Stay invested for the new year
The VIX volatility gauge spiked towards the end of the year worrying some that the bull market may be over or is hitting pause.
1 Month display of the VIX Volatility Index
Though, what is commonly referred to as the fear gauge, the VIX has been going up; other market indicator have remained strong.
3 Months Dow Jones Transportation Index
The Transportation index is still near its all time highs and has been going up with the exception of just the last 2 trading days of the year.
Looking at the Dow Jones Index and the S and P 500 we see similar charts.
3 Month Dow Jones Index
3 Month S and P 500 Index
All charts are near their all time highs and have only seen some weakness in the last few trading sessions. This coincides well with end of the tax year taxing profits or otherwise closing positions. Especially since one of the hardest hit sectors has been technology and real estates both of which have had some of the best gains in 2017.
Since these three indexes are all still at highs Dow theory is in play pointing to a strong market. The only thing saying otherwise I believe is just light selling mostly for tax purposes.
With the next earnings season right around the corner and the strength that has been behind previous earnings seasons recently, also tax reform passing, also positive market indicators, also technology stocks (as of late have been the biggest earnings beaters) haven't had their stock price beaten up will have a lower bar to beat in order to raise their stock price back and drive the markets up overall...It is well advised to stay invested and keep investing.
We have had a strong 2017 and a strong end of the year. From all I see it looks like we will have a strong beginning of 2018 as well!
Happy New Year.
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