The Dow topped 34,000 for the first time, and the SPY and QQQ followed with new record highs, and the indexes continue to stretch out.  Though 10-year treasuries fell yesterday, they have rebounded slightly this morning, but with no bond auctions until next week, we will have to wait to see the direction of follow-through.  Index trends are extraordinarily bullish, but as we extend, the danger of reversal grows, so don’t become complacent or overtrade because the pullback could be rather punishing.

Asian markets closed the day green across the board as China reported economic growth of 18.3% last quarter.  European markets are also bullish across the board this morning as earnings inspire the bulls.  U.S. futures have recovered from overnight lows, pointing to a modestly bullish open ahead of earnings and housing data.  Expect price volatility to remain high, and keep an eye out for possible intraday whipsaws or even reversals if profit-taking picks up heading into the weekend.

Economic Calendar

Earnings Calendar

We have 20 companies listed on the Friday Earnings calendar, but several are unconfirmed.  Notable reports include ALLY, BK, CFG, KSU, MS, PNC, & STT.

News & Technicals’

According to the WHO, the Covid infection rate is approaching the highest level so far worldwide.  The agency says they will continue to assess the crisis and adjust advice accordingly.  Pfizer’s CEO said yesterday that a third Covid vaccine dose within 12 months is likely needed and went on to say it’s possible people will need to get vaccinated annually.  Daily U.S. Covid cases remain above 70,000 new infections daily.  China says its economy grew 18.3% but was below an expectation of 19%, and their GDP numbers suggest the recovery has already begun to slow down.  The 10-year treasury help yesterday’s sharp rally as it pulled back but is slightly rebounding this morning.  With on bond auctions today, we will have to wait until next week to see if the slide and follow through.

It has become an almost monotonous phrase in the last year of the U.S. Stock market, but we made new record highs in the DIA, SPY & QQQ yesterday while the IWM lagged.  The Dow topped 34,000 for the first time as the indexes continue to stretch in nearly parabolic chart patterns.  The bulls found energy as companies blew past expectations and economic data came in much more robust than expected.  Analysts have lowered expectations so much that so far this season, reports have topped them by more than 20%.  Some might call that manipulation!  That said, the trends remain extraordinarily bullish, and there is no reason to believe it can’t continue, so don’t fight the tape.  However, traders should avoid overtrading and remain vigilant because as this market continues to extend, the danger of a punishing reversal grows.

Trade Wisely,

Doug