By Alan Valdes, director of floor operations at Silverbear Capital
Wow! Thanksgiving is almost here. Time really does fly. Don’t expect to see much volume in this shortened holiday week. Traders start to leave tomorrow to do what’s really important: head home to spend time with family, friends and loved ones.
The next six weeks are usually directionless, similar to the end of summer — especially with earnings season winding down. With 95% of S&P companies reporting third quarter earnings, 74% have had positive EPS surprises and 66% have beaten on sales. Overall, it’s been a very positive earnings season and a great way to end the year. The positive momentum continues today. Before the bell, we heard from Lowe’s (LOW), Hormel Foods (HRL) and Dollar Tree (DLTR), where I buy my gifts, and all posted better-than-expected earnings. After the bell, we heard from Salesforce.com (CRM), Hewlett-Packard (HP, HPE), and GameStop (GME), to name a few.
Trump’s proclamation yesterday at his Cabinet meeting that his administration will give “Americans a huge tax cut for Christmas” has, along with today’s earnings, lifted all three indexes higher. The S&P 500 (^GSPC) traded above 2,600 for the first time, the Dow (^DJI), at this writing, had gained 172 points (another all-time record), and the Nasdaq (^IXIC) hit a record intraday high reaching 6,859.84. Traders are still having some trepidation over his remarks, even as we all hope this indeed will come to pass before the ball falls in Times Square to usher in 2018.
However, there still seems to be 11 million Americans who will get a tax hike. Like they say, “The devil is in the details!” I believe that this bill will pass and, for Wall Street, a corporate tax cut could have this market humming into 2018.
Have a Healthy and Happy Thanksgiving!