Milestone: DJIA 20,000 in Sight

Milestone: DJIA 20,000 in Sight

Milestone: DJIA 20,000 in Sight

$DIA, $SPY, $QQQ, $VXX

The 20,000 mark on the DJIA has transfixed the financial media since the index crossed 19,000 on 22 November, riding a wave of optimism about President Elect Donald Trump’s plans to boost the US economy.

For sure, 20,000 is a number that is psychologically significant for investors, but some say it is no guarantee that the Milestone mark will become support for the next leg of this Bull market.

Recalling some other times in stock market history when the DJIS crossed Key milestones, as follows:

  1. DJIA hit 100 in August 1922, it did not pierce that level permanently for 19 years.
  2. DJIA tests 1,000 in December 1976; it took 6 years before investors saw that number again.
  3. DJIA tapped 10,000 in December 1999, not to be seen again for 11 years.
  4. DJIA finished at 19,883.06 Monday, + 14% YTD.

Some analysts believe stocks are getting too expensive compared with the estimated profitability of US companies that are facing higher interest rates and a stronger USD. A more valuable Buck makes overseas earnings look weaker and makes American goods more expensive to other countries.

Several real GDP growth forecasts for Q-4 are below 2% at an annual rate and the impact of the surge in mortgage rates and the crippling effect of the surging USD risk making Q-1 look just as stagnant as it was in Q-1 of this year.

The Fed last week raised its target interest rate by 0.25%, mirroring a similar hike in December 2015 that was the 1st hike in 9 years. The stock market corrected more than 10% in the following 2 months. Real Q-1 GDP product grew a meager 1.6% from the prior year.

The S&P 500 is currently priced for Y 2017 earnings of 142/share, compared with the median Wall Street estimate of 127.

Monday, the US major stock market indexes finished at: DJIA +39.65 at 19883.06, NAS Comp +20.28 at 5457.44, S&P 500 +4.46 at 2262.53

Volume: Trade on the NYSE came in heavy at 947.8-M/shares

  • Russell 2000 +20.8% YTD
  • DJIA +14.1% YTD
  • S&P 500 +10.7% YTD
  • NAS Comp +9.0% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.35) Bullish (0.44) Bullish (0.35)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.30) Bullish (0.31) Neutral (0.23) Bullish (0.35)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.39) Very Bullish (0.56) Bullish (0.25) Bullish (0.36)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Very Bearish (-0.50) Bearish (-0.45) Bearish (-0.35) Very Bearish (-0.71)

Stay tuned

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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