DJIA 40,000 Just a Few Years Away

DJIA 40,000 Just a Few Years Away

$DIA, $SPY, $QQQ, $RUTX, $VXX

S&P 500 and NAS Comp closed at record highs ahead of earnings season

Monday’s advance is attributed to these factors:

  1. The positive price action buoying sentiment
  2. Expectations that the upcoming earnings season will include reassuring guidance
  3. News the Us will remove China from its currency manipulator list, thereby improving trade relations and economic growth prospects, and
  4. No negative news to dampen the sentiment

Investment guru Jeremy Siegel predicts that DJIA 40,000 is within reach sooner than many think.

The professor of finance at the University of Pennsylvania’s Wharton School of Business spoke just a few days before the DJIA last Friday crossed the 29,000 mark for the 1st time.

Professor Siegel is forecasting that the DJIa may hit 40,000 in the next 4-5 years, unless something derails the market’s Bull run. “One could say we are 4 or 5 years away from Dow 40,000,” he speculated recently.

Professor Siegel, who forecast that the DJIa would see 20,000 at the end of Y 2015, recently said that market fundamentals are sufficient to support the recent run-up in US equity benchmarks but worried that euphoria, or a melt up, could take stocks to unsustainable peaks.

I think this market is fully valued and not undervalued, but I don’t think it’s overvalued,” he said.

Actually, one of the dangers is that people could be throwing risk to the wind and this thing could be a runaway. We sometimes call that a melt-up and produces prices too high and then if there’s a shock, you come down to Earth and that could impact sentiment,” he told Barron’s.

As for his longer-term view, Professor Siegel said he is looking at a more modest gain for stocks compared against last year’s powerful annual rally. “I’m looking for a zero to 10% increase in prices this year.”

Meanwhile, according to Byron Wien’s annual list of surprises Us stocks will extend their record-setting rally in Y 2020 as subdued economic growth prompts the Fed to cut interest rates.

The S&P 500 will climb above 3,500 at some point this year, Mr. Wien, vice chairman of Blackstone Group Inc.’s private wealth solutions business, wrote in a statement along with Chief Investment Strategist Joe Zidle.

Economic growth will trail forecasts and the Fed will lower its benchmark rate to 1%, they predict.

Monday, the major US stock market indexes finished at: DJIA +83.28 at 28906.96, NAS Comp +95.07 at 9273.95, S&P 500 +22.78 at 3288.13

Volume: Trade on the NYSE came in at 834-M/shares exchanged

  • NAS Comp +3.4% YTD
  • S&P 500 +1.8% YTD
  • DJIA +1.3% YTD
  • Russell 2000 +0.1% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish to Very Bullish in here.

Looking ahead, investors will receive the Consumer Price Index for December and the NFIB Small Business Optimism Index for December Tuesday.

Have a terrific week.

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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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