The Stock Market Is Expected To Continue Higher!

by Ian Harvey

September 21, 2018

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The stock market is expected to continue higher over the next several months as there are signs that the market has more legs-to-go; and a further breakout is likely despite the historical predictions that September is usually the worst month for stocks!

However, stocks surged upward on Thursday as trade worries subsided and investors began to look ahead to earnings reports next month.  The Dow Jones Industrial Average (DJIA), was up +0.95% on Thursday, booking its first record since January 26; this is joined by the S&P 500 Index (SPX), up +0.78%, and the Nasdaq Composite Index (COMP), up +0.98%; both of which had already broken out of a lengthy downturn to move into record territory (as recently as Thursday for the S&P 500).

There are several signals that seem to confirm the idea that the stock market is expected to continue higher…..

  • …..the Dow Jones Industrials are on the move higher, particularly the Dow Jones Transport stocks, including airlines and railroads…..as I mentioned in a recommendation to our “Mentorship” members yesterday. Boeing and Caterpillar, two industrial stocks that had been held back by emerging market weakness and China trade fears, have been on a positive move in the past week or so.
  • ……and for those that are followers of the Dow theory buy signal – suggesting that for the next six to nine months the economy is improving and resulting in expectations of a higher market.
  • …..also, financials have been getting their act together this week – having had the strongest move in two months, higher than average volatility.
  • …..as well, Chinese stocks are coping with the latest round of trade actions – suggesting that China stock declines may have bottomed.
  • ….. the S&P technology sector is also helping the rally after faltering recently; up 0.2 percent for the week earlier, but then more than 1 percent Thursday.
  • …..as stocks moved higher bonds sold off – which is a positive sign.

The Downside of this Argument…..

As in any situation, there is always an opposite reaction or view that unfolds. In this case headwinds could disrupt this positive move of the stock market, which includes the potential for more escalation in trade wars and rising interest rates.

KNOWLEDGE IS POWER!

Conclusion…..

More broad-based buying is apparent based on the fact that the Dow has caught up with the S&P and other indexes that had made new highs since January and February's stock market sell-off; which is a positive.

Many market watchers are pushing for the S&P closing above its high, and pushing its way up to 3,000 in the fourth quarter.

As always is the case with markets, only time will tell how this ultimately plays out, but for now stocks have so far resisted the urge to unravel on the lingering trade fears, even as it remains the most closely followed risk factor on Wall Street.

Take advantage of what the market has to offer today.

Stock Options Made Easy memberships are here to help you ride the wave higher and profit from the rising market!


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


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