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Only 'blind faith' sees Dow's record run roaring onward, says storied hedge fund manager
MARKETWATCH 9:18 AM ET 2/23/2017
Critical information for the U.S. trading day

Are you not entertained?

"Meh" would be a fair answer from investors who watched the Dow snag its best record-close streak in 30 years on Wednesday, but on just a 0.2% gain. Wowsers. Still, for the bears, it's maybe one more reason to get grumpier.

"Only 'blind faith' could cause me to be long this market," says Doug Kass, in the headline of a blog post (http:// www.realclearmarkets.com/articles/2017/02/23/only_blind_faith_could_bring_me_to_be_long_this_market_102559.html) today.

The storied hedge fund manager took issue with CNBC's "buy everything" segment Tuesday (also covered (http:// www.marketwatch.com/story/why-investors-shouldnt-just-buy-everything-2017-02-22) by MarketWatch's Joe Adinolfi). He pointed out all the political hurdles -- such as POTUS trying to glide his budget through -- that face this "priced to perfection" market.

"For the markets to mount any positive return going forward, it can be argued that nearly everything must go right from now on. With valuations elevated on a historic basis, optimal outcomes must be achieved," said Kass, president at Seabreeze Partners Management.

Speaking of history, investors might want to pay attention to our chart of the day from Bespoke Investment (https:// www.bespokepremium.com/think-big-blog/):

Along with its ninth-straight record close on Wednesday, the DJIA managed its ninth-straight win in a row. As the chart shows, the longest winning streak in the history of the Dow industrials was a 14-day run that ended June 14, 1897.

"Once you get below the 12-day threshold, streaks of between eight and eleven trading days are not quite as rare, but they're still very uncommon," the Bespoke post's author says.

So if history is ready to dictate to this market, the show may be over soon. But then again, oil is up. Read on for more on that.

Key market gauges

No. 10 for the Dow? Maybe as futures for it , the S&P 500 and Nasdaq-100 are up, after the DJIA's win and moderate losses (http://www.marketwatch.com/story/us-stocks-on-pause-after-record-rally-with-fed-minutes-ahead-2017-02- 22) for the S&P (http://www.marketwatch.com/story/dow-on-pace-to-slip-after-4-record-closing-highs-in-a-row-2016-11- 16)and Nasdaq Composite on Wednesday.

Oil (http://www.marketwatch.com/story/oil-sticks-to-19-month-highs-after-upbeat-opec-comments-2017-02-22) is clawing back (http://www.marketwatch.com/story/oil-sticks-to-19-month-highs-after-upbeat-opec-comments-2017-02-22) some of yesterday's lost ground, ahead of some key U.S. supply data. Asia stocks (http://www.marketwatch.com/story/asian-stocks- slide-lower-after-fed-minutes-released-2017-02-22) eroded a little on Fed uncertainty.

See the Market Snapshot (http://www.marketwatch.com/story/dow-eyes-10th-day-of-gains-as-us-stock-futures-rise-on-back- of-oil-rally-2017-02-23) column for the latest action.

The call

Oil is so boring, it could trip up investors who aren't paying attention.

So says LPL's senior market strategist Ryan Detrick, who notes that for the last nine weeks, WTI futures have been closing around either $52 or $53 a barrel. That puts the trading range at just under 9%, which has only happened 6% of the time historically -- going back to 1983 (as far back as he can get data).

"The old saying is 'don't short a dull market.' Well, there isn't much out there more dull than crude oil right now," says Detrick in a blog post (https://lplresearch.com/)

Now for some stats: The last time the oil market saw such a tight trading range was in July 2014, right before a 75% drop in the following 19 months.

But in two earlier periods with a similarly tight trading range -- December 2012 and November 1995 -- prices were higher a year later.

Detrick stresses that LPL isn't joining the bears, but it does see oil hitting a ceiling near $60-$65 a barrel.

Note that it's been a busy week for oil, with Citi's $70 Brent call (http://www.marketwatch.com/story/citi-sees-brent- oil-at-70-a-barrel-by-end-2017-2017-02-21) and market-moving talk from OPEC's Secretary-General (http:// www.marketwatch.com/story/opecs-barkindo-says-too-early-to-talk-about-extending-production-cut-pact-2017-02-21) at a London confab, as well as speculation about the next leg in oil bull market (http://www.marketwatch.com/story/why-the- next-leg-in-the-oil-bull-market-could-come-soon-2017-02-20). But $100 a barrel? Fuggedaboutit (http:// www.marketwatch.com/story/why-oil-prices-will-never-return-to-100-a-barrel-in-one-chart-2017-02-22), says BP.

The stat

53.2% -- That's the U.S. share of the global stock market at the end of 2016, according to this chart from Credit Suisse (h/t The Daily Shot (http://blogs.wsj.com/dailyshot/2017/02/22/wsjs-daily-shot-the-feds-ides-of-march/)). That's compared with the situation at the end of 1899.

