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Stocks may reach new high price levels
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Loading...Consumer inflation and industrial production could influence stocks Tuesday, but the market seems set on autopilot toward more new highs.
"It's hard to fight the Fed, and I just think the Fed's hands are still tied and that's why the market is doing what it's doing. … The quest for yield continues. My gut tells me that it doesn't look right, but at the same time it's hard to fight it," said Daniel Deming, money manager with KKM Financial. "I'm maintaining some defensive positions. It makes it seem like the market does want to chug higher unless the Fed does move."
"I think we're extended here. I think we're due for a pullback, but as long as interest rates stay where they are, stocks aren't going to go down a lot," said Steve Massocca, managing director at Wedbush. "We're 200 points off the June bottom. We had a 10 percent rally … It's a tinderbox right now. All it needs is a little spark."
Massocca said oil's gains were largely a short-covering rally, and he doesn't believe they will be sustained. As for stocks, they could drift higher until a catalyst comes along to break the momentum — including economic data.
But the simultaneous new highs in the three major stock indexes has a track record of being a positive event for the market, according to a study by Ryan Detrick, senior market strategist at LPL Financial. The last occurrence before Thursday was in 1999, right before the tech bubble burst, sending stocks sharply lower.
Detrick studied that and 147 other instances back to 1979, where the three indexes closed at new highs, and 75 percent of the time the market was higher a year later, for an average gain of 11.9 percent.
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