Thoughts on this week and next from Briefing.com:|
Weekly Wrap: You know, if you take Tuesday January 4 out of the picture, the market looks like it has been in a continual upward straight line since October 15. The past week, with only some minor bumps, is still on an upward trend, with technology leading the way. No matter what you think about valuation levels, or the level of speculation, bubbles, or the number of stocks that haven't risen, you have to admit that this market has incredible resilience. Even rumors of the possible breakup of the nation's largest company, and the announcement that Bill Gates is giving up the wheel, doesn't wreck the market. Interest rates continue to rise, and Alan Greenspan starts shaking the stick a little bit, but the equity markets just don't quit. Did you see any articles in the business media stating that the markets are worried about higher rates in the past week? They were obviously wrong. Rates continue to steadily rise, no one cares. If the market itself where a single stock, it's relative strength (compared to the investing environment) would be incredible! Relative strength measures a stock's performance against the market, and stocks which are unfazed by market declines have strong "relative strength." The market indexes, and many major technology stocks are showing that kind of strength. Frankly, the market's resilience can be viewed positively, even as many scratch their heads and say "It was crazy two years ago, now it is insane!"
Weekly Returns Symbol Close Weekly Change Percent Change
Dow Industrials (INDU) 11,722.98 200.42 1.7%
S&P 500 (INX) 1,465.16 23.69 1.6%
Nasdaq (COMPX) 4,064.34 181.73 4.7%
30-Year Treasury Yield NA 6.69 % 0.15 (15 basis points) NM
In this paragraph, we usually look at economic releases coming in the next week, with possible implications. Next week is particularly light, with only housing starts having much significance. But even that won't be looked at too closely by the markets. Maybe Microsoft's recent push into the "wired" home might make tech investors start watching housing starts, but for now, it just won't have much impact. It might actually be nice to get an economic report with clear bad implications for economic strength, because that would test the market resilience's. It is pretty amazing that higher interest rates are being ignored. Would signs of higher inflation be ignored? Would signs of an economic slowdown be ignored? In this real world laboratory, it might be interesting to test that, but the economy keeps on growing, and inflation keeps its head down. In any case, next week certainly won't test any of this ideas, which can only lead to one conclusion: the market will continue to rise. After all, it has, in a straight line (if you take out Tuesday January 4), for 13 straight weeks, a full quarter. And in that time the Nasdaq has risen 49%. This keeps up much longer, and even Briefing.com is going to start believing that "Hey, stock prices always go up." - RVG