Q. “Hi Timon, you recently wrote a prediction article on the Dow Jones where you expect it to rally in the final quarter of 2023.
Do you think the positive earnings will also play a role in the rally?
Also, on your chart it looks like the Dow Jones has been lagging the rally compared to the Nasdaq and SP 500. What are your thoughts on that matter?”
A. I agree fully that the Dow Jones needs to play catch up with the other American indices!
Take a look at the chart below:
Why the Dow Jones is lagging behind the others
In the above daily chart. We can see three indices:
Nasdaq 16.08%, SP 500 8.13% and Dow Jones 1.77%.
Already, you can see the star of the American indices has been the Nasdaq and the SP 500.
The Dow Jones however remains at the bottom, and it still needs to turn up from here.
This means the Dow Jones has some catching up to do, which we’ll be ready for, when the time comes.
Here’s what Art Hogan, Chief strategist at B Riley Wealth had to say:
“The Dow has been the laggard of the big three, and now it seems to be playing catch up. I think that catch-up trade is bringing us to a healthier place,”
And I couldn’t agree with him more.
Also, I’ve seen investors are now seeking opportunities in the sectors and companies that have been underperforming.
In fact we’ve seen huge flows of funds into areas outside the tech-dominated companies.
I’m talking about sectors like industrials, financials, materials, energy, and real estate sectors.
This means, the market rally is becoming more diverse and inclusive.
And apart from investors just piling into computer, tech and AI industries, the stock-market rally with the Dow Jones in other areas are a positive sign of market health, sustainability and growth.
This diversification will continue to help pump up the Dow’s index.
On the other side with earnings season here…
The corporate earnings have been fantastic
Most companies in the latest reporting season have crushed forecasts and expectations in the US.
And when corporate earnings do well in the other American indices like SP 500 and Nasdaq – this is positive for an index like the Dow Jones.
In fact, nearly 130 S&P 500 companies have reported second-quarter earnings.
And out of them, 79% have exceeded analyst expectations.
These results are showing us that the companies are coming out with strong earnings and profits.
And despite the concerns of inflation, the economy is showing strong resilience.
Here’s what Steve Eisman, senior portfolio manager at Neuberger Berman, said on CNBC’s “Squawk Box.
“So far, there’s no evidence of a recession. So as long as there’s no evidence of recession, and I think the market will probably continue to melt up; people are chasing,”
***************
Q. “Can you please explain how is it possible for Outsurance to have data on my charting platform, as far back as 2013 while it was just listed on the JSE.”
A. Great question and the answer may surprise you.
You see, the data that you see from 2013, came from the parent company Rand Merchant Investment Holdings (RMI).
They then changed the name to OUTsurance Group Holdings Limited (OUT).
And they have been in the process of transitioning and rebranding from RMI to
OUT following the unbundling of its investments in Discovery1.
And now, the Centurion-based insurer has officially swapped places with its parent company, Rand Merchant Investment Holdings (RMI), which is no longer listed on the exchange.
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