Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016

The stock market closed a strong month on a sloppy note as the S&P 500 (-0.3%) spent the day in a retreat from its opening high. The benchmark index narrowed its November gain to 3.4% while the Nasdaq Composite (-1.1%) underperformed, but still added 2.6% for the month. The Dow Jones Industrial Average (UNCH) outperformed today, staying true to its November (+5.4%) form.

Equity indices entered the day with an assortment of positive headlines to rally behind, but what we saw instead, was a continuation of the selling that showed up during the last hour of yesterday's session.

The positive headlines from this morning included:

• An official OPEC agreement to lower oil production to 32.5 million barrels per day
• Better than expected economic data, which supports the narrative that a December rate hike makes sense and is not being rushed
• News that Steve Mnuchin, who is known to be business-friendly, was nominated as Secretary of the Treasury
• Report that the European Central Bank is likely to extend its quantitative easing program past March

In the end, only the OPEC-related news stuck, preventing the S&P 500 from ending well below its flat line. The energy sector (+4.8%) extended its November gain to 7.9% while crude oil soared 9.3% to $49.44/bbl, ending the month higher by 5.5%. The big rally in crude began in overnight action, before the results of the OPEC meeting were known. A short squeeze likely played a part in the rally, especially when taking into account yesterday's bearish headline flow. On a side note, today's OPEC deal will put monthly supply back at levels from the start of the year, when hopes for a supply cut were already driving daily price action.

Energy was one of just four pockets of relative strength on the sector leaderboard. Financials (+1.3%) and materials (+1.1%) also posted solid gains while industrials (-0.1%) ended just ahead of the S&P 500 thanks to strength in transport stocks after rail carrier CSX (CSX 35.83, +1.03) raised its guidance.

Ahead of the Employment Report on Friday, the ADP National Employment Report showed an increase of 216,000 in November (Briefing.com consensus 160,000) while the October reading was revised down to 119,000 from 147,000.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 417.41 points a 2.22% gain	11/30/16
Nasdaq	up 195.06 points a 3.74% gain	11/29/16
S&P 500	up 46.02 points a 2.15% gain	11/30/16

Related Link: http://www.stockmarket-direction.com/

Market Direction Week of November 28, 2016©

Market Direction: BULLISH alert issued 11/10/2016

Last Week Review: Stocks continued their post-election rally as major indexes reached record highs Friday and have risen in each of the past three weeks. Small-cap stocks have increased more than large-cap stocks since the election because many investors believe that they will be the larger beneficiaries of accelerating growth and tax reform. However, the success, growth and resiliency of the U.S. don’t change with each election, and neither should your investment strategy.

How the market finished last week, the S&P 500 up 1.4%, the Nasdaq up 1.5%, and the Dow up 1.5%.

This Week: OPEC and non-farm payrolls dominate the coming week. The OPEC meeting is set to decide the course of crude oil prices, since a failure to agree a deal could see the gains made recently unwound. Also on the list for the week are manufacturing PMIs from around the globe, plus US GDP figures.

The corporate front is relatively quiet, although full-year numbers from Aberdeen Asset Management and Sage, plus interims from Berkeley Group, should provide plenty of interest.

Economic Calendar: GDP (11/29), Consumer Confidence (11/29), PMI Manufacturing Index (12/1), Employment Report (12/2) 

Some of the major earnings announcements on deck: SWHC, DG, FIVE, KR, ULTA.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, write us. Share with a friend. Cha-ching.

Related Link: http://www.stockmarket-direction.com/

Market Direction Weekly Closing Numbers©

Market Direction: BULLISH alert issued 11/10/2016

The economy

The stock market extended its winning streak to three consecutive weeks with the S&P 500 rising 1.4% to mark a fresh all-time high. Not to be outdone, The Dow Jones Industrial Average (+1.5%), Nasdaq (+1.5%), and Russell 2000 (+2.3%) also registered weekly gains and marked new record highs during the holiday-shortened week.

Treasury yield have been on a big post-election run, but selling in the bond market eased up a little during the past week. The 10-yr yield edged up to 2.36% from last Friday's 2.34%. Interestingly, the modest uptick in the benchmark yield did not stop rate-sensitive sectors from receiving some inflows. Post-election laggards like telecom services (+4.6%) and utilities (+1.9%) had a better showing than the broader market during the past week.

Things were a bit more mixed on the cyclical side where only three sectors outperformed the broader market. The energy space (+2.2%) rallied as OPEC members continued playing ‘Deal or no Deal' while the consumer discretionary sector (+2.3%) benefitted from expectations for a better than feared holiday shopping season. Industrials (+2.3%) also outperformed, largely thanks to shares of Deere (DE), which surged in reaction to above-consensus results and an upbeat outlook.

