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Sunday, September 24, 2017 6:05:42 PM
Weekly Market Summary
By: Urban Carmel | September 24, 2017
Summary: The major US indices all traded at new all-time highs (ATH) this week. Even the lagging small caps index closed at a new ATH on Friday, and transports are very near a new ATH. Persistent strength like that seen throughout 2017 has almost always continued into year-end. However, like last week, a few studies suggest short-term upside will likely be limited. The third quarter ends on Friday.
* * *
US equities are now in the second longest and second strongest bull market of the post-war era. Enlarge any image by clicking on it.
This bull market is not showing signs of ending. This week, SPX and DJIA made new all-time highs (ATHs) on Wednesday and NYSE and RUT made new ATHs on Friday. All the main US indices have now made a new ATH in the past two weeks.
As an example of how persistent the current trend is, consider this: this week was only the second time since 1995 that SPX did not trade lower than the close of September OpX at least once. The only other exception was 2001 when SPX lost 12% during OpX week.
A month ago, weakness in transports raised the concern among many pundits that a "Dow Theory" sell signal was likely. Since then, transports have risen 7.5% and closed Friday a mere 0.3% off its ATH.
The rebound in the lagging transports and small caps should reassure those that previously considered their weakness to portend broader weakness in equities. This is yet another example of how breadth weakness is a highly unreliable indicator for anticipating turns in the market. For a fuller explanation of this, read further here.
Further gains into year-end appears to be strongly odds-on.
First, since 1928, when SPX has made a 12-month high in September, it has then risen in the 4th quarter 83% of the time (from Liz Ann Sonders).
Second, since 1928, when SPX has risen in every month from May through September, it has risen in the 4th quarter every time. SPX would have to fall 1.2% this week to invalid this study (from Ryan Detrick).
Third, active investment managers became bearish last week, with NAAIM sentiment closing under its two standard deviation weekly Bollinger Band (middle panel). This has happened 16 times since the survey started in 2006 and SPX (upper panel) has closed higher 6 weeks later every time (from Cam Hui; his post is here).
This sentiment study is consistent with those presented by BAML in our post last week (read further here). It is also consistent with data from AAII.
Fourth, economic data continues to point to further growth, conditions under which bear markets are very unlikely, especially within a few months. Growth in the index of leading indicators has turned negative ahead of the 3 recessions in the past 30 years; in contrast, current growth is accelerating (from Jim Sullivan). . .
* * *
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By: Urban Carmel | September 24, 2017
Summary: The major US indices all traded at new all-time highs (ATH) this week. Even the lagging small caps index closed at a new ATH on Friday, and transports are very near a new ATH. Persistent strength like that seen throughout 2017 has almost always continued into year-end. However, like last week, a few studies suggest short-term upside will likely be limited. The third quarter ends on Friday.
* * *
US equities are now in the second longest and second strongest bull market of the post-war era. Enlarge any image by clicking on it.
This bull market is not showing signs of ending. This week, SPX and DJIA made new all-time highs (ATHs) on Wednesday and NYSE and RUT made new ATHs on Friday. All the main US indices have now made a new ATH in the past two weeks.
As an example of how persistent the current trend is, consider this: this week was only the second time since 1995 that SPX did not trade lower than the close of September OpX at least once. The only other exception was 2001 when SPX lost 12% during OpX week.
A month ago, weakness in transports raised the concern among many pundits that a "Dow Theory" sell signal was likely. Since then, transports have risen 7.5% and closed Friday a mere 0.3% off its ATH.
The rebound in the lagging transports and small caps should reassure those that previously considered their weakness to portend broader weakness in equities. This is yet another example of how breadth weakness is a highly unreliable indicator for anticipating turns in the market. For a fuller explanation of this, read further here.
Further gains into year-end appears to be strongly odds-on.
First, since 1928, when SPX has made a 12-month high in September, it has then risen in the 4th quarter 83% of the time (from Liz Ann Sonders).
Second, since 1928, when SPX has risen in every month from May through September, it has risen in the 4th quarter every time. SPX would have to fall 1.2% this week to invalid this study (from Ryan Detrick).
Third, active investment managers became bearish last week, with NAAIM sentiment closing under its two standard deviation weekly Bollinger Band (middle panel). This has happened 16 times since the survey started in 2006 and SPX (upper panel) has closed higher 6 weeks later every time (from Cam Hui; his post is here).
This sentiment study is consistent with those presented by BAML in our post last week (read further here). It is also consistent with data from AAII.
Fourth, economic data continues to point to further growth, conditions under which bear markets are very unlikely, especially within a few months. Growth in the index of leading indicators has turned negative ahead of the 3 recessions in the past 30 years; in contrast, current growth is accelerating (from Jim Sullivan). . .
* * *
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Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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