The earning results were ok for the week. The S&P 500 finished flat, Nasdaq dropped 0.2%, and Dow Jones outpaced by 1.2%.
Half of the companies have reported their second quarter results. The technology and financial sectors propel Dow Jones S&P 500 and Nasdaq to new record highs. Both displayed positive returns for the second quarter.
The market recorded new highs for the 29th time. It is rallying for several months following the presidential election. Economists are optimistic with Trump’s pro-growth agenda. It includes tax reform, deregulation, infrastructure stimulus.
Here is another reason that drives the market higher. First, Fed's careful approach to stop the monetary stimulus. Second, it decides to make gradual interest rate hike. These decisions put the economy in a comfortable position to recover and prosper.
In this table, it shows that Dow Jones is the leader among the four market indices. It led by +1.2%. Russell 2000 is the laggard with -0.5%. Overall, technology-driven index, Nasdaq tops with +18.4% return for 2017. All market indices cleared the double digit figure except for volatile small-cap index, Russell 2000 with +5.3%.
Dow Jones climbed for four consecutive days since Tuesday. It ended by recording a new all time high of 21830.31. There is a clear sign of institutional support as shown in the volume spike on Thursday. With such boost, expect for more bullish run in the next few weeks.
Nasdaq peaked to an all time high on Wednesday before plunging on big volume on the next day. It seems that there is a resistance barrier at 6450. See if the technology driven index continue to digest its fourteen consecutive days of gains.
S&P 500 is still digesting its gains since last week. This is after a short term climb on early July 2017. See if the index can break above the resistance of 248 in the next several days.
Russell 2000 was doing well until it started to dip for three consecutive days from Wednesday onwards. On a positive note, the index seems to found support above 141, which happened to be the old resistance for a multi week consolidation.
After piercing above the resistance line of 21000, Dow Jones continued to climb higher at increasing weekly volumes. This bullish run resumed after the index moved sideways for nearly twelve weeks.
Nasdaq joined the party too. After recovering from the minor correction that lasted for six weeks, it broke above 6300. Only time will tell if it continues to move up.
S&P 500 also remained bullish plus it stayed above the resistance line of 240. The index has been rising for the past four weeks on increasing weekly volumes. One tiny caution is that these volume were relatively low.
Russell 2000 remained above the resistance line of 140. However, the climb is unconvincing as the weekly volumes for the past four period were relatively low. See if it will continue to rise or consolidate somewhat.
In this chart, it shows that it is forming an ascending triangle. This happens when the price consolidate into a triangular shape after a strong uptrend. Over here, the chart shows that $NYA200R is preparing to bounce after moving sideways for close to twelve months.
Note: $NYA200R is an index that monitors the percentage of stocks that is above the 200 day moving average. The greater the percentage, the more bullish it becomes.
The chart above shows that NAAIM Exposure Index (blue line chart) is increasing gradually but is meeting resistance somewhere at 110. Here is an interesting discovery. As S&P 500 (green line chart) continues to climb higher, NAAIM Index is also behaving positively. One might guess that if the latter managed to break above the resistance line, the former would also blast higher at steeper gradient.
Note: The NAAIM Exposure Index represents the average exposure to US Equity markets.
Survey results are also justifying for the previous chart. As you can see, more investor felt uncertain about how the market will behave in the next several months. This hesitation caused majority of them to remain cautious to wait for news or events that can propel the market forward.
However, more investors are ready to seize new opportunities when the time is perfect. This can be seen from the Fear & Greed Index. It shows that the investors are generally greedy and hungry to take risk. This value is higher as compared a month ago.
The market currently looks a tad overbought and due for a little pullback. Keep a lookout for the 50 day moving average lines for the major indices.
Pay more attention to your stocks when the market breaks below the support lines. Doing this prevents you from taking on extra risk and outsize losses.
It is true that it's not easy to keep emotions contained with market volatility. Hence, it is advisable to have proven rules to keep your capital safe.
Remember this. As long as support holds, the bulls remain in control of this market.