 65 points, the S&P 500 gained 5 at 2,246, the Nasdaq rose 24 points to 5,417 and the Russell 2000 closed at 1,386, a gain of 22 points. The NYSE’s primary exchange traded 992 million shares with total volume of 4.2 billion shares, and the Nasdaq crossed 2.2 billion shares. On the Big Board advancers outpaced decliners by 1.6-to-1; on the Nasdaq, advancers led by 2.1-to-1. Blocks on the NYSE fell to 5,393 from 5,814 on Wednesday.
A reverse Head-&-Shoulders bottom formation has been confirmed on the weekly chart of the S&P 500. Although not as common in the middle of an uptrend, this bull market is in its seventh year and thus a longer-term consolidation in this type of formation could be expected. The target of 2,438 is about 8.5% higher than yesterday’s close and is derived by subtracting the low (1812) from the neckline at 2125, which gives us 313, and adding that to 2125 = 2438.
Conclusion: As noted in Jeff Saut’s yesterday’s Morning Tack, despite all of the evidence that a renewed bull market has emerged “the majority still do not believe it.” He does, however, concede that the public is beginning to get the message: “Just look at the new highs (Wednesday) at 409. This is a bullish sign.”
Jeff concludes by saying “Buy the dips.” I’ve been saying that for the last two months, but many are still skeptical. And dips are getting very scarce. Now, buy the strength.
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.
