Visitors Now:
Total Visits:
Total Stories:
Profile image
By ETF Daily News (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

Here’s Why Dow 20K Won’t Happen Any Time Soon

Thursday, January 12, 2017 5:17
% of readers think this story is Fact. Add your two cents.

(Before It's News)

From Tyler Durden: As Vicent Cignarella, FX strategist who writes for Bloomberg, wrote recently, the “Dollar Rally May End If Dow Fails to Pass 20,000″ and the one variable that might determine if it does, is Donald Trump.

Here’s why:

President-elect Donald Trump’s first press conference in six months will need to include some policy specifics if U.S. stocks and the dollar are to continue their post-election rallies. (Update: It didn’t contain any specifics). The Dow Jones Industrial Average has led the dollar higher since the November election with a correlation above 0.85, but a potential problem for dollar bulls has emerged as two technical indicators show the blue-chip index’s recent surge will leave it short of the 20,000 milestone.

Tom DeMark’s TD Sequential is signaling a pullback in the Dow at the same time mean reversion technicals are flashing caution. The indicator is a trend-reversal technique designed to predict a turn in a market using exhaustion points to determine peaks and troughs. “If everyone anticipates 20,000 will be broken they are already in the market awaiting that breakout, so what impetus is left to move the market above that level,” DeMark said in a Jan. 6 Bloomberg TV interview.

The equity index has failed to stay above the second standard deviation from its annual mean a handful of times in the past month, suggesting its next breakout will be to the downside. The Dow gained as much as 9% after the election and on Friday climbed within 0.37 point of the round-number milestone. The dollar hit a 14-year high on Jan. 3. A retreat in the Dow accompanied by a dollar slide would only worsen if the President-elect doesn’t deliver policy substance as markets are looking for clarity on everything from infrastructure spending to trade agreements that will impact the economy.

And here are some further details from Bloomberg, why traders can count Tom DeMark among the growing group of skeptics that the Dow – which hit 19,999.63 last Friday and faded – will rise above 20,000 anytime soon.

The chart analyst said investor psychology is acting as a ceiling on the gauge – everyone who expects the level to be surpassed has already purchased stocks, leaving an absence of buyers whenever it gets close.

“We’ve been confident the last three weeks we would not break 20,000,” DeMark said in an interview on Bloomberg Television. “I assume there’s a possibility intraday we could, but it’s so unanimous, it’s almost as if the election were being replayed within the market. Everyone’s confident the market’s going to break 20,000. If it does break, it may go quite a bit higher. But I don’t think it’s going to happen.”

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.53 (-0.27%) in premarket trading Thursday. Year-to-date, the only ETF tied to the DJIA has gained 0.92%, versus a 1.60% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #6 of 77 ETFs in the Large Cap Value ETFs category.


This article is brought to you courtesy of ZeroHedge.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.