Weekly Market Summary

Summary: The major US indices all traded at new all-time highs (ATH) this week. Even the lagging small caps index closed at a new ATH on Friday, and transports are very near a new ATH. Persistent strength like that seen throughout 2017 has almost always continued into year-end. However, like last week, a few studies suggest short-term upside will likely be limited. The third quarter ends on Friday.

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US equities are now in the second longest and second strongest bull market of the post-war era. Enlarge any image by clicking on it.

This bull market is not showing signs of ending. This week, SPX and DJIA made new all-time highs (ATHs) on Wednesday and NYSE and RUT made new ATHs on Friday. All the main US indices have now made a new ATH in the past two weeks.

As an example of how persistent the current trend is, consider this: this week was only the second time since 1995 that SPX did not trade lower than the close of September OpX at least once. The only other exception was 2001 when SPX lost 12% during OpX week.

A month ago, weakness in transports raised the concern among many pundits that a "Dow Theory" sell signal was likely. Since then, transports have risen 7.5% and closed Friday a mere 0.3% off its ATH.

The rebound in the lagging transports and small caps should reassure those that previously considered their weakness to portend broader weakness in equities. This is yet another example of how breadth weakness is a highly unreliable indicator for anticipating turns in the market.