This past week is a continuation of a steady upward move for most indexes and market sectors. The equities market is paying no attention to the 3.1 trillion dollar debt the U.S. is ringing up this year. This debt is the largest as a percentage of GDP since WWII.
Once more, pay more attention to the bullish percentages found on the left of the tables. The X’s and O’s give a quick visual picture of what is going on and most of the indexes and sectors are bullish.
Every index moved up this week with exception of the Dow Jones Industrial Average, which held steady at 70% bullish. Note that the NYSE and NASDAQ, the two very broad indexes, are not over-bought. All the other indexes are in the red zone indicating this is a large-cap driven market. Large-cap stocks are the last to give up in a bull market.
As I wrote over on the Forum, Moody’s Analytics projects at least a 3.1% growth rate for the economy in 2021 regardless which party wins the 2020 election. We will know a lot more in six months, particularly if there is no more stimulus money. We will also be through the winter and have a better understanding how Covid-19 is impacting the economy.
I’ll continue to keep TSLOs in place.
Most of the sectors followed the major indexes and we see lots of bullish signals. Seven of the ten sectors are over-bought, but from experience, these over-bought positions can be sustained for many months. Over-sold positions tend to bounce off the bottom faster than over-bought positions reverse direction.
Here we see slight improvement since last week. The NYSE is once more moving toward the over-bought zone.
While slightly behind the NYSE, the NASDAQ index is trending upward.