Week In Review

new-year-1   The Dow Industrials rallied 1.4% on the week to a new record high closing above 18,000. The S&P 500 and the NASDAQ followed suit with a nearly 1% gain. The holiday shortened week brought news of consumer sentiment at a seven-year high and the GDP was revised upward to 5% in the third quarter – the best showing in eleven years. In another positive sign, the Commerce Department said that consumer spending was up a better-than-expected 0.06% in November from the previous month. West Texas crude oil continued to fall by 4.2% to $54.73/bbl., sending the energy sector down by a modest 0.65%. Lower oil prices remain a double-edged sword as consumers benefit from the drop in gasoline and heating oil prices, but the glut remains a troubling signal that the world economy is not gaining much traction, especially in some of the more developing nations. Virtually all industry sectors were higher this week, led by utilities which soared over 3.5% on average. Other than the energy sector, healthcare stocks took a breather falling about 1.9% on the week thanks to many of the pharmaceutical companies. Express Scripts sent shock waves through the group on Tuesday taking Gilead Science’s Hepatitis C drug off their formulary in favor of AbbVie’s competing offering and gesturing that other high-priced drugs may follow either discontinuance or pricing pressure from Express Scripts and other pharmacy benefit managers such at CVS Health. Income choice Johnson & Johnson was lower on the week by $0.49 and aggressive candidate Teva Pharmaceutical fell $0.82 to $57.18, but the shares managed a multi-year high of $58.95 on Monday, before the news broke. CVS shares were higher by $2.55 for the week, also at record levels. The Dow Transports have had a nice showing this month and as a group are now trading less than one percent from their all-time highs. For the year, rail and trucking stocks are up by over 31.5% vs. the S&P 500’s 13% advance (see chart, below). Conservative play United Parcel Service hit a new high this week at $113.10, before settling back a bit and aggressive choice CSX Corp. at $36.68 is close to its all-time high set back on November 25. A close above 9,202.84 in the transports would reconfirm the bullish primary trend according to Dow Theory followers. With the transports poised to signal a continued bullish tendency and the absence of many viable investment alternatives in this low interest-rate environment, investors should continue to maintain a positive stance toward equities as we head into 2015.

Happy New Year to All !!


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