Monday, November 11, 2013
Stock Market Recap for Last Week – The Dow Jones Industrial Average and the S&P 500 extended their string of consecutive weeks higher to five with gains last week. The stock market provided a tougher environment for the smaller capitalization stocks. This group of stocks has outperformed their larger brethren and led the market higher throughout the year. A rally on Friday moved these smaller indices from lower to higher for the week, after significant selling on Thursday. A lot of the individual stock market leaders experienced pullbacks last week. However, most found support at either their 20 day moving average or their 50 day moving average lines and successfully bounced higher after reaching those levels. Typically, strong stocks will pull back to those moving average line areas when they are consolidating gains and will use that support as a refresh or base to launch their next move higher.
Current Outlook and Comment – The Dow Jones Industrial Average finished last week at 15,761.78, while the S&P 500 closed at 1770.61. The third-quarter earnings season is nearly over with almost 90% of the S&P 500 components having reported their earnings so far. As I wrote last week, the reports are showing positive earnings growth for the third quarter. It appears that earnings grew just a tad over 4% during the third-quarter. Analysts estimate that earnings growth for the fourth quarter and the first quarter of 2014 will continue to accelerate. I bring this up again in order to provide what is developing as a terrific backdrop for the stock market over the next few months. It also makes it more likely that those who have and are continually trying to call a top to this market will remain wrong during the next few months. This week will be fairly quiet as a light economic release schedule and the winding down of the third-quarter earnings season will reduce the level of news that had become constant over the past couple of weeks. The market is somewhat extended, but other than normal pullbacks the bias is higher indicating higher prices into the end of the year.
Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results. _____________________________________________________________________________________________________________