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.

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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

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