The Dow gained 91-points on Tuesday, just 26 points from the 20,000 level that the media is literally giddy about. Yes, it is quite a milestone, but obviously it is meaningless. A 0.46% gain is a 0.46% gain whether the Dow is 20,000 or 2,000, and that is a decent day. The problem is it feels like it is being pushed there artificially because of how far it has come in the last several weeks. What will happen once it gets there is the question.
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I am going to make this brief today. The next several days will be lighter trading days, and there is a positive bias during the holidays, but as I've talked about before, over the last decade or so the market tends to reverse direction after Christmas from the direction is was going before Christmas so don't get too complacent.
The SPY (S&P 500 / C-fund) was up again as the pre-holiday action has not disappointed the bulls. It's typical action in an atypical year. We saw a breakout above a flag pattern and the rising support line has continued to hold. I don't know how long this angle of incline can sustain itself, but its clearly extended and the holiday action may be the only thing holding it up. Eventually the election results will be priced in fully, if they haven't been already.
Just a couple of the things that were off from typical behavior.
Remember the "As goes January, so goes the year" axiom? The S&P 500 was down 5% in January this year. Looks like the year will go out with solid gains.
"If Donald Trump wins the elections, stocks will plummet." How'd that prediction work out?
And then there was the Brexit. Surely the global economy was going to suffer if Britain voted to leave the European Union, right? Not so much.
If I learned anything this year it was to stop listening to the outside noise... Or better yet, just do the opposite of conventional wisdom. It's not easy to do, but it tends to work.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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