Is 2017 the Year We’ll See Dow 20,000?

The Futures are flying!  

What couldn’t be accomplished in 3 weeks of trying is almost accomplished while the markets were closed this morning as the Dow gains over 150 points in pre-market, low-volume trading.  Asia was up on positive Chinese data while Europe had some good PMI numbers and oil is up 2.5%, at $55, as OPEC officially began their production cuts on Sunday and so far, so good.

Fundamentally, nothing has changed.  Last I heard, high oil prices were bad for consumers and impacted profits in the Transports but no one actually cares about the Fundamentals – least of all the TradeBots that run the markets these days.     

Anyway, I resolved to be more Republican in 2017 so we’re going to accentuate the positives in the markets and ignore the negatives so we can BUYBUYBUY without all that needless worrying that comes with being a Liberal.  Earnings season kicks off next week and we’ll be able to see if our Corporate Masters are able to justify a 10% rise in their stock prices.  Certainly the energy sector should be improving.

We did have a 3.2% improvement in Q3 earnings over the prior year but that was the first time we had a positive quarter since Q1 ’15 so 1 out of 6 is not a trend yet.  Of course the comps are easy to beat so we should get SOMETHING out of Q4 but keep in mind we’re already up 10% from 2015 – on, so far, less than 2% more earnings.

Half the Q3 earnings came from the Financials and Financials should do well in the age of Trump but, like the broader market, they have already jumped close to 20% since the election in anticipation of a lot more than the 8% gains they’ve posted so far. 

If you think the Financials have gotten ahead of themselves, I like the Ultra-Short Financial ETF (SKF) which has been slammed down 33% since the Summer but seems to be holding up at $30 as the Financial ETF (XLF) runs out of gas at $24.  A pullback on XLF to $21 would be 10% down and that should give SKF a 20% pop to $36.  If we assume that happens after January earnings, we can…

Provided courtesy of Phil’s Stock World.