Stocks are very strong and the fact that they continue to rally and hit new highs, illustrates that the bulls are clearly in control. The Dow jumped above 19,000 and the S&P 500 jumped above 2,200 last week and continued hitting new highs. In the short term, the market is overbought by any normal measure and we wouldn’t be surprised to see it drift lower in the near future. Keep in mind, that we are approaching the end of the month, quarter and year – which is a seasonally strong period for the market. Barring a massive sell off, we are operating with the notion that weakness should be bought. Looking forward, the next big event the market will be looking at is the Jobs report on Friday and then the Fed meeting in December.
A Closer Look at What Happened Last Week…
The Dow Jones Industrial Average, Nasdaq composite, S&P 500 all hit record highs on Monday. Monday was the first day of the shortened holiday week. The benchmark S&P 500 hit a fresh record high after energy prices rallied 2% on renewed optimism that OPEC would cut production. Apple ($AAPL) and IBM ($IBM) were two big leaders in the Dow and made up most of the Dow’s gain. Elsewhere, Tyson Foods ($TSN) plunged 14% after reporting earnings.
Stocks rallied on Tuesday helping the Dow trade above 19,000 and the S&P 500 top 2,200 for the first time ever. These are “round” numbers and important psychological levels to watch going forward. Existing home sales jumped to a 9.5 year high. Steel stocks continued to surge and act very well.
Stocks were mixed on Wednesday as investors digested the latest round of economic data, including minutes from the Federal Reserve’s November meeting. The Minutes showed the Fed still wants to raise rates in December. Separately, Durable Goods rose by +4.8%, beating estimates for +1.5%.
Thur & Fri Action:
U.S. stocks were closed on Thursday in observance of Thanksgiving. The market rallied on Friday, helping the major averages continue to hit fresh record highs. The market closed early (1pm est) on Black Friday.
Market Outlook: Tape Is Strong
The market remains very strong now that the election uncertainty is behind us. That tells us the bulls are still in control and the market will likely continue to rally for now. As always, keep your losses small and never argue with the tape.