We suggested the DJIA would reach the half way mark, 24,400, back to the October high of 26,600. And today the DJIA is opening at 24,484, hitting the target square on. Now what?
The indicators suggest this rally has some life. Stock market indicators like the percent of stocks in bullish position are climbing. Fifty-six percent of the S & P stocks are now above their 50-day moving average. Even more impressive, 56 percent are above their weekly moving average. The weekly advance decline line for the New York Stock Exchange is also in positive mode. New highs versus new lows has returned to neutral. This reverses the extreme low of minus 1,000 seen in late December.
There are about a dozen Exchange Traded Funds which represent different sectors of the economy. One can focus on banking, communication, technology, or consumer staples and discretionary spending. These are easily traded on exchanges and do not have holding period requirements that many mutual funds require. Cycling through my chart list of these funds, many are now challenging their 50-day moving average. The advance has been strong enough off the December 24 bottom to make the case many have gone too far too fast. That suggests a short term over bought situation.
Notably the bank stocks reported a nice earnings bump which resulted in a sharp move up in share prices. The XLF ETF tracks this sector. Point being a healthy banking sector is a good indication of a healthy economy.
Energy prices have paralleled the overall stock market prices. And both are still on a sort of which way next mode. Crude oil has bounced ten dollars off its $42 low. It is now challenging its 50-day moving average at $51.94. That is also the case for the Energy Producers XLE and Energy Service XES. We have noted XES has remained particularly weak. Baker Hughes for example looks toppy here. And the tariff-border wall impasse needs a resolution. Both sides have dug in with Trump cancelling a military flight for Pelosi and friends recently. Will this negative mood infect the markets?
Our bottom line for the markets is that this is the line in the sand moment. Stocks and energy shares need to move up from here as both are in a decisive price frame.
In the meantime while waiting for a resolution here is an amazing sports moment UCLA gymnast Katelyn Ohashi scored perfect ten for her floor exercise routine. Check it out on you tube at this URL.