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Near all-time highs, but for how long?

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by Peter Switzer

With the Dow now around 280 points off its all-time high of 14,164.53 and the S&P 500 fighting it out at the psychologically important 1500-level, the question is can this rally keep rolling on?

The good news

For the record the Dow was down 13.05 points or 0.10 per cent to 13,881.93 while the S&P 500 lost 2.78 points or 0.18 per cent to end at 1500.18. This looks like a breather ahead of further rises and that’s because there’ a lot of good news out there at the moment such as:

The S&P 500 has had its best rising run since November 2004, which was at the beginning of the rally that went to late 2007.
The Yanks have seen their three major stock market indexes rise for four weeks in a row.
The shift out of safe deposits to shares is increasing.
The VIX or fear index has been under 13, which says share players are not spooked about much, though it has lifted a little overnight.
By the weekend, 147 S&P 500 companies had reported and 68 per cent beat expectations on earnings and 65 per cent topped on revenue. That’s a very good sign.
Jobless claims are at a five-year low, and that’s pre-GFC!
Durable goods orders in December were up 4.6 per cent against expectations of two per cent.
Capital spending was up 0.3 per cent.
I also like the fact that US corporate balance sheets now total up to $1.8 trillion, which one day will be used to power investment, economic growth and jobs.

Out this week

Ahead this week, there are more company reports in the USA, a swag of economic data and the all-important jobs report out on Friday.

On the local front there are home price, credit, manufacturing and trade data reports that will help make or break the case for an interest rate cut next Tuesday.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Tuesday, January 29, 2013

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