Courtesy of John Nyaradi.

The Dow Jones Industrial Average (NYSEARCA:DIA) gained 54 points on Friday to close at a new record high.

courtesy of NASA

The Dow Jones Industrial Average (NYSEARCA:DIA) and SP500 (NYSEARCA:SPY) both notched gains on Friday, with the SP500 (NYSEARCA:SPY) breaking 1800 for the first time in history and the Dow Jones Industrial Average (NYSEARCA:DIA) hanging onto the 16,000 level to close at 16,065.

For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 0.7% while the SP500 (NYSEARCA:SPY) added 0.4%.  The Nasdaq Composite (NYSEARCA:QQQ) climbed 0.1% for the week.  The Russell 2000 (NYSEARCA:IWM) gained 0.47% on Friday and 0.71% for the week.

Interestingly, the last time the major U.S. indexes climbed for seven weeks straight was in May, 2007, which preceded a double digit decline in the summer of 2007.  After that, the major indexes saw one higher high in October, 2007, before heading into the financial crash of 2008.

On My Stock Market Radar

The chart of the SP500  (NYSEARCA:SPY) tells the story in pictorial form.

Here we can see that the index is near overbought territory at 66 on the RSI chart, and momentum, as represented by MACD, is declining while prices continue to rise.  This is a negative divergence and a situation that oftentimes proves to be an indicator of an imminent change in trend.

chart courtesy of Stockcharts.com

Stock Market News You Can Really Use

As we head for the end of the year, one of the most powerful bull markets in history continues on the strength of support from the Federal Reserve and its historic bond buying program.

The debate over when or if the Fed will begin to taper its program continues to intensify, even among members of the Fed, and the outcome of that debate will likely set the tone for future market action.  A December taper has been frequently mentioned in recent days while most investors appear to be pricing in the first move to come in March after Janet Yellen has taken control of the institution.

The Dow Jones Industrial Average (NYSEARCA:DIA) has set 40 closing highs this year and a strong debate is underway over whether or not this year’s run has created a Fed-induced stock market bubble while the “real” global economy continues to slow.

Many experts say we’re not in a bubble, in spite of this year’s historic run up in stock prices and with the economy only growing at 1.5% year over year.  Janet Yellen doesn’t see a bubble while others see valuations definitely on the high side with SP500 (NYSEARCA:SPY) earnings at 17.6 times operating earnings over the past year, below long term averages but close to levels seen in 1999 prior to the onset of the dotcom crash.

Nobel Prize winner Robert Shiller’s CAPE P/E index is 50% above its median and at the fourth highest level in history, exceeded only by 1929’s Black Tuesday, the period preceding the dotcom crash in 2000, and in 2007 before the onset of The Great Recession and 2008’s meltdown.

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