Big Friday Rally Put The S&P 500’s Total Return At A Record High

Big Friday Rally - Market Inches Towards Record High

The stock market rallied hard on Friday as S&P 500 had its 3rd straight weekly gain. S&P 500 increased 0.66% to 2,907.41. On a total return basis, the market hit a record high. The highest close in September was 2,930.75, meaning a record high excluding dividends is inevitable.

CNN fear and greed index is at 74 which is very close to extreme greed again. S&P 500 is up 15.98% year to date. I will freely admit that at the start of the year, never in my wildest expectations, did I think the market would be up almost 16% in less than 4 months. Even though I have bought into the concept that this slowdown won’t lead to a recession and that earnings growth will re-accelerate in Q4, I don’t fully grasp the gains which have been achieved.

Nasdaq was up 0.46% and Russell 2000 was up 0.36%. VIX was down 7.76% to 12.01. I think it’s a great time to buy protection because the VIX is so low and stocks have gotten so far ahead of the economy and earnings. Earnings revisions have gotten better, but they are still worse than average.

Big Friday Rally - Disney+ To Launch In November

Disney stock exploded 11.54% higher because the company unveiled its $6.99 per month streaming platform called Disney+. It will launch on November 12th. 

As a result of this announcement, Netflix stock fell 4.49%. I disagree with Netflix stock’s decline because Disney has family friendly content geared towards kids. That doesn’t directly compete with Netflix. The Disney+ service will include 13 classic animated movies, 21 Pixar features, original series, and material from the Marvel, and Star Wars franchises.

Netflix competes in an incredibly tough industry. This new service will make it slightly tougher to compete. But it won’t be enough to stop Netflix from growing. I’m not sure why Disney stock rallied so much since the only news from this announcement is the price. The price is extremely accessible but also makes it tough for Disney to turn a profit. Disney plans to spend $1 billion on content by 2020 and $2 billion by 2024.

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