Saturday, November 23, 2024
Stocks continued their upward trajectory on Tuesday, but there is one thing that has some investors concerned.
The Dow Jones Industrials rose 164 points, or just under half a percent, to close at 34,991. The S&P 500 gained seven points to close at 4,503, and the Nasdaq Composite added nine points to close at 14,103.
Bonds were down, with the yield on the two-year Treasury rising ten basis points to 4.916%. The yield on the 20-year Treasury was up eight basis points to 4.895%.
Oil and gold also declined, but only slightly. Oil fell $1.63 to close at $76.53, and gold lost $3.40 to close at $1,963 a troy ounce.
While Tuesday's market action may not have met the classical definition of a "follow-through day," it was still a positive sign that profit-takers did not dominate the action and send stocks lower. This is especially encouraging, given the strong market performance over the past two weeks.
However, there is one thing that has some traders worried: the old adage that "all gaps get filled." A gap, or gap day, occurs when the market opens higher than the previous day's high. Some traders believe that the low of the gap day must also exceed the previous day's high.
Both definitions of a gap day were met on Tuesday. This means that, if this truism holds, stocks could backtrack until they trade in the area that was "gapped."
Despite the concerns about gap days, there was some positive economic news yesterday. The Producer Price Index (PPI) came in well below expectations, showing a decrease in prices at the wholesale level for October. Retail sales also came in above expectations, and Target exceeded expectations on both the sales and earnings front.
This suggests that the economy may be able to achieve a soft landing, avoiding a recession.
Investors will be watching today's release of Walmart's earnings and Initial Claims for Unemployment.
