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New Record Highs for the Dow, S&P 500

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June 22, 2014 By: , No Comments

Spread betting markets are still caught in a one-way trend as stock markets in most regions of the world finished the week with another strong performance. Most of the optimism for the global economic is being expressed through long positions in the US stock benchmarks, as both the Dow Jones Industrials and the S&P 500 moves to new record highs during the period.

This performance has led many skeptics to wonder whether or not these bull runs have gone too far and that a “bubble” is now in place.  Of course, bubbles are never a good thing — because they eventually burst and many spread betting investors are left “holding the bag” in unprofitable positions.  but there are some clear reasons to argue for why the current run higher is different and this has been the topic of discussion in some of our recent articles here.

Specifically, it will be important for spread betting traders to continue monitoring earnings projections, as positive here will generate the news stories that are needed to drive benchmark prices higher.  At the moment, most of the outlook remains supportive so spread betters should be viewing instruments like the S&P 500 more as a buy on dips rather than as a sell on rallies.  The bull rally is still in place and supported by the fundamental outlook for corporate earnings.

 

Technical Perspective

 

S&P 500:

The S&P 500 is proceeding higher in an orderly fashion and the fact that we were able to close the week above the 1960 mark should be viewed as highly encouraging for stock market bulls.  We have seen very little in the way of material pullbacks in the S&P 500 so there is little reason to expect significant declines any time soon.  Of course, the real question is whether or not we will break the 2000 mark before the end of the year, so the fact that this level is not far away remains encouraging for the index.

 

FTSE 100:

The FTSE 100 is not looking quite as strong as the S&P 500 but we are still trading near the top of its long term range and this is suggestive of higher prices before the end of the year.  We have broken some important short term support levels so we could easily see some more downside before this index turns higher.  Better to wait on the sidelines for now.

 

DAX:

The DAX is back trading at the top of its range and we are now trading just below the much discussed 10,000 mark.  An upside break here is a relative certainty — the real question is when.  Aggressive traders can look to sell into current levels given the psychological proximity but stop losses should be kept very tight here as an upside break of 10,000 would be a highly bullish event.

Richard.Cox

About Richard Cox

University Teacher in International Trade and Finance. Specialty in technical/fundamental analysis of the commodities and currencies markets.

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