The remarkable rally to kick-off 2018 continued yesterday, with the Financials and Techs leading the way higher for the 3rd day in a row, while the Cyclicals and Retailers, took a snow day. The DOW S&P, NASDAQ and Russell 2000 all registered new closing highs, with the DOW closing above the 25,000 mark. The recent market breadth and volume numbers remain unimpressive, but one can sense, a rise in the desperation of Institutional Players, Money Managers, Traders and now John Q. Public to get into the markets at any price. Now anyone who has been in this business for at least 10 years and has seen monster rallies like this before, knows that one of the major warning signals is when the Public starts to talk about stocks and as the old Wall Street adage goes, “brother, when the Ducks Quack, Feed Them”.
The problem is that after the Crash in 2008 – 2009, Investors large and small were decimated, but the big Investors were able to ride it out, while Joe Blow had to selland stayed away from stocks for the next 10 years. Now the Public and their cash, wants back in, so as long as that cash flow holds up, stocks could go higher, but the combination of Public Euphoria and high Equity prices can be deadly, so just dancing until the music stops.
Overnight the Global markets continued higher and in early trading, our markets are looking higher once again. The Yield on the 10 Yr is off a tick to 2.46%, the Dollar is rebounding and that has Commodities off a bit in the pre-mkt.
Today we have the December Jobs report at 8:30, followed by the Dec ISM Services and Nov Factory Orders reports at 10:00. Inside today’s Jobs report, pay attention to see if the Hours worked and Wages paid rise and if both are good, it means that the U.S. Economy is growing and that’s good, but the rising Wages could signal that Inflation is building and that’s not so good.
By the way out of the DOW’s 5000 pt move over the past year, 1/2 of the gains were from just 5 stocks BA +900pts, UNH +430pts, CAT +410pts, MMM +406pts, HD +355pts, so if you think you missed something you haven’t.
I will be in and out today, so drop me an email and I’ll get back to you.
Today’s Early Markets
DOW Futures— up 70.00 London – up 16.58
S&P – up 500 DAX – up 117.76
GOLD—$1315 Feb Nikkei — up 208.87
OIL— $61.55 Feb HangSeng — up 75.45
DOW RESISTANCE 25,150 S&P RESISTANCE 2735
DOW SUPPORT: 24,950 S&P SUPPORT: 2710
$NASDAQ RESISTANCE 7130
$NASDAQ SUPPORT 7000