Yesterday saw a continuation of the same pattern that has been in effect for the past six weeks, namely a push to the upside that has its own dynamics on each particular day. This means that certain stocks and groups do well depending on what day it is and in a sense this rotation allows most stocks to participate in the primary upside trend.
The dynamic yesterday was the bond yield declines with the 10-year down to 2.54% which then meant that interest bearing stocks, which have been out of favor as the yields have been rising, got a break. So, we saw gains in higher dividend paying stocks such as phone companies like VZ and T, real estate trusts and utilities. Of course, this dynamic can change from one day to the next. As far as the Dow is concerned, it was led by DIS after strong box office sales over the weekend, in addition to MSFT at a new all-time high and UTX in the industrial group.
Today, the markets pushed higher again. The DOW closed up 91 points, the S&P 500 added 8 today, and the NASDAQ forged ahead by another 26 points. The DOW flirted again with the magic round number of 20,000 but couldn’t get over the top.
Breadth numbers were positive today and the VIX declined down to 11.45…proving once again that everyone should keep their eyes on this one as it starts to get closer to the always stopper on the downside level of 10. The market will generally have to make some sort of downside correction in order to get this number back above 10.
The dollar weakened a little bit against the Japanese yen and gold, which has been under tremendous pressure as the dollar has strengthened, reversed a little bit back to the upside with a small gain up to $1,140 an ounce. How long can this last?
There were no economic reports today so the gain just seems to be a continuation of the primary trend which has been higher. The dollar was stronger again with the Euro down to 1.039, a new low for the move. Gold was flat. Bond yields rose a little with the 10 year up to 2.57% which once again is helping the financials do better.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings and recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendations or otherwise promote a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.