Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016

The stock market closes at record highs... 

The CBOE Volatility index VIX, +1.80% briefly dropped to its lowest reading ever Wednesday following the conclusion of the Federal Reserve's July policy meeting. The VIX dropped to as low as 8.84, its lowest reading since CBOE started publishing real-time data in the early 1990s, according to FactSet data. The decline for VIX accelerated after an updated policy statement from the Federal Reserve, released Wednesday afternoon, indicated that it would start to unwind its $4.5 trillion asset portfolio "relatively soon" and also signaled that it was focused on stubbornly low inflation. At last check, the VIX was down 1.2% at 9.32. Previously, the VIX had hit a low of 9.04 on Tuesday, and is down nearly 34% year to date.

U.S. stock-market benchmarks on Wednesday finished modestly higher, with all three gauges recording all-time highs, supported by better-than-expected corporate results, and as the Federal Reserve offered an update to its monetary-policy outlook.

The Dow Jones Industrial Average DJIA, +0.45%  advanced 97.58 points, or 0.5%, to close at a record of 21,711.01. Boeing Co. BA, -0.15%  shares surged nearly 10% to its own all-time high, logging its best daily climb on a percentage basis since Oct. 28, 2008, according to WSJ Market Data Group.

The S&P 500 index SPX, +0.03%  eked out a meager 0.70 point rise to end at 2,477.83, with telecoms climbing 3% on the back of stronger-than-expected earnings from AT&T.

The Nasdaq Composite Index COMP, +0.16% added 10.57 points, or 0.2%, to close at a record at 6,422.75.

“The market is right to be driven by earnings and so far we’ve had enough upside surprises. Because it has been the most hated bull market, there is still room to grow,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital.

The Fed’s statement, meanwhile, wasn’t substantially different from its previous remark and recent testimony on Capitol Hill from Janet Yellen, but the central bank did touch on subdued inflation, giving Wall Street participants the impression that the central bank would take extra care in normalizing monetary policy. That could mean a more moderated pace of rate hikes as the Fed also intends on unwinding its $4.5 trillion crisis-era balance sheet. The Fed kept rates unchanged on Wednesday.

Read: Fed to wind down bondholdings ‘relatively soon’

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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 2,934.82 points a 15.60% gain	7/26/17
Nasdaq	up 1,223.49 points a 23.49% gain	7/26/17
S&P 500	up 314.21 points a 14.50% gain	7/26/17

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