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MARKET-ALERT – Rumblings Up, Down, and Around Wall Street – Issue #431 dated May 7, 2017 – with Ray Dirks of RAYDIRKS Research and his team of securities analysts and money managers, along with the internationally-followed Web Sites : and, where Fashion meets Finance, and where Stocks meet Blonds.

Well, well, well … ‘Twas another exciting week on Wall Street as May got underway with 2 of the 3 major indexes – the Dow Jones Industrial Average and the Standard & Poor’s 500 hitting new highs. Rumblings’ readers/investors also did exceptionally well, with Aflac (AFL) at $74.35 and Aetna (AET) at $147.70 in our list of Favorite Stocks doing fine despite a pullback in the insurance stock group.

Now, let’s quote from “The Trader” column in tomorrow’s Barron’s, The Wall Street Journal Business and Financial Weekly, where the headline reads : “Stocks Ignore the Headlines and Hit New Highs”.

The column starts off : “A week full of market-moving headlines that failed to move the market ended with two of the three major indexes hitting new highs.

The Dow Jones Industrial Average advanced 66 points or 0.3%, to 21,007 last week, while the Standard & Poor’s 500 index rose 0.6% to 2,399, a new all-time high. The Nasdaq Composite gained 0.9% to 6,101, also a record.

For most of the week it looked as if nothing was going to happen at all. Through last Thursday’s close, the S&P 500 had gone seven days without a move of 0.2% or more in either direction. That’s only the fifth time that the popular benchmark has gone at least that many days without such a move, according to Bespoke Investment Group.

The lack of action was putting many observers on edge, but Bespoke notes that stocks generally move higher when such streaks end: Following low-volatility streaks of seven days or more, the S&P was 2.1% higher a month later on average. “Historically, similar periods of low volatility have rarely lasted longer, and periods that follow offer modest but very consistent equity market gains,” Bespoke says. On Friday, the S&P gained 0.4%.

That the S&P would hit a new high was all the more surprising given the lack of reaction to major headlines throughout the week. On the plus side of the ledger, Congress managed to avoid a shutdown, while on the downside, President Donald Trump tweeted that the U.S. “needs a good shutdown,” and the Federal Reserve appeared appeared more hawkish than prognosticators had been prognosticating. Nothing. Then there’s the prospect of a shocker in the French election over the weekend, though the pro-Europe candidate Emmanuel Macron is widely expected to beat the more-radical Marine Le Pen. Yet here we are. “It’s like the market took Novocain and is numb to everything says Thomas Lee, head of research at Fundstrat Global Advisors.

Well, not completely numb, as below the surface, stocks were churning, sometimes violently. The energy sector fell 0.7% last week – and was saved from a much larger loss only by a Friday rally – as the price of oil tumbled 6.3% to $46.22, while telecom stocks dropped 1.2%, thanks to big earnings-related drops in CenturyLink (CTL) and Level 3 Communications (LVLT). That caused the shares of the two companies – which are planning to merge – to fall 8.1% and 5.1% respectively. But those drops were more than offset by the financial sector’s 1.2% rise – higher rates are good for banks – and tech’s 1.4% gain, despite lackluster earnings reports.

Not even the House of Representatives’ passage of Trumpcare last Thursday afternoon could ruffle the market’s feathers. The health-care sector finished the week up 0.6%. Even hospital stocks, the industry with perhaps the most to lose by the passage, since they probably will have to treat a greater number of patients who can’t pay, held up just fine. Instead, investors focused on deal making – Community Health Systems (CYH) and Tenet Healthcare (THC) found buyers for some hospitals – rather than the potential consequences of the bill.

There’s a good reason for that, says Jason Pride, director of investment strategy at Glenmede: The final health law probably won’t resemble what came out of the House. He points to the fact that the bill squeaked through by just four votes, and the Senate version will most likely look quite different. “Passing the House is the easy step,” Pride says. “The market is shrugging it off as not much of anything.” Until it is.

Rumblings suggests that readers/investors, after checking with their investment advisers, sell most, if not all, of the fixed-income investments they own and then reinvest those funds in common stocks, including those on Rumblings’ list of stocks to own in 2017, including Aflac and Aetna, as well as Apple (AAPL).

Rumblings suggests that readers/investors place no more than 1% of the funds that they invest in common stocks in the securities of any one company. It’s best to diversify…. !

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