The market rumbles onward – bears cease to exist, and on and on we go. The adjectives for this move are becoming harder to find without just repeating oneself. So let’s just go with “boo yah” and press one of Jim Cramer’s buttons. The only down day of the week for the S&P 500 was a fractional one. And we now have a year where the S&P 500 is up 14 of the 17 days! (more boo yah) The government shutdown that no one was really worried about ended Monday – and the market rallied on that, despite not pulling back on the actual shutdown. That’s called a bull market.
Kent Engelke, chief economic strategist at Capitol Securities Management Inc., stressed that the market is extremely overbought and is on pace to match the longest streak of ending in overbought territory, as measured by the Relative Strength Index, since 1996.
“While we remain bullish for the year as a whole, this is beginning to look a little too frothy for our liking,” said James Barty, a Bank of America Merrill Lynch strategist, in a note on Thursday.
For historical perspective, John Higgins, chief markets economist at Capital Economics, said Shiller’s cyclically adjusted price/earnings ratio for the S&P 500, a measure of stock valuations, has soared to 34, slightly higher than where it was right before the “Great Crash” in the 1920s. ”Nonetheless, the CAPE remains well below its all-time high of just above 44, which it reached in December 1999, before the dot-com bubble burst,” he said in a note.
Economic news was muted and mostly ignored.
The European Central Bank left interest rates unchanged and repeated that it expects to keep interest rates at present levels for an “extended period” and “well past” the end of its asset purchase program, which is due to expire in September.
Trump claimed he wanted a strong dollar – but his Treasury Sect says weaker dollar is good for exports and we have a broken dollar. Note the knee jerk move up post election day 2016 for a few months as everyone thought Trump was going to make the dollar go up!
“The Treasury secretary’s comments today match with what we have been discussing since the U.S. election. This administration sees the fastest way for the U.S. to become more competitive on the manufacturing stage is through a weaker U.S. dollar,” said Douglas Borthwick, head of foreign exchange for Chapdelaine FX.
Things you see when the stock market is in euphoria stages: Ameritrade is now offering trading 24 hours a day!
Online broker TD Ameritrade is set to offer its retail clients the ability to trade 24 hours a day, five days a week — a move which is likely to be followed by rivals. The broker said it wants to close the gap between regular hours and extended hours for qualified investors, starting from 8 p.m. Eastern on Sunday to 8 p.m. Friday. The move also is an attempt to grow its business in Asia.
Here is the 5 day weekly “intraday” chart of the S&P 500 …not via Jill Mislinski.
The week ahead…
More big name companies – Marketwatch had an interesting stat: these 5 companies set to report next week have a market cap of $3.6B; which is on par with Germany’s entire GDP!
Also a Federal Reserve meeting and Yellen’s swan song; good job Janet; you helped create a new bubble. MORE EASY MONEY– THANK YOU.
Short term: More boo yah – hard to offer much more than that in hard hitting analysis at this stage of things.
The Russell 2000 is rallying and all but nothing like the major indexes. (who benefit more from the weak dollar)
The NYSE McClellan Oscillator remains a dud which is very head scratching considering the movement in the indexes.
Long term: NO MORE WORDS. OK 1 WORD – PARABOLIC!
Charts of interest / Big Movers:
Monday, insurance company Validus Holding (VR) soared 44% after giant insurer American International Group (AIG) announced it is buying it for about $6 billion. Have we come full circle or what – bailed out company in market crash of a decade ago is out there buying other companies. Conveniently this opens up the stock symbol VR for some great virtual reality IPO in the next few years.
Also Monday Celgene agreed to buy Juno Therapeutics (JUNO) a biotech company developing cancer treatments, for $9 billion, or $87 a share in cash. I think we are starting to see where all this tax savings to “create jobs” is going.
Tuesday, Netflix (NFLX) jumped 10% to a record high after it beat forecasts for earnings and new net subscribers. With the gain, the company topped a $100 billion market-capitalization valuation for the first time ever. The rest of the week was not too shabby either.
Wednesday, Puma Biotechnology (PBYI) slumped 29% after its price target was lowered, notably by J.P. Morgan Chase, as the company said a European Medicines Agency committee completed a negative vote for its breast cancer therapy neratinib.
Wynn Resorts (WYNN) fell 10.1% Friday, after the Wall Street Journal said the casino firm’s owner, billionaire mogul Steve Wynn, has a long history of sexual misconduct. The stock was so overextended, that this move only moved it back down to the 10 day moving average!
Intel (INTC) jumped nearly 10.6% Friday after the chip maker’s earnings topped Wall Street expectations late Thursday. Its percentage gain was the best since Sept. 21, 2000.
Have a great week and we’ll see you back here Sunday!