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CI Market Dashboard: Bears Go Into Hibernation Following Presidential Election

Weekly Market Summary

It was a roller coaster ride for the U.S. stock market this week as investors digested the notion of Donald Trump being elected the 45th President of the United States.

After notching its seventh straight losing session last Friday, the Dow Jones Industrial Average (DJIA) blue-chip index rallied and has now posted five consecutive winning sessions and recorded a record closing high on Friday at 18,847.66. For the week the index was up 5.4%. The index also broke out of the range in which it had been trading since early September and moved north of its 50-day moving average (18,234.5). We look to the 18,600 area for initial downside support, as this area had served as resistance in July and August. Below that is the 50-day moving average.

The S&P 500 Index (SPX) ended the week 3.8% higher at 2,164.45. This index also moved above its 50-day moving average this week. We wonder if there will be some upside resistance around the 2,175 level, as this had been a tripping point in mid- and late-September. To the downside, the 50-day moving average (2,145.88) isn’t an enthusiastic support level. Below that is round-number support at 2,100, followed by the 200-day moving average, which did offer support last week.

According to the Select Sector SPDRs website, eight of the 11 S&P Sector SPDRs ended the week with gains. Utilities (XLU) were the weakest performers, losing 4% as many analysts believe a Trump presidency will bring about expansionary policies that will boost interest rates and inflation. This same sentiment pushed financial serves (XLFS) and financials (XLF) up 11.28% and 11.19%, respectively, as financial firms tend to earn more in higher interest rate environments. Technology (XLK) added 1.19% for the week.

The broad market Wilshire 5000 (W5000) tacked on 4.35% for the week and closed at 22,533.48. The index reclaimed the ground above its 50-day moving average (22,307.61), although we are not sure how strong of a support level it will be. Below that is round-number support at 22,250 and 22,000. Then there is the 200-day moving average, currently at 21,612.85, which provided support last week.

The tech-laden Nasdaq Composite (COMP) marked its best week since July 2015, adding 3.8% to 5,237.11. It appears that the 50-day moving average may be a point of upside resistance. The index ran into it on multiple occasions this week, moving above it on an intraday basis on Thursday but failing to close above it. To the downside, meaningful support appears to be just below the 5,050 mark, which offered support last week. Below that is key psychological support at 5,000.

The Russell 2000 (RUT) index of small stocks rocketed 10.22% higher this week to close at 1,282.38, only 1.04% away from its all-time record high close set in June of last year. The index broke through resistance around 1,260, which had held the index back in September. We will have to wait to see if that area turns into downside support. Below that is the 50-day moving average at 1,225.62.

The CBOE Volatility Index (VIX) dropped over 37% this week to close at 14.17.

Computerized Investing Market Dashboard Indicators

This week, four of the Market Dashboard indicators triggered new signals: three switched to bullish from bearish and one switched to neutral from bearish. In addition, one indicator generated a confirming bullish signal.

To see the current signals of all the dashboard indicators, visit the CI Market Dashboard.

The Market Dashboard is one of the many benefits of Computerized Investing, a service from AAII that harnesses the power of technology to help individual investors become more effective managers of their own portfolios. To learn more about Computerized Investing, visit http://www.aaii.com/computerized-investing/about

 

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