The Dow Jones Industrial Average advanced to another record high today, and the S&P 500 is now only 8.93 points (or +0.57%) from its record closing high at 1,565.15 as set on October 9, 2007. The S&P 500’s record intra-day high is 1,576.10 as set on October 11, 2007 . Today was the 7th day in a row of “overall” gains in the market (7 up days in a row for the DJIA and the S&P 500 Index). Except for some relatively soft economic news out of China U.S.
Here are today’s closing marks, with changes from Friday’s close:
Monday’s Changes
Dow Jones Industrial Average 14,447.29 +50.22 +0.35%
S&P 500 Index 1,556.22 + 5.04 +0.32%
NASDAQ Composite Index 3,252.87 + 8.50 +0.26%
Russell 2000 Index 942.51 + 0.01 +0.00%
The VIX fell to 11.56 today, its lowest level since February 26, 2007 . As mentioned in this space previously, a relatively low VIX number doesn’t necessarily mean that a correction is imminent, but it does reflect an elevated level of complacency among investors in general.
As I write this column (at 7:30 PM ET ), the main headline on MarketWatch.com is “Time to Sell Your Bonds?” If we look at the TLT, which is the long Treasury Bond ETF (>20-year maturity), then T-bond prices are down about 13% since peaking last July 2012. The yield has risen from 2.45% to 3.25% on the 30-year T-bond over this same period. While I certainly wouldn’t want to own 30-year T-bonds for the next 30 years with a yield of just 3.25%, I suspect that there will be a meaningful “bounce” in T-bond prices very soon, especially if the U.S. stock market begins a correction (as expected). And the Fed is still buying $85 billion/month in Mortgage and Treasury securities, which should provide a floor to bond prices in general, at least over the near term.
With ½ hour remaining in NYSE dealings today (at 3:30 PM ET ), most of the major stock market averages were starting to roll over (or that's the way it looked to me). The Dow Transportation Average and the Russell 2000 were actually in negative territory at that time, and market breadth (Advancing Issues minus Declining Issues) was about even. At that moment, I thought perhaps a meaningful turn was being made. However, several buy programs were executed late in the session, and the DJIA jumped 25 points in the last 30 minutes to post a new intra-day high, and the S&P surged to match its best level of the day.
It’s hard to find anyone who doesn’t believe the S&P 500 will advance from here to a new record high. Of course, I would be surprised if you could have found anyone in late December 2012 who thought the S&P 500 would rally to a record high in the first quarter of this year.
Every weekend I run two stock screens to produce a list of potential undervalued stocks and a list of potential overvalued stocks. While I consider my screening criteria to be relatively “tight”, my objective is to produce two reasonable lists where further research might provide compelling buy or short-sale candidates. This past weekend’s results are noteworthy because the “undervalued” screen produced only 5 stocks, while the “overvalued” screen produced 67 stocks. Approximately 6,500 total stocks are screened in this exercise each week, and this weekend’s results produced the lowest number of undervalued stocks and the highest number of overvalued stocks in the history of this screen (which goes back about two years). Maybe this should be expected given the record highs now being posted in most major indices, but my read here is that the U.S.
Bottom Line: I have very few pearls of wisdom for today. I thought the U.S.
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| S&P 500 Index Daily Bar Chart with Computer-generated Buy & Sell Signals |
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