Stocks moved higher due to several factors. One being the rising odds of the tax bill passing the Senate while another was the continued solid economic reports showing GDP estimates at 3.3% up from 3%. IBD still has markets in rally mode while BTS continues to sit in cash which is sending mixed signals. Institutional accumulation on the Dow however is a solid “A-“ reading while the market leading NASDAQ has fallen to neutral with several leading stocks now flashing sell signs. Caution is advised at this juncture but the tax bill could be a game changer.
At the close the Dow was up 331 points to 24,272. Trading volume on the Dow was up while trading volume on the NASDAQ was down.
According to IBD, the past few trading sessions are flashing signs of sector rotation. The biggest loser of the 197 industry groups are semi conductor chip stocks while the biggest gainers are mid-rated retail department stores, airline stocks and super regional banks. Money center banks have also moved up while market leading large cap growth companies like Faceplant, Google and Netflix are flashing sell signals. What this means is that we could have a market pullback but within that pullback some sectors could still be moving higher. This phenomena occurred back in the year 2000 when the dot.com bubble burst.
Economic news continues to be good. Personal income rose 0.4% in October which was above guru estimates calling for a 0.3% increase. Consumer spending increased 0.3% which matched estimates. The Chicago purchasing managers guage rolled in at 63.9 for November beating the guru conseusus calling for a reading of 63.5.