US stocks bounce at the open as better-than-expected earnings from Exxon Mobil (XOM), a larger-than-anticipated rise in personal income and strengthening manufacturing activity fuel the rally.
But keep an eye on the run-up’s stamina, as the stock market has portrayed an ugly pattern of late. Stocks have shown hefty gains at the open in recent sessions, only to see those gains drift away by mid-afternoon, putting any rally’s sustainability in question.
Dow rose as much as 119 on Friday, only to close down 54 – near session lows. Same thing happened last Tuesday, when the index rose as much as 88, but eventually lost all the gains and finished down three. And prior to today’s action, the Dow was down 6% since Jan. 19.
“There’s simply no way to sugarcoat it,” Bespoke Investment Group says, as recent trading suggests stocks may have risen too fast, too soon. (The Dow rose 64% between mid-March and Jan. 19.)
The long-term uptrend is also getting close to breaking. “If the uptrend breaks, investors will need to reposition their portfolios, which ultimately puts even more pressure on share prices,” firm adds.