Fear of Missing Out (FOMO) on Big Gains Driving Market Due North

Fear of Missing Out (FOMO) on Big Gains Driving Market Due North

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

FLASH: S&P 500 and NAS Comp marked all-time closing highs

The S&P 500 index closed at a record high, surpassing the highs it set last September and recouping all the ground it lost in the Fed engineered attempt to push it into a Bear market late last year.

The NAS Caom also closed at record highs Tuesday.

The market has risen sharply since bottoming out on Christmas Eve, driven by greater confidence in the economy and reassurances that the Fed is unlikely to raise interest rates this year, and that there is no recession in sight.

The gains Tuesday came as big US companies began turning in solid results for Q-1.

The S&P 500 rose 25 points, or 0.9%, to 2,933.

The market outlook is not the same as it was last September.

Worries about a possible recession have faded, in large part because of a change in stance by the Fed. That has many investors predicting more gains for the market going forward, despite risks still hanging over stocks, such as the global trade disputes and slower growth for economies and corporate profits around the world.

Companies are now telling investors how much profit they made during Q-1 of Y 2019, and analysts have prepped for disappointment. Wall Street is forecasting a drop of more than 3% for S&P 500 companies, the 1st decliner in about 3 years.

That is a concern for investors because stock prices tend to track profits over the long term. But analysts expect growth to return and accelerate as the year progresses. After hitting bottom in Q-1, analysts expect S&P 500 profit growth to ramp back up to 8.5% in Q-4 thanks to stronger than expected revenues, the continuing effects of The Trump Tax Cut and the end of the trade dispute with China.

Plus, economic data has been improving around the world, which is raising optimism.

When the S&P 500 set its record last Fall, dueling import taxes by the United States and China threatened global growth, higher mortgage rates were hurting home sales and the initial October jobs report hinted at slower hiring.

Now, US-China trade tensions have lessened, even if underlying conflicts are not yet resolved. Mortgage rates have fallen, home sales have recovered and the labor market has been solid.

The economy still appears on course for slower economic growth this year than the roughly 3% pace achieved in Y 2018, with economists outside of The Trump Administration pegging the annual gain at closer to 2% and the Administration seeing 2.8 – 3.0%. And investors see a very much lower risk of recession in Y 2019.

So far, my work shows that many investors are still hesitant to come back into stocks. This is a Key reason the market may be primed for more gains.

Investors have pulled more money out of US stock funds in the last few months than they have put in, according to the Investment Company Institute. If those skeptical investors come back to stocks, it will mark more gains, as many investors are feeling better about the market’s health now most of all because the easier Fed has helped lessen the threat of recession.

So, 2900 on the S&P 500 now looks like 3000 near term.

Tuesday, the major US stock market indexes finished at: DJIA +145.34 at 26656.39, NAS Comp +105.56 at 8120.81, S&P 500 +25.71 at 2933.68

Volume: Trade on the NYSE came in at 824-M/shares exchanged

  • NAS Comp +22.4% YTD
  • Russell 2000 +17.5% YTD
  • S&P 500 +17.0% YTD
  • DJIA +14.3% YTD

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

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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