Special comment – the next issue of the Daily Market Notes will appear on Monday, May 20th.

Well, well, well – and how many times did investors over the years sell out of these main indices because of a bearish situation, only to find out that guess what – they all ended higher than ever before yesterday. It sort of reminds one of the situation where the Dow ended “Black Monday” October 19, 1987 at 1,800 and never closed lower than that on its way to almost 40,000 at the present time. So this begs the question of why does a person ever sell on these bearish patterns when one knows that over time these indices do tend to reach record highs?

So the Dow gained 349 points to a best-ever 39,908 led by large gains in AMGN, CRM, GS, HD and MSFT. The S&P did even better with a strong 61 point advance to its highest close of 5308 led by its three largest components which are MSFT, AAPL and newly energized NVDA ahead of its earnings report next Wednesday, in addition to homebuilders, financials and energy.

The Nasdaq added to its record gains from the day before to a new high of 231 up to 16,742 led by those large tech issues while the Russell 2000 Index of small stocks also ended better than ever at 2109 for a 22 point advance.

So it was not surprising that the VIX dropped all the way down right to support levels of 12.45 and if it breaks below that area, the market could continue to make another leg higher, all the way down to a 10 VIX, which is as low as it is going to get and that should finally stop equities on the upside.

Relief came from the bond market, where Treasury yields eased to release some of the pressure on the stock market. The moves resulted from strengthening expectations among traders that the Federal Reserve may indeed cut its main interest rate this year.
 

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Donald M. Selkin

Chief Market Strategist

 

Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.