Tuesday, January 10, 2017

Dow 20000 No Go Again; Is The Trump Rally Over?

In 2016, having first crossed the 19,800 point on December 12 and closing above 19,900 the following day, one would have thought that crossing the 20,000 rubicon for the Dow Jones Industrial Average would have been a slam dunk before New Year.

It wasn't and it still isn't. Like the final five yards on a scoring football drive, the final 100-200 points on the widely-watched blue chip index are proving to be tough, resistant, and, at this point, possibly a field goal attempt would be in order. Or a punt.

Including the 12th of December, it's been 20 days since the "Dow 20,000" baseball caps began circulating, but nobody's been able to don one just yet. There has been more than a fair share of drama over the simply psychological level, especially this past Friday, when the average fell just 0.37 points short of making magic.

But twenty days of hanging just below the number is giving some investors cause to pause and consider that the eight-year bull market - and more specifically, the massive post-election Trump rally - is finally tiring and about to head back to the corral. And if that happens, the confidence so prevalent the past few months will have been for naught unless one had the foresight to sell into the rally at some point.

Stocks continue to be highly valued, some say overbought. The last meaningful decline was in January of last year when the Dow and other indices took a hit somewhere between 12 and 15%. Though that particular correction never materialized into a bear market, it was a confidence-shaker and those who suffered losses are wont to forget it.

Taking a stab in the dark, it would appear that speculators are more interested in NASDAQ stocks, which continue to tear up new highs, just as the Dow is stalling. Could the NAZ pull the Dow along with it, or does the Dow hold the losing hand with which it will eventually pull down the composite, S&P, transports, et. al.?

With the Dow ending today roughly 150 points from the requisite top, it's still out there for the taking, though there seems to be no catalyst for any kind of extended move, so, reiterating past posts, even if the Dow makes the mark, it's doubtful it would hold for long. A correction is in the cards and it's likely to be swift rather than a slow grind, so day traders must keep stop losses close to the vest and hang on with all their fright. Yes, that's no typo. Fear and greed rule the markets and the fear index is on the rise.

At the Close 1.10.16:
Dow: 19,855.53, -31.85 (-0.16%)
NASDAQ: 5,551.82, +20.00 (0.36%)
S&P 500: 2,268.90, 0.00 (0.00%)
NYSE Composite: 11,183.33, +13.54 (0.12%)

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