T3’s Market Wrap: The Bears Get Taxed
Yesterday, Senator Marco Rubio threw a wrench into the GOP tax reform machine.
But it looks like a deal may be forthcoming.
Rep. Kristi Noem of South Dakota saidRepublican leaders would increase the child tax credit to meet Marco Rubio’s demand.
So the bulls went off running.
The S&P 500, Dow Jones Industrial Average, and Nasdaq all hit fresh record highs today.
And the Russell 2000, which fell hard on yesterday’s tax scare, bounced back big time today.
The Russell rose 1.5% today vs. a 0.9% gain for the S&P.
The US dollar rose modestly against the euro and yen.
But interestingly enough, gold was up in the morning, and was basically flat in the afternoon.
The VIX fell 10.3% to 9.41, showing that traders continue to expect almost no volatility going into year-end.
(Related: What Is the VIX? And How Can I Trade It?)
With the dollar and rates up, bank stocks shot up today, with the S&P Financials ETF (XLF) up 1.5% and the S&P Regional Banking ETFup 2.5%.
Software maker Adobe Systems (ADBE) rose 1.7% after reporting stronger-than-expected fourth-quarter earnings. Its first-quarter guidance also impressed.
Other major tech names like Apple (AAPL), Nvidia (NVDA), Facebook (FB), and Tesla(TSLA) posted gains.
Athletic apparel maker Under Armour (UA) rose 9% after the stock was upgraded by Stifel Nicolaus.
Scott Redler, who went long Under Armour calls on November 1, sold today for a tidy profit.
(Click here to start a Redler All-Access Trial)
Economic news was slightly weak today.
November Capacity Utilization and Manufacturing Production were slightly below consensus expectations. But as of late, economic data has been pretty decent, so no one really paid attention.
Bitcoin had a strong day, rising 7% to $17,686.46, according to Coindesk.
One topic that’s emerging is the regulation of Bitcoin and other crypto currencies.
On Friday, the Commodities and Futures Trading Commission suggested that Bitcoin be regulated like existing commodities.
In England, the Financial Conduct Authority said it has no plans to regulate Bitcoin, though investors should understand it’s a “very volatile commodity.”
So how are traders feeling ahead of the Christmas holiday?
Positive. Very, very positive.
The CBOE Equity-Put Call ratio’s latest reading is 0.560. This is below the 0.655 long-term average.
The 10-day moving average is 0.592, which is very low on a historical basis.
And the 3-day moving average, which I use to measure very short-term bullishness, is 0.560 — again very low.
These numbers point to serious bullishness among options investors, who seem to expect more all-time highs into the new year.
And this week’s AAII Sentiment Survey shows that 45.0% of individual investors are bullish. This is the fourth highest reading of 2017, and a huge jump from last week’s 36.9% reading.
It’s also well above the year-to-date average of 34.5% and the 38.5% long-term average.
The long-term average is 38.5%, so a reading of 45% is fairly bullish.
Of course, the permabears are out saying the market’s gone too far, too fast, and that the bulls are too complacent.
Then again, that’s what they’ve been saying all year.
Could the market fall from here?
Yes.
But good luck figuring out when.
Read more by Soren K.Group
