2017 came to a close with the Dow falling 118 points at 23,719. Trading volume was lower than a crab pot.
Indicators continue to be mixed. IBD shows markets in rally mode while the BTS indicator remains in cash which reflects price weakness in the high yield bond market.
Market returns for the year were solid. The S&P 500 returned approximately 20%, the NASDAQ gained 29% and the Dow posted a 25% increase. Toward the end of the year we witnessed sector rotation from large growth tech stocks and into value stocks like banks and materials. Going forward the economist and gurus that I watch feel 2018 will be positive from an economic and market return perspective. They seem to have high conviction in financials and materials like steel, aluminum and copper as well as continued growth in disruptive companies like Faceplant, Netflix and Amazon. Rising interest rates will also play out in 2018 as will rising costs of raw materials and increased wages. US manufacturers are expected to retool and invest in capital improvements. While we could be wrong we at Greystone feel that underlying economic strength could propel markets to a 10% return in 2018. We also know however that markets will be subject to volatility as political and economic disruption continues unabated.
From all of us at Greystone we appreciate your business and wish you all a Happy New Year!