DJIA Marks 26,000, Trump Rally Makes History

DJIA Marks 26,000, Trump Rally Makes History

DJIA Marks 26,000, Trump Rally Makes History

$DIA, $SPY, $QQQ, $VXX

Wall Street’s 3 major market indexes rose sharply Tuesday, with the DJIA hitting the 26,000 mark for the 1st time, as Q-4 earnings season opened in earnest.

The DJIA broke above 26,000, the Key resistance, for the 1st time early in the session, paused and finished flat on the day.

  • The DJIA -10.33 pots, or 0.04%, to 25,792.86
  • The S&P 500 -9.82 pts, or 0.35%, to 2,776.42, and
  • The NAS Comp -37.38 pts, or 0.51, to 7,223.69

Volume: Trade on all US exchanges came in at: 8.30-B/shares, compared to the 6.48-B/share average over the last 20 trading days.

Breadth: Advancing issues outnumbered decliners on the NYSE by 2,037 to 687, on the NAS, 1,958 issues rose and 673 fell.

Anticipation of strong quarterly earnings, supported by steep cut in corporate taxes, and solid global economic growth have bolstered Wall Street’s optimism in the start to 2018.

The US stocks are coming off a strong Quarter, and the Trump tax reform measures are continuing to provide a boost, with investors keen to hear more about what impact this will have on future earnings.

The Trump Rally in the  market is “hot” by every standard notably the Sentiment, Trend and Momentum indicators.

Anyone worrying about a meltdown/crash has to know that there is an very strong trend in corporate earnings. And as we all know EPS (earnings per share) is Key

Thanks to the Trump tax cut passed into law in December, analysts have been raising their estimates at a rate not seen in at least 6 years.

Forecasts for Y 2018 profit from companies in the S&P 500 Index increased 3.5% over the past 3 weeks to $151/share, the fastest pace over comparable periods of data that go back to Y 2012.

Analysts, including me, are moving to lift estimates as December’s tax overhaul lowers the corporate tax rate to 21% from 35%. The forecasters have not trimmed estimates for Y 2019 they have increased, increased them this round, upping to $166.6/share from $160.9/share in December 2017.

Notably, the bigger-than-expected cut in taxes may increase investor optimism that drives the S&P 500 to 3,000, but it makes the high level of growth hard to keep going. Because, as companies raise wages for workers or pass on the benefit to consumers, profit margins may suffer.

Nevertheless, in this earning scenario we are likely to see the S&P 500 at 3,257 in Y 2018, archive it.

Nine of the 11 major S&P sectors were higher, led by a 1.44% rise in the real estate index and 0.92% gains in the technology index.

Bitcoin fell 18% to a 4-week trough close to $11,000, after reports that a ban on trading of cryptocurrencies in SKorea was still an option. Shares of cryptocurrency-related companies were all down.

Overall, the US major stock indexes remain Very Bullish

  • NAS Comp: +3.6% YTD
  • S&P 500: +2.8% YTD
  • Dow Jones Industrial Average: +2.6% YTD
  • Russell 2000: +1.6% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Very Bullish (0.69) Very Bullish (0.67) Very Bullish (0.73) Very Bullish (0.67)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Very Bullish (0.69) Very Bullish (0.71) Very Bullish (0.77) Very Bullish (0.58)
HeffX-LTN Analysis for QQQ Overall Short Intermediate Long
Bullish (0.46) Bullish (0.31) Very Bullish (0.73) Bullish (0.33)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Very Bearish (-0.52) Very Bearish (-0.55) Very Bearish (-0.69) Bearish (-0.33)

 

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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