DJIA Up Almost 8,000 pts Since Donald Trump’s Election

DJIA Up Almost 8,000 pts Since Donald Trump’s Election

DJIA Up Almost 8,000 pts Since Donald Trump’s Election

$DIA, $SPY, $QQQ, $VXX

  • DJIA Up almost 8,000 points since Donald Trump’s Election!
  • US Energy Sector a Key Driver for the Economy

US stocks spiked Wednesday and the DJIA closed above 26,000 for the 1st time as investors’ expectations for higher earnings lifted stocks across all sector.

The DJIA market the 26,000 Milestone intra-day Tuesday, in its fastest 1,000-point run in history, before dropping back a bit, and investors bought the dip on Wednesday.

The S&P 500 posted a record closing high. More than 75% of the 36 S&P 500 companies that have reported so far have topped earnings estimates, according to Thomson Reuters I/B/E/S.

My thoughts, as follows:

In Y 2015, the economy expanded at a very strong 2.9%, then faded in Y 2016, with growth coming in at a weak 1.5%.

The Big Q: What was the Key reason for the contraction?

The Big A: The collapse of energy prices and the energy sector.

Last year conditions changed, and the energy sector is now leading the way again.

Industrial production rose in December, and on the year, but not because of manufacturing.

On the year, manufacturing was up a solid 2.4%.

The mining sector surged in December and was up double-digits on the year. The large rise was driven by a 40% rise in Crude Oil and Nat Gas drilling for the year.

With energy prices increasing expect that the energy industry will help lead the way this year.

US homebuilders are pleased with conditions lately and that really did not change despite a decline in the National Association of Home Builders’ Index in January. The level is very high and has rarely been seen except at the peak of both the dot.com and housing bubbles.

Now, in the US there are really good economic conditions for developers.

ADP’s Workforce Vitality Index was up again in Q-4 of Y 2017, that is no surprise.

This report is worth following because it is one of the more comprehensive reports on wage gains we have. It breaks down wage changes by region, industry, age of worker, tenure in job, company size, by full-time vs. part-time and whether workers switched jobs or held them.

Wage gains are accelerating, especially in the resource and mining and hospitality and leisure industries. Job switchers are doing better than job holders and that has led to a further rise in the turnover rate.

It is now over 50% in leisure and hospitality.

If firms want to hire stable workers, they should look to those over 55, not those under 35.

Wednesday’s reports really do not change much for anyone.

We are in earnings season, investors are going to love it, as it will take a lot of terrible reports to get the markets exuberent instincts under control.

And the data are not so strong as to cause any of the Fed members to rethink their views on rate hikes.

Sometime this month the Senate will confirm Jerome Powell as the next Fed Chairman, but that is a formality.

And expect the government to get funded in due course.

Wednesday, the major US stock market indexes finished at: DJIA +322.79 at 26115.65, NAS Comp +74.59 at 7298.27, S&P 500 +26.14 at 2802.56

Volume: Trade on the NYSE came in at: 913-M/shares exchanged

  • NAS Comp: +5.7% YTD
  • DJIA: +5.7% YTD
  • S&P 500: +4.8% YTD
  • Russell 2000: +3.3% YTD

The Overall outlook for the Key indexes is Bullish to Very Bullish cross the board.

HeffX-LTN Analysis for USO: Overall Short Intermediate Long
Bullish (0.29) Bullish (0.29) Bullish (0.42) Neutral (0.17)

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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