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Dec. 8, 2016, 5:43 p.m. EST

Trump rally has punished doubters as the stock market roars to all-time highs

Dow industrials are up more than 7% postelection

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By Mark DeCambre, MarketWatch

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Don’t fight the Trump rally.

“Don’t fight the trend” is an oft-used expression on Wall Street. It may be truer now than ever. Casting a dubious eye on what has amounted to a spectacular rise for equity markets since Donald Trump became president-elect in November is proving a costly enterprise.

Whether the advance for equities can sustain itself over the next month and into 2017 is anyone’s guess, but for now investors who have been reluctant to embrace the unabashed exuberance that has gripped stock investors over the past month are losing money—fast.

Underscoring that point, four closely watched gauges of the health of the market registered fresh records Thursday following a breakout rally Wednesday.

Trump’s election has resulted in a more than $2 trillion jump in the value of global equities over the past 30 days, according to Bloomberg . Consequently, that is about the size of the losses bond investors, like those in U.S. 10-year Treasury notes /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -1.81% , have suffered over that period.

Here’s a look at how some of the action played out on Wednesday:

The Dow Jones Transportation Average /zigman2/quotes/210598063/realtime DJT +1.61%  soared to its first intraday record of 9,383.65 to finish at a record of 9,371.61, marking its first all-time high in more than two years (as the following chart shows):

Source: FactSet
Transports log their first record close in 2 years Dec. 7, 2016.

From a technical standpoint, higher highs for areas of the market like transports, which are viewed as a measure of the health of the economy, are considered a bullish sign, according to those investors who adhere to Dow Theory.

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.65% , meanwhile, set its own intraday all-time trading high of 19,558.42 and closed at 19,549.62, registering its third-straight record close in a row. But even more remarkable, the Dow is lunging toward cracking 20,000, a psychologically significant level, after breaching the 19,000 level just two weeks ago. Gauged from its closing low of 15,660.18 on Feb. 11, a nadir for 2016, the Dow has gained almost 4,000 points, or about 25% (as the chart below shows):

Source: FactSet

The S&P 500 index /zigman2/quotes/210599714/realtime SPX +2.43%  joined the Dow in record territory on Wednesday storming to a record high of 2,241.63 and wrapping the day at an all-time closing high of 2,241.35, after opening in negative territory. The broad-market index is up about 22% since its February lows.

Source: FactSet

The Russell 2000 /zigman2/quotes/210598147/delayed RUT +1.93% , representing the heath of small capitalization stocks, also turned in a record intraday high of 1,366.61 and ended at a record of 1,364.48.

“We do think we kind of grind higher from here,” said Andrew Adams, market strategist at Raymond James Financial told MarketWatch. He said that even if the market does see a pullback there are many bets in place that the market marches higher.

To be sure, this isn’t a recommendation to jump wholeheartedly, or blindly, in the market. Meetings of the European Central Bank on Thursday and of the Federal Reserve Dec. 13-14 could take some of the froth out of stocks. But the main driver right now appears to be Trump and policies that Wall Streets is widely reading as pro-business.

Check out : Gross warns investors of the ‘negatives’ of Trump policies

Some strategists are still waiting for tech to join the party. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +3.13% has been languishing after setting its record close of 5,398.92 Nov. 25.

Still, the tech-heavy gauge ended at 5,393.76 on Wednesday, just about 5 points shy of its own record close.

“Technology as a sector has NOT yet shown evidence of turning higher properly in a way that would suggest good relative strength into year-end,” wrote Mark Newton, technical analyst at Newton Advisors, in a Wednesday note.

add Add to watchlist BX:TMUBMUSD10Y
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US : Nasdaq
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Jan. 28, 2022 5:16p

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

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