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MARKET-ALERT – Rumblings Up, Down, and around Wall Street – Issue #434 dated May 28, 2017 with Ray Dirks of RAYDIRKS Research and his team of Security Analysts and Money Managers, along with the widely-followed Web Sites – and, where Fashion meets Finance, and where Stocks meet Blonds.

Well, well, well…’Twas another good week on Wall Street in the United States as the stock market closed higher despite relatively poor news on the political front. And Rumblings’ readers/investors did well, led by Aflac (AFL), which closed near its high at $74.94.

Let’s take a look at “The Trader” column in tomorrow’s Barron’s, The Dow Jones Business and Financial Weekly, where the headline reads : “What Bad News? Markets Surge Despite It All”. The column starts off : “You can’t keep a good market down.

After two weeks in the red, the Dow Jones Industrial Average advanced 275 points, or 1.3%, to 21,080 last week, and came within 35 points of its March all-time high. The Standard & Poor’s 500 index and the Nasdaq Composite didn’t come up short, The former rose 1.4%, to 2,416, while the latter gained 2.1%, to 6,210. both record highs.

As we’ve seen so many times this year, the market decided it ciukd ignore what could have – or should have – been market-moving headlines. A bombing in the United Kingdom, a China credit-rating downgrade, a former Central Intelligence Agency director fretting over potential Russian influence in the Trump administration; and a Federal Reserve intent on raising rates and shrinking its balance sheet.

It’s easy to imagine any one of these events causing the market to fall. Instead, the market surged ahead. “All of it could have delivered a bad week,” says Michael Shaoul, CEO of Marketfield Asset Management, who notes the continued strength shows “the markets want to go higher.”

Indeed they do, and it’s difficult to foresee what might change that. Friday sees the release of the May payroll data, something that has typically been a market-moving event. But don’t expect it to have the kind of impact it once might have, even if the numbers are decidedly mediocre. U.S. economic data has been disappointing for a while now, and and that trend continued this past week, as durable-goods orders and new-home sales both disappointed. Nary a blip.

Independent strategist Jim Paulsen chalks that resilience up to the better-than expected data coming from abroad. In the past, when U.s. data would weaken, the markets would worry that there was no one else to pick up the slack, and the market would experience its annual growth scare.

But European economic data has been surprisinglystrong – Germany’s flash purchasing -manager index rose to the highest level in six years- Japan has been improving, and even emerging markets are holding up better than might be expected. Such strength, Paulsen says, could limit the size of the drops in the U.S. market, even if something like payrolls disappoints. “They matter less than they did previously, just because there’s more growth in the world,” he adds.

This isn’t a plan for investor complacency. As we saw two weeks ago, when the Dow dropped 373 points in one day, current events don’t matter – until they do. Peter Anderson, chief investment officer at Fiduciary Trust, calls this an “unsustainable equilibrium,” one that can be upended when we least expect it. “We should prepare ourselves for more frequent 300-point down days in the Dow,” he says.

Just don’t expect the pain to last LPL Financial’s Ryan Detrick notes that the S&P 500 had gained 7.9% through Thursday, the 100th trading day of 2017. Why is that important? He says that since 1950, the S&P 500 has never fished lower after gaining at least 7.5% during the first 100 trading days – it’s 23 for 23. And on 20 of those occasions, the benchmark continued to rise, with an average gain of 9% over the remainder of the year.

I suspect most of us could live with that.”

Rumblings thinks that common stocks will continue to rise this year – perhaps by 10% to 20% more, and then go up considerably again in 2018 – partly because interest rates are so low.

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

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