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DJIA Pushing All-Time Highs, A Look At 2018’s Performance

Posted Thursday, September 27, 2018 by
Shain Vernier • 2 min read

It seems that no matter what transpires geopolitically or economically in the U.S., the “Trump Rally” in equities presses on. Today is a prime example of this phenomenon. Facing a hawkish FED and a slew of subpar economic news items, the DJIA is in position to post fresh all-time highs.

A quick look at the weekly chart as of yesterday’s close illustrates this point — retracements are brief, with values consistently grinding north.

DJIA, Weekly Chart
DJIA, Weekly Chart

Referencing the weekly chart upon the closing bell on FED day is an interesting exercise. The panic in equities is evident following the FED’s rate hike and FOMC’s predictions of coming tightening. In addition, projections of 1.8% GDP growth by 2021 alarmed investors.

Is the end of the bull market in U.S. equities really in sight? Yesterday afternoon interjected this idea directly into the collective psyche of the markets.

What A Difference A Day Makes: DJIA Back On The Bull

Today’s U.S. session has been a different story. For the first 120 minutes of trade, U.S. indices have rebounded. Both the DJIA and S&P 500 are decisively in the green, with the DJIA within a few hundred points of making a new all-time high.

During the U.S. pre-market hours, several economic metrics hit newswires. All in all, they were pretty strong:

Event                                                            Projections          Actual

Core Personal Consumption(Q2)                  2.0%                      2.1%

Annualized GDP(Q2)                                        4.2%                     4.2%

Pending Home Sales(YoY, August)              -0.4%                    -2.3%

Initial Jobless Claims(Sept 21)                       210K                    214K

Continuing Jobless Claims(Sept 14)           1.684M                 1.661M

The headliners here are GDP(Q2) holding strong at 4.2% and growth in Core Personal Consumption(Q2). Real estate continues to be a challenge and jobs numbers came in mixed.

The optimism from strong GDP growth appears to be carrying today’s action. Even though official projections from Wednesday’s FED report have this number being cut in half in the next 24 months, the markets aren’t buying it. For now, “risk on” is the order of the day.

Overview: Picking a top in the DJIA is a difficult proposition and one that has been costing traders money for two years straight. However, the fact is this: the availability of capital is going to become limited and the U.S. Congressional Midterm Elections may impact everything from tax cuts to impeachment proceedings.

Make no mistake, I am not calling a top in the DJIA at this time — but, there are some market fundamentals on the horizon that may put a lid on this market.

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