Once again stock futures did not tell the story. Of late a higher open was sold and stocks were forced to scramble to recover lost early ground. Wednesday futures indicated a modest open but were fading into the bell. Once the bell rang, however, stocks shot higher. A test of the move at the first hour and then stocks were off and running, rising into the close. An impressive move with nearly all sectors rallying nicely except semiconductors and telecom.
SP500 12.92, 0.57%
NASDAQ 47.92, 0.88%
DJ30 60.40, 0.30%
SP400 1.55%
RUTX 2.27%
SOX 0.27%
VOLUME: NYSE -10%, NASDAQ -1.5%. Disappointing volume did not inspire greatly, but volume has returned to average and better levels as stocks move back up off the late 2016 fade.
A/D: NYSE 5.6:1, NASDAQ 3.4:1. Impressive breadth as the small and midcaps surged. Growth was in the air -- along with commodities, oil, drugs, and some financials.
Improved overseas economics helped gin up the engine as other countries try to piggyback on the US optimism surge.
China moved its yuan to the lowest peg since May 2008 as Bitcoin continued to surge, moving toward parity with gold, as China tries to hold currency inside the country.
Japan's PMI beat expectations as did the European CPI and PMI.
Auto sales hit a record in 2016 as GM posted a 10% December sales increase, F a 0.3% rise.
The FOMC saw more disposable income, some more spending by consumers (don't look at M and KSS earnings and sales afterhours) and business. It also is uncertain about what changes in fiscal policy will occur, and, not surprisingly, it is not certain what the effect of those policies will be even if it knew. Hmmm. Why again do we have a Fed? Doesn't know what will happen, doesn't know the effects even if it does know what will happen. And these people are setting our prosperity level? Seriously? I know the powers that be will never agree to dismantle the Fed, but how about SEVERELY restricting its power to ONLY adjust money supply by certain percentages for clearly set time periods that expire automatically? It's a start. Then when we all see that we get along better and are wealthier without an FOMC continually devaluing our currency, we can wean ourselves off it completely. Hey, it's a time for optimism, right?
Things look so rosy, and not a policy is in sight, at least not the particulars about any policy. But, there will be a veritable flurry of activity come January 20. People we know on the inside of the transition talk about a President-elect who is even more energized than he was in campaigning. How he is working long hours organizing everything that will be done, breaking them down into immediate actions to reverse executive orders, laying the groundwork to reverse laws Congress passed, laying the groundwork for his fiscal policies to pass Congress. From what we hear, this will be the most active administration in my lifetime.
We were busy buying new positions even though Tuesday I expressed concern about the rally's possibilities. The action Wednesday was solid with stocks rising on good volume. Not all, but metals started back up along with oil stocks, drugs, chemicals -- an eclectic, varied group.
We also let positions work. NFLX hit the initial target, but is working well as is DIS, MAN, HFC, AKS, WLL -- no point cutting off a good move that is possibly at the start of a good move.
Now we see if the moves can continue with the same vigor as Wednesday, even better.
Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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