The Dow crosses 18,000 as the year closes up. Now, if the market can hold on through this short week and the first part of next, it will finish the year just about where I suggested it would last summer. I saw all the fundamental signs, economic pointers that suggested the market would attract buyers and it has, despite the panic that ensued in October.
- U.S. and European shares rose on Tuesday, with the Dow industrials topping 18,000 for the first time after an unexpectedly strong report on U.S. economic growth supported risk appetite and eased concerns about falling oil prices.
And what about that GDP report? Again, despite all the doom and gloom, the talking heads, naysayers, and celebrity analysts with an agenda, the economy is proving, once again, it is for real.
- The Commerce Department said the final estimate of U.S. gross domestic product for the third quarter was revised up to a 5 percent annual pace, its quickest in 11 years, from 3.9 percent reported last month. Stronger consumer and business spending fueled the surge.
“Stronger consumer and business spending …” Well, how do you like that? All that talk earlier this year about the US consumer not having any confidence and US corporations hoarding cash seems to have evaporated with the current numbers coming out.
- The key point here is that U.S. companies have healthy cash cushions and a productive use of cash may further fuel economic growth.
The above words appeared in an article last March, as did the words below, which makes them seem prophetic.
- Investments in new equipment and buildings would be appropriate as the average age of private fixed assets is almost 22 years – a high for the last 4 decades.
Apparently, companies are spending and, apparently, the consumer is as well, and the reason both are dispensing cash more freely is that confidence abounds, which explains the phenomenal jump in Q3 GDP growth.
- Other data showed U.S. consumer sentiment jumped in December to its highest level in nearly eight years on cheaper gasoline and better job and wage prospects.
The market seems ready for another leg up, a substantial leg up in 2015, especially if in the first part of 2015, earnings come in as expected, up again.
Perhaps, the most telling sign that the market is ready for another leg up is the Russell 2000 (RUT). Along with the Dow crossing 18,000 and the S&P 500 hanging above 2080, the RUT is, once again, above 1200. It is closing in on its 52-week high of 1213, which means, money is flowing toward risk-on investments, which means, as per the usual, small-caps are leading the way up.
Anyway, let’s see what the rest of this week and early next week brings. Beyond that, get on board for the 2015 ride. It promises to be a good one.
Trade in the day; invest in your life …
