Friday, February 16, 2018

Rally On! Dow Regains More Than Half of February Losses

With the Dow Industrials posting the fifth straight positive session, he blue chip average has regained more than half of the losses incurred during the first six trading sessions of February.

Standing just above 25,200, the Dow has been an impressive performer following the instant, interest rate sensitive melt-down earlier in the month.

The Dow is up more than 1000 points this week, with Friday's session important as stock options reach expiration.

Last week's scare has morphed into this week's buying opportunity, as investors have scrambled back into stocks after equity funds experienced record outflows just a week prior.

Those who sold at the interim bottom may be experiencing some seller's remorse presently, though the stock market has still has some distance to travel back to all-time highs.

Has anything changed besides sentiment, which is now returning to bullishness after a spat of fear entered the minds of speculators?

Certainly, rising interest rates are a concern, with the 10-year-note reaching four-year highs. The value of the US dollar, as reflected in currency FX pairs and the Dollar Index, is another new feature of the cycle-weary market. The dollar has weakened considerably over the past 12 months and does not appear to have four support.

Higher interest rates on treasuries usually causes strengthening in the dollar, but not this time, befuddling the normally-smug bond and currency analysts. If bond yields continue to rise and the dollar does not recover substantially, then all manner of economic theory can be tossed out the proverbial window.

Whatever the case may be - not discounting the effect of accelerating volatility during the recent downturn - there remains considerable uncertainty which must somehow be resolved, either by a permanent change in market direction from bull to bear, or a continuation of the long rally off the GFC lows of 2009.

Dow Jones Industrial Average February Scorecard:

Date Close Gain/Loss Cum. G/L
2/1/18 26,186.71 +37.32 +37.32
2/2/18 25,520.96 -665.75 -628.43
2/5/18 24,345.75 -1,175.21 -1,803.64
2/6/18 24,912.77 +567.02 -1,236.62
2/7/18 24,893.35 -19.42 -1,256.04
2/8/18 23,860.46 -1,032.89 -2288.93
2/9/18 24,190.90 +330.44 -1958.49
2/12/18 24,601.27 +410.37 -1548.12
2/13/18 24,640.45 +39.18 -1508.94
2/14/18 24,893.49 +253.04 -1255.90
2/15/18 25,200.37 +306.88 -949.02

At the Close, Thursday, February 15, 2018:
Dow Jones Industrial Average: 25,200.37, +306.88 (+1.23%)
NASDAQ: 7,256.43, +112.81 (+1.58%)
S&P 500: 2,731.20, +32.57 (+1.21%)
NYSE Composite: 12,856.87, +110.15 (+0.86%)
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