The chart may offer some justification for those U.S. investors who aren't as keen to diversify outside of Wall Street stocks. On that note, read why MarketWatch's Jeff Reeves thinks now's the time to invest in Europe stocks (http:// www.marketwatch.com/story/5-reasons-to-invest-in-european-stocks-now-2017-02-23).

The buzz

Tesla (TSLA) is down 2% after the automaker revealed an aggressive plan to roll out its new Model 3 sedan (http:// blogs.marketwatch.com/thetell/2017/02/22/tesla-earnings-arrive-amid-stock-tear-drive-to-model-3-production-live-blog/) (http://blogs.marketwatch.com/thetell/2017/02/22/tesla-earnings-arrive-amid-stock-tear-drive-to-model-3-production-live- blog/) by the end of the year. It also swung to a loss, but revenue beat forecasts.

Read:Tesla's earnings show 'bull arguments are stronger than bear arguments' (http://www.marketwatch.com/story/teslas- earnings-show-bull-arguments-are-stronger-than-bear-arguments-2017-02-23)

Square (SQ) is up about 11% after upbeat results (http://www.marketwatch.com/story/the-dorsey-divergence-as-twitter- stalls-square-still-in-high-growth-mode-2017-02-22), which make it a contrast to that other Jack Dorsey company -- Twitter (TWTR) .

Reporting early, Hormel (http://www.marketwatch.com/story/hormel-misses-profit-expectations-cuts-outlook-2017-02- 23)(HRL) is down 4% after cutting its outlook; Kohl's (http://www.marketwatch.com/story/kohls-shares-rise-after- earnings-beat-dividend-raised-2017-02-23)(KSS) is up a little on those results. Gap (GPS) , Hewlett-Packard (HPE) , Nordstrom (JWN) and Herbalife (HLF) are due after the close.

Exxon (XOM) has cut nearly 15% from its oil-reserve estimates (http://www.marketwatch.com/story/exxon-shaves-nearly- 15-from-its-oil-reserve-estimates-2017-02-22).

Carlos Ghosn is stepping down as CEO (http://www.marketwatch.com/story/carlos-ghosn-resigns-as-nissan-ceo-2017-02-23) at Nissan Motor (NSANY) .

American Airlines's (AAL) "new, simplified boarding process" and its nine categories (http://www.marketwatch.com/ story/american-airlines-simplifies-flying-with-nine-distinct-boarding-groups-2017-02-22).

The economy

Weekly jobless claims and the Chicago Fed national activity index are coming at 8:30 a.m. Eastern Time.

See:

The quote

"We won't accept it because we don't have to." -- That was Mexico's Foreign Minister Luis Videgaray (https:// www.wsj.com/articles/top-u-s-officials-get-chilly-reception-in-mexico-1487811060) in a veiled reference to Trump's immigration plan.

Videgaray was speaking at a ceremony in Mexico City, where Secretary of State Rex Tillerson and Homeland Security Secretary John Kelly got a chilly reception Wednesday.

And here's White House press secretary Sean Spicer, speaking some hours earlier: "I think the relationship with Mexico is phenomenal right now, and I think there's an unbelievable and robust dialogue between our two nations."

Random reads

Transgender bathroom rules revoked by Trump administration (http://www.marketwatch.com/story/trump-revokes-obamas- transgender-bathroom-guidelines-2017-02-22).

(https://twitter.com/CHellerTVNews/status/834625474110246912)

Protests in LA after video appears to show officer firing at teens after confrontation (http://www.latimes.com/local/ lanow/la-me-ln-lapd-anaheim-20170221-story.html)

Iraqi forces retake Mosul airport from ISIS (https://www.theguardian.com/world/2017/feb/23/iraqi-forces-storm-mosul- airport-seize-isis)

Louisville coach Rick Pitino loses it with Tar Heels fan (https://www.washingtonpost.com/news/early-lead/wp/2017/02/ 22/rick-pitino-had-to-be-restrained-from-going-after-a-north-carolina-fan/?utm_term=.4669a3e8aad3) (https:// www.washingtonpost.com/news/early-lead/wp/2017/02/22/rick-pitino-had-to-be-restrained-from-going-after-a-north-carolina- fan/?utm_term=.4669a3e8aad3)

(https://twitter.com/cjzero/status/834614014235774976?ref_src=twsrc%5Etfw)

More out-of-control-workplace stories from Uber, reports the New York Times (http://www.marketwatch.com/story/more- stories-of-ubers-out-of-control-workplace-culture-emerge-2017-02-22).

One winning Powerball ticket (http://www.cbsnews.com/news/powerball-435-million-jackpot-has-one-winning-ticket/) will get a $435 million jackpot

Are you a stock-market newbie? Bone up on these terms (http://www.visualcapitalist.com/40-stock-market-terms-every- beginner-know/)

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-Barbara Kollmeyer; 415-439-6400; [e-mail]


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02-23-170918ET
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