Modest gains drive US stock indexes to more record highs

Modest gains drive US stock indexes to more record highs

Modest gains drive US stock indexes to more record highs

U.S. stocks will keep rising in 2020 but at a much more modest pace than this year, with plenty to potentially slow the ascent, according to a Reuters poll of strategists.

The benchmark S&P 500 index will finish 2020 at 3,260, roughly 4% above its close on Monday of 3,133.64, based on the median forecast of 52 strategists polled by Reuters in the last two weeks.

So far this year, the S&P 500 is up about 25%.

“It’s going to be a good year, but not a great one,” said Sam Stovall, chief investment strategist at CFRA in New York. He sees the S&P 500 ending next year at around 3,380.

Most – 15 out of 21 respondents – said they expected the bull market would extend into 2020 and run for at least a year.

Following 2018’s sharp, tax-cut fueled gains, S&P 500 companies are expected to increase earnings overall by just 1.1% in 2019. Growth is forecast at 10% for 2020, according to IBES data from Refinitiv.

Still, a majority of respondents said there is more of a risk the market falls short of their S&P 500 index targets than surpasses them.

Among the biggest uncertainties for the market will be the drawn-out trade war between the United States and China, which stands to further hurt global growth, and the 2020 U.S. presidential election, strategists said.

Slower-than-expected global growth poses the biggest risk to the bull market, said Stovall.

Almost all respondents said the market would see further upside in the event of a partial trade deal, with some seeing the potential gains as significant.

The S&P 500 index is already trading above the poll’s end-2019 median target of 3,100, but if it finishes at that level, the end-2020 forecast would represent a 5.2% annual gain.

The poll also showed the Dow Jones industrial average finishing 2020 at 29,400, based on a median forecast of 27 strategists. That is up about 4.8% from Monday’s close of 28,066.47.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 27,377.32.

The projected upper bound is: 28,675.48.

The projected lower bound is: 27,693.20.

The projected closing price is: 28,184.34.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 95.6333. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 71.94. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 126.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 42.320 at 28,164.000. Volume was 24% below average (neutral) and Bollinger Bands were 23% narrower than normal.

Open     High      Low     Close     Volume___
28,156.47128,174.97128,075.23028,164.000 198,214,752
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 27,957.22 27,164.45 26,466.90
Volatility: 7 12 14
Volume: 258,908,096 254,753,504 272,236,832

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 6.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into .DJI (mildly bullish). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 19 periods. Our momentum oscillator is currently indicating that .DJI is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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