The beat goes on. A few weeks ago we noted that if that Wednesday session was indeed "the bottom" (you never know until after the fact) the market has had a pattern of 12-14 day super rallies during quantitative easing. Well we just finished off session #12 of this rally, and only 2 days were down - and those were minor. And the S&P is up over 100 points! So we'll declare that a victory and just mention it again next time there is any form of correction. Eventually the pattern will break - maybe we'll just go vertical now for 40-50 days in a row or the next time we'll have a slow motion rally - but until it changes I suppose one must assume it happens again. The big moves in Amazon.com and Microsoft as we noted helped the indexes as breadth was not great today; in fact the small cap focused Russell 2000 was down for the day but the indexes reflect the larger companies. The S&P 500 gained 0.44% and the NASDAQ 0.37%. It was a slow day in the market as everyone is now complacent once more. Remember that volatility index that broke out a few weeks ago? Look at it now...
There were two economic reports today but with D.C. out of the way and the printing presses of the Fed at full steam, these were mostly ignored:
On the economic front, consumer sentiment slid to to 73.2 in October, falling to the lowest level since December 2012, according to the Thomson Reuters/University of Michigan survey. Analysts polled by Reuters expected a reading of 75.0. Durable goods orders rose 3.7 percent during September, though excluding transportation, slipped 0.1 percent, according to the Commerce Department.
As for the indexes - steady as she goes. The NASDAQ continues to dance along the top trend line that connects the highs of 2013, while the S&P 500 is consolidating above this intermediate trend line of recent highs.
Elon Musk was the second high profile CEO this week to note his stock's price is way ahead of fundamentals. This is the type of stuff you saw in the bubble of 1999.
"The stock price that we have is more than we have any right to deserve," he said in London Thursday at the opening of a Tesla showroom in London. And he's got a point. Shares are up 400% this year and are trading a nearly 100 times 2014 earnings estimates. It's fairly rare that CEOs try to talk down their stocks, given that one of their goals is to boost shareholder value. Experts say investors should take heed. "If the guy who runs the company and has insight is saying something, you need to read those tea leaves," said Joe Saluzzi, co-head of equity trading at Themis Trading.
We've mentioned over the past 2 weeks that industrials have been a strong spot in the market; it is always worthwhile to know which sectors are leading in a rally. Today, post earnings both Eaton (ETN) and Flowserve (FLS) - two large manufacturing companies surged.
It has been a while since we looked at gold; last time we looked it had finally broken a year long correction between July and September but then began a new leg down. However this time around it did not make a new low versus the previous one in July which is a small bullish divergence. It is trying to fight out of his descending channel but still remains overall a choppy chart.
We'll return next week to more earnings with some big hitters like Apple and Facebook - have a good weekend.