Dow Ends Winning Streak, Asian Markets Range Bound

 | Dec 30, 2013 01:33AM ET

U.S. markets were rather quiet Friday. The Dow Jones and S&P 500 are near record highs but broke winning streaks. Investors are looking at the rising interest rates and wondering about increased borrowing costs in the economy and trying to figure out if that is good or bad. Higher rates alone are not something to fear though.

If the economy can handle the rise in borrowing costs, then 2014 will be off to a fast start. Still, do not let your profits ride and take some off the table. Equities are at record highs thanks to earnings that are at record highs. We often say that stocks and earning are disconnected. Question is, would earnings be this high if economic policy was not so accommodative? The Fed is still in it with QE. How much of these earnings are real business growth and how much of these earnings have been propped up by the Fed’s QE program? We are going to find out real soon now that the Fed is winding down its asset purchase program.

STOCKS

After the DJIA had its best gains over a six trading day sprint, the blue chip index lost 1.47 points to 16,478.41 on Friday. The S&P 500 was pretty flat and lost 1.47 points to close at 1,841.10. Consumer staples led winners and consumer spending lagged out of the indexes 10 components. The Nasdaq Composite lost 10.59 points to close the week at 4,156.59.

Both the Dow and S&P 500 are within sight of record highs. For Friday, winners barely edged out losers in weak volume. Nearly 424 million shares traded. The Composite volume was a shade over 2 billion.

Asian markets are fairly quiet and range bound today. The Nikkei is leading the region as the yen is hitting new highs against the Dollar.

The Nikkei has now extended its winning streak to nine straight sessions. We even touched, briefly, a six year high at 16,269 points. This is coming after the USD/JPY rose to a five year high at 105.41. The yen is currently at 105.296 at the time of this report and the Nikkei is within a stones throw of a six year high as we are currently at 15,262.

The Shanghai Composite is flat, up 1.29 points after hitting a high at 2,112 earlier in the day. This mark has not been seen in over a week. There is news that Beijing will deal “severely” with companies that perform poorly in 2014, and this has hurt sentiment.

The Australian ASX 200 is around 10 points shy of a new one month high. The AUD/USD is near a three and a half year low near 0.8823 which is helping sentiment.

CURRENCIES

USD/JPY (105.296) is near the target of 105.50 as we touched a five year high earlier today near 105.40. Our next target is 108.50 with a break above that testing 109.00. We only see weakness below 102.50.