Stocks pulled back today as the G20 got started, global interest rates rose and tech stocks pulled back. At the close the “bow wow” Dow was off 158 points to 21,320. The one saving grace was lower trading volume meaning the big boys are showing some reluctance to bolt from the feeding trough.
Way back in the 1920s a guy named Charles Dow (founder of the Dow Jones Industrial Average) formulated the Dow Theory which states that if the industrial and transportation indexes hit highs at the same time then the bull market was on. Lately both the Dow Jones Industrial average and the Transportation index have been hitting highs suggesting that the current bull market could continue. The basis of the Dow Theory is that truckers are the backbone of the country and if they are doing well then the economy is doing well. While this is good news we should always be aware of risks and proceed with caution.
Speaking of trucks, Renton based Paccar, maker of Peterbilt, Kenworth and DAF brands, saw its shares rise after Goldman Sachs upgraded the stock to a buy saying that margins should improve as engine sales look good and this, coupled with the company’s nearing the end of a manufacturing expansion should allow more cash to flow to the bottom line. Paccar is the 3rd largest truck maker in the world and is very well run. I always liked their motto of saying they are not a truck company but a technology company that makes trucks.