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Why January will be the end of any Dow 20,000 hopes
By Barbara Kollmeyer
Published: Dec 22, 2016 2:45 p.m. ET
16
Critical information for the U.S. trading day
AFP/Getty Images
Sliding back on the slow climb to 20K.
If the Dow was meant to have hit 20,000 by now, wouldn’t it have happened?
It’s a fair question to ask, as investors watch the index back off what seemed a sure thing only a few days ago. Some, like FXTM’s Hussein Sayed, say breaking that psychological level could open the door to more buyers, as it suggests bulls are still in control.
But the index DJIA, -0.12% has run up 14% year-to-date, which opens up another investor dilemma.
“As gratifying as it would be for the Dow to hit 20,000, there’s an awful lot of potential profit that can be booked from the rally of the last six weeks,” ADS Securities’s Remo Fritschi says in his own note. Nuveen’s Bob Doll would disagree, as his latest advice is don’t hide out in cash.
On to our call of the day, which says forget 20,000 for now, because 19,000 is likely to come first. That is according to Newton Advisors’s Mark Newton, blogging for See It Market.
He expects stock markets will pull back in January, citing these reasons: overbought conditions; so-called exhaustion signals that show a market trend (up in this case) is nearing an end; and overly bullish investor sentiment. Others, like Northman Trader’s Sven Henrich, say red flags are piling up right now.
Newton notes how the Dow took 14 years to get from 10,000 to 15,000, three years to get from 15,000 to near 20,000, and then just two months to rise around 2,000 points.
“The mentioning of these levels, however, DOES play a critical role in giving conviction to those that are long, while nudging others to join the party. This often occurs at the exact wrong time. Investor sentiment tends to grow around round numbers, which is largely media-driven,” says Newton. Ouch!
It doesn’t look like the data is doing much to jolt this market out of its preholiday lull. Read on for more on the last big data dump of 2016.
Key market gauges
The Dow DJIA, -0.12% and S&P 500 SPX, -0.19% are tilting south. Read Market Snapshot for the latest.
It’s pretty quiet across most other markets. Asian stocks ADOW, -0.05% finished mostly lower, while European stocks SXXP, -0.21% are going nowhere fast.
The economy
Durable-goods orders dropped for the first time in five months, GDP was raised to a 3.5% growth rate, and weekly jobless claims jumped to a 6-month high.
The buzz
Apple AAPL, -0.18% and Nokia NOK, -0.84% NOKIA, -4.91% are getting ready to square off again in a dispute over patents. Report says Apple will release a top-tier iPhone code-named “Ferrari” next year.
Johnson & Johnson’s JNJ, +0.11% talks to buy Actelion ATLN, +12.50% are back on.
Report says Apple will release a top-tier iPhone code-named “Ferrari” next year.
Micron MU, -0.30% shares surged late Wednesday after better-than-expected results.
Alibaba BABA, +0.12% has been put back on a U.S. list of global marketplaces known for fake goods.
After meeting with President-elect Donald Trump, Boeing’s BA, +0.95% CEO Dennis Muilenburg says the aircraft maker will get that Air Force One done a little bit cheaper than $4 billion.
The chart
Christmas tree sales are going through the roof. Sales are up an average 10%, versus 7% for last year, and that looks like the best season in a while, says Evercore (h/t The Daily Shot). What that probably means is consumers are just a little more joyful.
Evercore ISI, @modestproposal1, @DeanDijour
The stat
More than 85%—That is how much shares of the world’s oldest lender, Monte dei Paschi di Siena BMPS, -7.48% have fallen this year.
The Italian bank has been trying to stave off a collapse via a multibillion-euro cash call, but it looks like a state bailout is on the cards. Here’s a look at why investors should care about the MBPS crisis.
The quote
“This was a counterproductive exercise in reaffirming to the rest of the country that North Carolina wants to remain mired in this divisive dispute.” — Simone Bell, Southern regional director at gay-rights group Lambda Legal, after North Carolina lawmakers failed to stick to a deal to repeal a controversial bathroom law
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Denys Dlaboha 2 hours ago
Hey Barb - this happens every year in december - you should be fired!
of course volatility is high... everyone is going either on vacation or starting their holidays!!!! that's why the "fear" is kicking in... come january it'll pop! and dow will Shatter through 20K the morning of Monday Jan 23!
Write some real news!
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mike chanoski 5 hours ago
who cares about dow20000. I have 10% in short term gains since the election...10% in 6 weeks. that my friends is not chump change! as cramer says bulls make money , bears make money and pigs get slaughtered. speaking of pigs I bought pork loins for 99 cents a pound. farmers gotta be hurting. ME I JUST SOLD MY GAINS AND WILL WAIT TO SEE WHAT HAPPENS. hope the weight does not break the wagon
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Michael Galaburri 7 hours ago
The DOW is going to hit 20,000 whether we want it to or not, and it will be done anytime from now until the inauguration of January 20th. After there probably will be somewhat of a pullback, but like it or not, this market is going higher - 22,000 on the DOW my friends. Yep, you read it here. The technicals are virtually always right, and though we have our healthy pullbacks, the markets will be rising another
10 to 12 percent in 2017 before there is a major pullback.
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