It is worth noting that market participants received the policy minutes from the November FOMC meeting during the past week, but the release did not invite a particularly strong reaction. The minutes acknowledged that the Fed is ‘relatively close' to raising rates, which was universally received as a sign of a rate hike coming in December. The market had been anticipating this type of a statement, evidenced by the limited movement in the fed funds futures market, which projects a 93.5% implied likelihood of a rate hike in three weeks.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, write us. Share with a friend.

By the numbers the weekly closing index numbers compared to the initial BULLISH recommendation closing numbers: 

Stock Market Closing Numbers
compared to Recommendation Numbers
	11/10/2016	11/25/2016	Difference
Dow Jones	18,807.88	19,152.14	344.26
Nasdaq	5,208.80	5,398.92	190.12
S&P 500	2,167.48	2,213.35	45.87

Register at: http://www.stockmarket-direction.com/

Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016

On Monday, the Dow, the S&P 500, the Nasdaq, and the Russell 2000 each hit an all-time high on the same day.

The last time that happened?

December 31, 1999.

Stock market historians will remember that this final trading day of the millennium came just a few months before the beginning of the tech bubble bursting and the beginning of a US recession.

The resulting crash would see the Nasdaq lose about 80% of its value peak-to-trough and even become the market famously linked with the idea that investors had been taken in by “irrational exuberance.”

Naturally, many investors are likely to be spooked by any bit of “since 1999” data given what followed that event. So is now a time to worry about stocks?

Well, it depends what you mean by worry.

The Buffett view

 

Writing in Fortune on Tuesday, Carol Loomis reprised a stock market prediction from Warren Buffett made in 1999 that stocks would return about 6% a year over the next 17 years. The S&P 500’s annualized return was about 5.9% over that period. Pretty good, but about half what many investors back then expected.

But even this relatively disappointing period for stocks — in which investors endured two recessions and brutal bear markets — was still a broad success for investors that enjoyed the full benefit of those 17 years.

Buffett declined to make a prediction about the next 17 years, saying only that a low-cost S&P 500 fund will beat government bonds, “do-nothing” investors in aggregate will beat high-charging professionals, and high-charging professionals will still get rich underperforming indexes.

In other words, count on the US economy improving and stocks benefitting. Invest accordingly. And cheaply.

“Let me be clear on one point: I can’t predict the short-term movements of the stock market,” Buffett wrote in 2008.

“I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”

Buffett wrote these words in October 2008 hoping to bolster the confidence of a scarred American public that had just seen Lehman Brothers collapse and financial markets tank. Now, in November 2016, markets are at record highs despite a surprise political outcome and a deeply divided public.

Eight years ago Buffett counseled that waiting for things to get better would lead one to miss the cycle’s turn.

Alternatively, fearing record highs and waiting for things to get worse will leave investors similarly wrong-footed.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 275.88 points a 1.47% gain	11/23/16
Nasdaq	up 183.46 points a 3.52% gain	11/22/16
S&P 500	up 37.32 points a 1.72% gain	11/22/16

Related Link: http://www.stockmarket-direction.com/

Market Direction Week of November 21, 2016©

Market Direction: BULLISH alert issued 11/10/2016 

Last Week Review: The Dow Jones Industrial Average was marginally higher on the week, but ended a seven-trading-day post-election rally on Wednesday (Nov. 16), during which, the index gained more than 5.7% and reached a new record high. The S&P 500 was up more than the Dow on the week, as the industrial and financial services sectors (where the Dow has relatively more exposure) lagged the index after their strong gains witnessed immediately after the election. While some investors may choose to speculate how new policies will affect the economic and investment landscape under president-elect Trump, we believe the underlying fundamentals will not be solely dependent upon them.

How the market finished last week, the S&P 500 up 0.8%, the Nasdaq up 1.6%, and the Dow up 0.1%.

This Week: After the excitement of recent weeks, we enter a period of relative quiet on both the corporate and economic data fronts. It seems as if fundamentals have taken a back seat to concerns and hopes (depending on your view) about what the new administration might do. The prevailing theme of the week has been US dollar strength, putting markets like the euro, yen, gold and oil on the back foot. While December now looks nailed on for a rate increase, we could see some of the dollar bullishness unwind, if only because of profit taking, and as a result some currencies that have been hit hard could see a breathing space. Strength in the likes of the euro and the yen could result in difficult times for stock markets in these countries.

Back in the US, we have seen strong performances by stock markets, with tech names in particular recovering thanks to a lack of further news on what president-elect Trump’s plans regarding tax. While stock markets here look overextended, we are heading rapidly towards the Thanksgiving holiday, which is a traditionally strong period. Thus, those hoping for another sell-off could be disappointed, at least until the beginning of December. 

Outside of what Mr Trump does, the other key event is the UK’s Autumn Statement. Will Mr Hammond, the chancellor, go for infrastructure spending or will he look to steer a calm course through troubled waters? 

