Fourth Quarter Earnings Season Coming Up Roses
The major indices once again set new all-time highs this week, and stocks are enjoying a historic winning streak fueled by solid earnings from market leading stocks, the perceived benefits of tax reform and FOMO (Fear Of Missing Out). The S&P 500 has now appreciated in 12 of the last 15 trading days and, after blasting through the 2,800-level last week, the index is now sitting at 2,839. The Nasdaq is approaching the 7,500 level quickly, as the tech-heavy index is on a torrid run. The Russell 2000 small-caps are also participating in the rally, as they made a nice push to new highs above the 1,600 level on Monday.
However, the S&P 500 Volatility Index (VIX) has also been rising, which is slightly worrisome. The VIX spiked to a peak of 11.88 yesterday. While it is off its highs of around 12.50 from last week, the VIX held above both its 50- and 200-day moving averages yesterday, so I’m still slightly cautious at this point and any negative headline of significance could trigger some well-deserved profit taking.
Elsewhere in the market, crude oil is continuing its advance after breaking through the $60-per-barrel level at the start of the year. The price is now sitting just above the $66 level despite a report from the American Petroleum Institute (API) this week that showed supplies of crude oil in the U.S. rose by 2.8 million barrels last week versus an expected drawdown of 1.6 million barrels. The weakness in the U.S. dollar, geopolitical tensions and a more disciplined OPEC have contributed to the rise in oil prices lately.