The Capital Wave Forecast for this week is “more of the same,” as in expect markets to keep going up based on money flowing in from the sidelines and money flowing from consumers as they exercise their “shop until you drop” plans.
We’ve been bullish ever since the major benchmark indexes broke out of the long, and at times worrisome, sideways channels they traded in from last February until the beginning of November.
Then it happened, November’s bell ringing ushered in expectations for holiday sales and that fourth quarter earnings might beat already beaten-down consensus estimates.
Since the breakout flashed green lights to anyone watching or reading the Capital Wave Forecast, there’s been no stopping side-lined money from pouring in and from consumers doing what they’re expected to do this time of year.
Record Breaking Highs Again Is the Big Trend of Bullish 2019
Stocks made new records AGAIN last Wednesday. They sold off on Friday on thin volume, which meant nothing in terms of sentiment or expectations for more gains.
For the week the S&P gained .99%, closing at 3140.98. It’s the 26th record this year, leaving it up 25.8% for the year. An incredible year by any account, but even more so considering the age of this bull market.
The Dow ended the week at 28,051.41, up .63%. It’s been up 5 out of the last 6 weeks, hitting its new all-time high on Wednesday when it closed then at 28,164.
With tech stocks leading the charge, as they have since 2009, it’s no wonder the Nasdaq Composite rose 1.71% on the week, closing Friday, a down day for stocks, at 8666.47.
Even the Russell 2000 got into the act, rising 2.2% for the week. However, that broader index of smaller and midcap stocks is still 7% below the all-time highs it reached in August 2018 when it hit 1740.75.
Retail investors have been the major catalyst for rising stocks since the November breakout.
According to Alliance-Bernstein $32.5 billion has flowed into equity funds over the last three weeks.
Most of those flows were into ETFs, including funds that invest in European stocks, emerging market stocks and of course U.S. equities.
The other flows that investors are watching are consumer spending flows.
Adobe Analytics, the only credible analytics to come out since Thanksgiving on retail sales, through a slew of other analytics will start flowing tomorrow, reported to Retail Drive that online Black Friday sales this year were up 19% to $7.4 billion.
That’s the second biggest online day of sales since last year’s Cyber Monday, which totaled $7.9 billion.
Today is Cyber Monday, and Adobe is predicting online sales will be 20% more than last year’s record.
They expect full weekend sales, from Thanksgiving through Cyber Monday, to total $29 billion.
We’ll see what the numbers are in a few days.
The point is, consumers are spending. That’s important on account of there being six fewer shopping days this year from Thanksgiving through Christmas Eve.
Until the sidelined money stops flowing in and consumers back off spending, the forecast is for stocks to keep marching higher.
You gotta be in it to win it, make sure you’re riding this bull, it’s not going to end any time soon.