The Dow extending its streak of record-setting gains to 11 days, the longest such streak since 1987, as increases in utilities and other safety plays outweighed declines in financials. Both the S&P 500 and the Nasdaq rose for a fifth straight week, while the Dow brought its string of weekly gains to three. As seen in the chart below, since the presidential election the major stock indexes have been on a tear. The only major asset classes to fall during this time are precious metals and bonds which are being adversely impacted by the threat of higher interest rates.
A standard chart that we use to help confirm the overall market trend is the Momentum Factor ETF (MTUM) chart. Momentum Factor ETF is an investment that seeks to track the investment results of an index composed of U.S. large- and mid-capitalization stocks exhibiting relatively higher price momentum. This type of momentum fund is considered a reliable proxy for the overall stock market trend. We prefer to use the Heikin-Ashi format to display the Momentum Factor ETF. Heikin-Ashi candlestick charts are designed to filter out volatility in an effort to better capture the true trend. The updated chart below maps the aggressive bullish surge. However, now we are starting to see the first technical signs indicating a possible pullback since the so-called Trump rally started. Overbought markets like the current situation can continue indefinitely, but now stock prices are converging into a tight range near resistance levels. Also, momentum levels are starting to turn down.