Economic Calendar: Durable Goods Orders (11/23), PMI Manufacturing Index Flash (11/23), Consumer Sentiment (11/23), International Trade in Goods (11/25) 

Some of the major earnings announcements on deck: CPRT, PANW, SINA, DLTR, DE.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, write us. Share with a friend. Cha-ching.

Related Link: http://www.stockmarket-direction.com/

Market Direction Weekly Closing Numbers©

Market Direction: BULLISH alert issued 11/10/2016

The economy

The stock market enjoyed its second consecutive week of gains that lifted the S&P 500 into the neighborhood of its record high. The benchmark index gained 0.8% for the week while the Nasdaq Composite (+1.6%) outperformed after lagging one week ago. Conversely, the Dow Jones Industrial Average (+0.1%) underperformed after showing relative strength during the election week.

The overall post-election narrative did not change much during the past week. Expectations for inflationary fiscal policy kept the bond market under pressure, driving the benchmark 10-yr yield up to a one-year high of 2.34% from last Friday's 2.14%. Continued steepening in the yield curve helped the financial sector extend its November gain to 12.3% while the U.S. Dollar Index (101.34) climbed to its best level since early 2003.

Market participants received a batch of quarterly earnings from the retail sector during the past week. Apparel retailers had a mixed showing while electronics retailer Best Buy (BBY) surpassed estimates and issued upbeat guidance for the holiday quarter. Home Depot (HD) also released upbeat earnings and guidance while Wal-Mart (WMT) struggled after its earnings beat was overshadowed by declining profitability. More than 95.0% of S&P 500 components have now reported their third-quarter results, showing an earnings growth rate of 3.0%.

Last week featured Janet Yellen's testimony before the Joint Economic Committee of Congress, but the appearance was free of any big surprises. Chair Yellen acknowledged that recent economic data has lived up to the Federal Reserve's expectations, and noted that a rate hike will be appropriate "relatively soon." Ms. Yellen's appearance had little impact on the fed funds futures market, which continues pointing to a near certainty of a rate hike in December. The implied probability of a December hike rose to 95.4% from last Friday's 81.1%.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, write us. Share with a friend.

By the numbers the weekly closing index numbers compared to the initial BULLISH recommendation closing numbers: 

Stock Market Closing Numbers
compared to Recommendation Numbers
	11/10/2016	11/18/2016	Difference
Dow Jones	18,807.88	18,867.93	60.05
Nasdaq	5,208.80	5,321.51	112.71
S&P 500	2,167.48	2,181.90	14.42

Register at: http://www.stockmarket-direction.com/

Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016

The Dow Jones Industrial Average is hitting all-time highs and closing in on 19,000 for the first time. If history is any guide, that psychological triple-zero barrier suggests more gains are to come. 

Based on market data from the past 30 years, when the Dow has crossed levels like 2,000, 3,000, 4,000 ... all the way to 18,000, we can expect traders to push it up even higher, according to data from Kensho. The Dow doesn't just go up, but it outperforms the S&P 500 along the way.

The trend is true not just for a quick one-week return, but also one-month and one-quarter returns. Here's a full summary of the data, going back to January 1987, when the Dow closed above 2,000 for the first time. That's 17 different instances, all the way through the first close above 18,000 in December 2014.

Thousands boost
The Dows tends to outperform the S&P 500 right after the Dow closes above a multiple of 1,000.
Dow performance			1 week	1 month	1 quarter
Average return			0.07%	0.48%	3.85%
Median return			0.01%	0.24%	3.69%
Excess return			0.16%	0.68%	0.88%
Source: FactSet, Kensho

On a one-month basis, the Dow has outperformed the S&P 500 13 of the past 17 past times.

Those -000 multiples get extra attention in the media (as this article demonstrates), encouraging more people to jump on board. Such mental and optical effects also relate to technical trading, where investors focus on chart movements and specific levels of "support" and "resistance." Breaking through any -000 number is a real event that people can flock toward to push assets higher.

A market move through a -000 level also suggests a shift on the chart: Levels that had been considered resistance — psychological barriers against going higher — turn into levels of support — barriers against dropping lower. Consider the scenario we are in: A Dow below 19,000 is still pushing on that ceiling, but once it breaks above 19,000, it just has blue sky and room to run. 

Take a look at one example from mid 2007, when the Dow closed above 13,000 for the first time. You'll see specifically how the Dow then took off relative to the S&P 500, outperforming by almost 4 percent in just three months.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 117.38 points a 0.62% gain	11/15/16
Nasdaq	up 93.88 points a 1.80% gain	11/10/16
S&P 500	up 14.82 points a 0.68% gain	11/10/16

Related Link: http://www.stockmarket-direction.com/