If Nirvana is possible in the financial markets, it seems like we are on the cusp of it these days. Everywhere we look, almost everything seems to be slowly but surely creeping upward. A classic melting up. The strong close in the major indices is indicative of the sneaky way in which the markets have been reaching for the stars of late. Could the market really be in such a good mood, or is this too good to be true? Here is a rundown of the major indices I like to follow:
Still trapped within downward trends: the Dow Jones Industrials, the Nasdaq, and the Semiconductor index, but…
Nasdaq: peeking its head above the 200DMA
Dow Jones Transports: power move to another 52-week high
S&P 500: This is actually pulling OUT of its downward channel AND above the 200DMA. VERY bullish! Can it make new 52-week highs now?
Dow Jones Industrials: it is painful to watch this tortoise but it is trying to take another stab at breaking out of its persistent downward trend.
U.S. Dollar: still hanging in there in what could be a consolidation/basing pattern.
Bank index: poised for new 52-week highs?
Gold: Officially breaking out anew although 52-week highs are still a tough fight away.
Oil: New highs at $52 and change per barrel.
Other Commodities: What can you say, they’re still on fire! Take a look at steel in particular.
Small cap index: power move to another 52-week high.
Utilities: power move to another 52-week high.
10-year Treasuries: poised to try to take out the 50DMA and break out from a steep downward trend in place for about 6 months.
With the exception of interest rates creeping upward and the semiconductor stocks remaining stuck in the mud, can we REALLY keep getting it this “good” whereever we decide to toss our coins? This is truly an amazing show to watch. The mixed signals here are pretty confounding. Financials AND gold looking strong? Commodities AND utilities soaring? The S&P breaking its 2004 downward trend even as the Nasdaq AND Dow struggle to break theirs? Perhaps complacency has completely engulfed the market. (We certainly see that folks are now buying many semiconductor stocks on almost any news they report!)
Perhaps the market sees a great jobs number on Friday and a resumption of a robust economic recovery that just a few months ago looked dead in the water. Perhaps the market sees everything at once: the bulls & bears, and the value guys & speculators are happily and smugly playing in their own separate play pens?
The markets of course are going to do what they want to do, but it seems that we are in a “set-up” mode for an eventful Fall earnings season…
