New Record Highs For The Dow And S&P 500

Despite the lack of new economic data or corporate earnings reports on Friday, stocks continued to advance on pure momentum as investors apparently feared it may yet be too early to start taking profits by cashing-in their shares.

The Dow Jones Industrial Average (DIA) gained 35 points to finish Friday’s trading session at a new record-high closing level of 15,118.49 for a 0.24 percent advance. The S&P 500 (SPY) climbed 0.43 percent to set a new record-high close at 1,633.70.

The Nasdaq 100 (QQQ) rose 0.67 percent to 2,981. The Russell 2000 (IWM) surged 0.92 percent to end the day at a record-high 975.

In other major markets, oil (USO) dipped 0.09 percent to close at $34.14.

On London’s ICE Futures Europe Exchange, June futures for Brent crude oil declined by 71 cents (0.68 percent) to $103.49/bbl. (BNO).

June gold futures declined by $21.00 (1.43 percent) to $1,447.60 per ounce (GLD).

Transports coasted on Friday, with the Dow Jones Transportation Index (IYT) advancing 0.56 percent.

All of the major European stock indices finished the week in positive territory. The Euro STOXX 50 Index finished Friday’s trading session with a 0.44 percent advance to 2,785 – remaining above its 50-day moving average of 2,669.

Japanese stocks made absurd gains on Friday at the conclusion of “yenny watch” as the yen finally broke below the psychological barrier of one American penny. Japanese investors hope that with this barrier broken, the yen can decline even further. A weaker yen results in more-competitive prices for Japanese exports in foreign markets (FXY). After the closing bell in Tokyo, the yen sank as low as 101.94 per dollar. The Nikkei 225 Stock Average skyrocketed 2.93 percent to 14,607 (EWJ).

In China, stocks advanced after the People’s Bank of China cut the yuan’s reference rate by 0.15 percent to 6.2016 per dollar. Over the past few days, the currency reached its highest exchange rate in 19 years. The weakened yuan gave the nation’s stock prices a modest boost. The Shanghai Composite Index climbed 0.62 percent to 2,246 (FXI). Hong Kong’s Hang Seng Index advanced 0.47 percent to 23,321 (EWH).

Technical indicators reveal that the S&P 500 remains far above its 50-day moving average of 1,570 after closing at 1,633.70 – motivating bears to hope that we are watching the formation of a head-and-shoulders pattern, which would signal a decline. Its Relative Strength Index advanced from 65.54 to 67.36 – approaching the threshold level of 70. Most investors consider a Relative Strength Index above 70 as an “overbought” signal. The MACD remains above the signal line, suggesting the likelihood of a further advance.

For the day, most sectors finished in positive territory except for the energy and materials sectors. The healthcare and consumer discretionary sectors were the clear leaders of the group.

Consumer Discretionary (XLY): +0.78%

Technology: (XLK): +0.29%

Industrials (XLI): +0.30%

Materials: (XLB): -0.10%

Energy (XLE): -0.52%

Financials: (XLF): +0.42%

Utilities (XLU): +0.23%

Health Care: (XLV): +0.99%

Consumer Staples (XLP): +0.39%

Bottom line: Both the Dow and the S&P 500 reached new record-high closing levels on a day when there were no new economic data or corporate earnings reports to feed the bulls. Friday’s positive finish was based on pure momentum and investor concern that more gains will be missed by taking profits now.

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