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CI Market Dashboard: Bears Retreat as Dow 20,000 Finally Becomes a Reality

Weekly Market Summary

The Dow Jones Industrial Average (DJIA) ended its flirtation with the 20,000 mark this week, topping the level for the first time. Although the blue-chip index fell on Friday, the Dow closed the week above 20,000 for the first time, adding 1.3% to 20,093.78. It is perhaps too early to tell whether the 20,000 will offer psychological support moving forward. Below that, the 19,700 level may offer support, followed by the 50-day moving average, which is currently at 19,628.21.

The S&P 500 Index (SPX) climbed 1% this week to close at 2,294.69. The index broke out of its weeks-long trading range we discussed a week ago and in the process moved above the resistance that had developed around the 2,280 level. We will have to wait to see if the 2,280 level turns into support moving forward. For now, we look to the 2,250 level for support as well as the 50-day moving average at 2,245.45.

This week it was an even split between winners and losers with the 10 S&P Sector SPDRs, with five each. Materials (XLB) posted the biggest gain at 3.4% after President Trump moved to cut regulation and promoted infrastructure projects such as the Keystone XL and Dakota Access pipelines. Real Estate (XLRE) lagged the other sector this week, shedding 0.9%. The Technology (XLK) sector was up 1.9% for the week

The broad market Wilshire 5000 (W5000) climbed 1.1% this week to 24,009.09, marking its highest weekly close ever. The index also broke out of a trading range this week that was bounded on the upper end around 23,800. We will wait to see if that turns into support moving forward. The 23,500 level may offer support moving forward, as well as the 50-day moving average at 23,488.51.

The tech-heavy Nasdaq Composite (COMP) rose 1.9% this week, closing Friday at a new all-time high of 5,660.78. After breaking through resistance around 5,575, we will wait to see if that turns into near-term support. Otherwise, round-number support at 5,500 and the 50-day moving average at 5,540.17 may offer downside support.

The Russell 2000 (RUT) index of smaller stocks gained 1.4% this week to close at 1,370.70. The index continues to trade in the 1,350 to 1,400 range. After testing the lower bound this week, as well as the 50-day moving average, the index bounced off strongly Tuesday. This is an encouraging sign that both the 1,350 level and the 50-day moving average (currently at 1,355.04) will offer downside support.

The CBOE Volatility Index (VIX) shed 8.3% this week to 10.58. During trading on Friday, the “fear gauge” hit a 30-month low of 10.3, according to Schaeffer’s Investment Research.

Computerized Investing Market Dashboard Indicators

This week, one of the Market Dashboard indicators triggered a new bullish signal, switching from bearish, while another triggered a new neutral signal, switching from bearish. In addition, one of the Dashboard indicators triggered a confirming bearish 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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