Dow’s Epic Winning Streak is Over — Now What?

old bullYesterday, the benchmark Dow Jones Industrial Average actually — gasp — closed in the negative. Normally this isn’t news, but the Dow had closed higher in the previous nine sessions in a row.

As the winning streak comes to an end, investors and analysts are scratching their heads wondering what’s next.

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Mark DeCambre of MarketWatch points out that a slew of analysts are warning that things are getting to frothy:

As the Dow industrials shift into hyperdrive, a sense of agita is rising rapidly on Wall Street.

A number of analysts and strategists over the past few days are cautioning that worrisome trends are starting to crop up as equities take the escalator higher, pointing to a market that is getting overheated.

Not only is the greed/fear index flashing a warning signal, but continued Brexit fallout fears have money managers holding a lot of cash:

The rapid, whipsaw action in stocks from sharp losses fueled by Brexit to the thin-oxygen levels of record altitudes has left a nagging sense of doubt for many investors. Indeed, according to a recent Bank of America Merrill Lynch monthly fund manager survey, investors are setting aside the highest proportion of their holdings in cash since 2001—about 5.8%.

Not everyone is bearish, however. Katie Stockton, BTIG chief technical strategist, for example has a price target of 2,400 set for the S&P 500, which would be a 12% gain from current levels.

As the presidential election nears, however, there’s one thing everyone can agree on: we simply have no clue how the market will react to a political race featuring two incredibly divisive candidates.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) closed at $185.02 on Thursday, down $0.80 (-0.43%). DIA was up $0.37 (0.20%) in premarket trading Friday. Year-to-date, the largest Dow 30 ETF has gained about 6.3%.

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