There are records across the board with all major equity indices rallying higher:

• Dow Jones Industrial Average: 72 under President Trump
• S&P 500: 63 under President Trump
• NASDAQ: 68 under President Trump
• Russell 2000: 33 under President Trump
• Dow Jones Transportation: 28 under President Trump

The session on Wednesday saw stocks back off on an early pop and drift into late noon, only to rally again after the release of Fed minutes that painted a Goldilocks situation of low inflation. Staying below the Fed objective is taking longer than currently expected with the ultra-low unemployment rate.

Meanwhile, a myriad of economic data moved the Atlanta Fed Gross Domestic Product (GDP) estimate to 3.2, suggesting that the economic momentum has spilled into 2018. 

Keep on Trucking

I’m a big fan of the Dow Theory that was developed almost one hundred years ago by Charles Dow. He suggested that stock market rallies gain or lose credibility based on action in the transportation index.  The movement of people and products will always be a great proxy for the movement of an economy, which makes the current spike in the Dow Transportation Index (DJT) so encouraging.

Additional Indicators

Crude oil continues to surge with West Texas Intermediate (WTI) finally piercing at $60 a barrel, which brings the next big upside test at $62.00.  The ‘Bomb Cyclone’ and Polar Vortex should put additional upside pressure on the price of crude.

CBOE Volatility Index (VIX) drifted close to its all-time low point.  I’ve never been able to trade the VIX, which has always been considered a great contrarian indicator but it hasn’t worked in a long time. There is some complacency, but there’s still more apathy and indifference as millions continue to miss the rally.

Market Breadth got better as the NYSE saw 1,708 advancing issues against 1,275 decliners, and new highs of 213 were almost ten times fresh 52-week lows at 28.

Business Proxies

Yesterday, a small metals company posted results before the open of the market, setting the tone for the industry by underscoring domestic and international demand.  Commercial Metals Company (CMC) blew away consensus as American recycling and mill businesses spiked from a year earlier, and international mills popped on record operating profits in Poland. 

 Zumiez Inc. (ZUMZ) posted results that blew away consensus on revenue and earnings as comp-store sales leaped 7.9%, almost twice as much as anticipated. Zumiez management offered strong guidance as well.

I know these are small names, but they give a glimpse of how powerful the economy’s rebound has become, and even smaller names in several sectors enjoyed store growth and even pricing power. 

Today’s Session

The ADP jobs report saw 250,000 jobs created in December besting consensus by 60,000.  The news is remarkable a day ahead of the government’s version, which may or may not come to the same conclusion.  Be that as it may, even with a tight labor market, employment growth remains robust and must start moving the wage needle. 

Buckle up for a potential close at Dow 25,000 today.