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“Trump Rally” Catches Second Wind, Market Dashboard Holds Steady

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Weekly Market Summary

This week marked the one-month anniversary since Hillary Clinton conceded the presidential election to Donald Trump. The so-called “Trump Rally” in U.S. stocks caught its second wind this week on the wings of strong consumer sentiment data and rising oil prices. On Wednesday, several of the major U.S. indexes posted their biggest one-day rallies since the election. On that day, the Dow Jones industrial average, S&P 500 index and NASDAQ Composite all gained more than 1%.

Then, on Thursday, something happened that has not occurred in 18 years: The Dow Jones industrial average, the S&P 500 index, the NASDAQ Composite Index, the Dow Jones transportation average and the Russell 2000 index all closed at new all-time highs. The last time this happened, according to MarketWatch, was March 16, 1998. The new high in the transportation index may portend strength in the overall economy because it includes train, truck and shipping companies that carry the raw materials and goods used in manufacturing and construction. In addition, Thursday marked the 13th record finish for the Dow industrials since the election.

The Dow Jones Industrial Average (DJIA) closed Friday with its fifth straight daily and weekly win. The blue-chip index also notched its 14th all-time-high-close since the close on election day. The index ended the week at 17,756.85 after rising 3.1%. On Wednesday the index broke out of its trading range on above-average volume, an encouraging technical signal. The 19,250 level may offer near-term support to the downside, as this was the level of the upside breakout.

The S&P 500 Index (SPX) ended the week with its sixth consecutive day of gains. According to Schaeffer’s Investment Research, this is the longest winning streak for the large-cap index since June 2014. For the week, the index gained 3.1% to 2,259.53. To the downside, we look to the 2,200 to 2,215 level for support, as this range offered resistance previously.

This week, all 10 of the S&P Sector SPDRs posted gains. Financials (XLF) were the biggest winners on anticipation of next week’s FOMC meeting, at which the Fed is expected to increase short-term interest rates. The sector gained 4.9% for the week. Technology (XLK) also rebounded strongly from last week, rising 4.2%. Health Care (XLV) brought up the rear, inching upward 0.6% after President-elect Trump declared he would take on high drug prices once he takes office.

The broad market Wilshire 5000 (W5000) posted a new all-time high close on Friday. For the week the Wilshire climbed 3.3% and closed at 23,678.76. The index muscled through resistance just above 23,000 and we will look to the 22,800 to 23,100 range for initial downside support.

The tech-laden Nasdaq Composite (COMP) also ended the week with its sixth winning session in a row. For the week, the Nasdaq climbed 3.6% to 5,444,50. The index pushed past resistance around 5,400 and we will wait to see if that turns into near-term support.

The Russell 2000 (RUT) index outperformed most other market indexes this week, as small-cap issues recovered from last week’s underperformance. This week the Russell 2000 added 5.6% to 1,388.07. This, too, is a new all-time-high close. To the downside, we look for initial support at the 1,310 to 1313,350 range.

The CBOE Volatility Index (VIX) fell 16.8% this week to 11.75. This is its lowest level since August 19.

Computerized Investing Market Dashboard Indicators

This week, none of the Market Dashboard indicators triggered a change in signal, nor did any of the indicators trigger confirming bullish or bearish signals.

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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