Market Oasis

Wall Street indexes achieved historic highs yesterday, enough to push the S&P 500 past the $20 trillion mark for the first time. Investors are continuing to bet on a sweeping tax cut as per President Trump’s campaign promise, a move likely to prop of economic growth by a significant margin.

This past Thursday, Trump promised to release a significant announcement about taxes in the coming weeks, adding fuel to the stock market rally which had halted over the last few weeks on the background of concerns about the potential impact of trade curbs and a lack of clarity regarding other proposed reforms.

The S&P 500 has soared by about 9% since Trump was elected on November 8^th on the background of these 3 key topics: tax cuts, limiting regulation, and substantial infrastructure spending. Furthermore, Trump has been holding high profile meetings with the CEOs of major industries, from airline companies to carmakers to Silicon Valley tech companies. Day in and day out, top industry players stream into the White House to meet with Trump. It seems like it’s back to business as usual, and in our view, that’s the reason that investors are willing to pay a little bit more now for stocks.

In summary for the day, the Dow Jones rose 0.7%, the S&P 500 extending last week’s breakup, climbing by another 0.52%. The NASDAQ closed up by a similar amount. The stock of Apple, which constitutes one of the components on all 3 of the major indexes, rose 0.9%, closing at a historic high for the first time since 2015. Analysts at Goldman Sachs raised their price target for Apple on the background of strong expectations for iPhone sales this year.

The financial sector (XLF) led the gains yesterday with a jump of 1.14%, Citigroup (C) soaring 2.3%. The industrial sector (XLI) jumped 1% on the day. These 2 sectors are expected to benefit in large measure from the policies Trump is pushing.

Strong economic figures over the last few weeks supported optimistic results from American firms. S&P 500 firms are on track to record their strongest earnings growth in 9 quarters. What stands behind Trump’s rhetoric are global fundamentals – including those of the U.S. – which find themselves on a continual uptick.

On the S&P 500, 73 stocks rose to new 52-week highs, without a single stock dipping to a new yearly low; on the NASDAQ, 194 stocks recorded new 52-week highs, 19 falling to new yearly lows.

About 6.3 billion shares changed hands on U.S. exchanges, beneath the 6.7 billion average over the last 20 trading days.

Tuesday: Investors are positioning themselves in advance of Fed Chairwoman, Janet Yellen’s speech this morning to the U.S. Senate, along with the inflation and retail chain sales figures expected for Wednesday. These developments, taken as one, are likely to heighten the chances of a Fed interest rate hike in March – something constituting the only headwind for the market’s growing complacency.

Complacency – or market indifference – have continued to grow to new highs, some of this finding expression in the continued plunge in volatility. Volatility on the S&P 500 nosedived yesterday to its lowest level in 10 years, the market having now gone 86 days without losses of 1% or more, and 45 days without closing up or down by 1%, and 40 days without intraday movement larger than 1%. The latest market gains have brought prices to high levels; take, for example, one of the most common price metrics, Price/Book Value, which is now above 3, the highest level seen on the index since 2004.

Besides the speech of Janet Yellen, which will command headlines and maximal attention on the part of traders both today and tomorrow, today’s economic figures will include the NFIB small business optimism survey at 6:00 N.Y. time, and the Producer Price Index at 8:30.

Earning reports are expected today before opening from DISCA, DPS, and GNRC. After closing, be primed for the numbers of AIG, ESRX, and DVN.

Tuesday’s Hot Stocks: DISCA, DPS, GNRC, BKD, NRG, TMUS, TAP

IPOs: None

Have a great trading day!

14.2.2017

Today’s Picks – Day Trading!

New York Strategy Swing

Today’s Picks – Swing “New-York Strategy

No.2 – CXW