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 Russell 2000 Index (RLS.I) & Dow Jones Utilities Average (DUX.I)

This holiday-shortened week has found major North American indices including the S&P 500, S&P 100, NASDAQ Composite, S&P/TSX Composite and Dow Jones Industrial Average in a holding pattern at or near the all-time highs. The Dow Transports have slipped a bit while the Russell 2000 rallied to another new high.

Trading action across sectors continues to reflect broad based positive sentiment toward stocks with a wide variety of groups posting gains including several Financials (Banks, Insurance and Consumer Credit), Technology, Homebuilders, and Retailers.

News flow has also been positive with US politicians close to signing off on deals to keep their government operating and to continue COVID-related financial support for individuals. Meanwhile the vaccine rollout continues to accelerate with Moderna’s vaccine reaching or nearing approval in several countries.

The coming week between the Christmas and New Years holidays is commonly one of the quietest of the year with many market participants set to take a break, particularly after such a tumultuous year for markets. Several month-end economic announcements, like the US GDP update, came out this week, so the main events for next week are the US Chicago PMI and Chinese PMI reports scheduled for Wednesday-Thursday.

The following week, January 2021 kicks off with the usual flurry of monthly PMI, employment, auto sales and construction reports.

Investors may also start looking for corporate year-end updates, particularly related to holiday retail sales wrap-ups and the impact of new lockdowns on business.

In this week’s issue of Equity Leaders Weekly, we take a look at what a breakout by the Russell 2000 Index and a breakdown by the Dow Jones Utilities Average are telling us about the current state of investor sentiment.

Russell 2000 Index (RLS.I) 

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