Okay, How About Dow 20,000 Today ?

Investor’s first read – Daily edge before the open
DJIA: 19,945
S&P 500: 2,268
Nasdaq Com.: 5,487
Russell 2000:1,377
Wednesday, December 28, 2016 9:16 a.m.
Assuming taxes will be cut, regs lifted and lots of money spent on defense and the infrastructure, the market has room to run.
It is doing so from a solid economic base, one well grounded, but not yet given to excess in spite of its age.
Only one bull market in 56 years has risen more, the 1990 – 1998 bull with an S&P 500 gain of 304%. So far, this one has logged in a gain of 241%, a gain of 304% would take the S&P 500 to 2,690 (DJIA: 25,820).
I am beginning to detect untethered euphoria, investors sensing a chance to make quick and easy money in the market.
Can the DJIA actually reach 25,000 ? If so, what happens to mid-cap stocks, micro-cap stocks? If the S&P 500 has risen 241% already, what is to stop it from adding another 25% ?
The Dow will be getting off to a better start today, increasing the odds that the DJIA will break 20,000 today, a number without any significance other than the fact the press will make a big deal of it, attracting attention of those who have been on the sideline for eight years.
The market wants to run further
SUPPORT “today”: DJIA:19,927;S&P 500:2,264; Nasdaq Comp.:5,467
RESISTANCE “today”:DJIA:20,017;S&P 500:2,276; Nasdaq Comp.:5,507
Corporate earnings.
Factset now sees Q3 earnings for the S&P 500 up 3.0%. On Sept. 30, its projection was for a decline of 2.2%. Q4 is projected at a gain of 5.2%, the year projected to come in at plus 0.1%. Earnings for 2017 are expected to increase 11.4%. Currently, the P/E based on 12 months out is 17.1x, which compares with a 10-year average P/E of 14.3x.
On occasion, I technically analyze each of the 30 DJIA stocks for a reasonable risk, a more extreme risk, and an upside potential over the near-term. I add the results of each, then divide by the new DJIA “divisor” (0.14602) to get the DJIA for those levels. This gives me an internal check on the DJIA itself, especially if certain higher priced stocks are distorting the averages.
As of December 14, a reasonable risk is 19,713 a more extreme risk is 19,657 Near-term upside potential is 20,123
 OPPORTUNITY: RISK: Selective opportunity ! Risk is reality at some point
 CASH RESERVE: 25% – 35%.
 KEY FACTORS: Speculative fever driven by expectations of tax cuts, lifting of regs., and lots of money dumped on economy.
Note: Source of weekly economic calendar and good recap of indicators: mam.econoday.com.
*The Fiscal Times – 12/22/16 – Eric Pianin
George Brooks
Investor’s first read
A Game-On Analysis, LLC publication
Investor’s first read, is a Game-On Analysis, LLC publication for which George Brooks is sole owner, manager and writer. Neither Game-On Analysis, LLC, nor George Brooks is registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized or as investment advice as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment in keeping with their tolerance for risk.

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