Equities and the Economy:

• ANOTHER record close for the Dow.
• Streak is getting long in the tooth.

The Dow closed at its 12th consecutive high yesterday at 20,837, up 16 points. The S&P 500 also ended at a record high of 2,370, up 2 points, and the Nasdaq closed just shy of its record high at 5,862, up 17. The Dow’s streak is definitely getting extended. I posted this table last Thursday and am posting it again to show you we’re bucking the odds. As you can see there’s only been twice in history when the consecutive winning streak has been greater than 12 days. Now am I saying “sell”? No. Just that the streak is way over due to end.

Regarding economic news, the National Association of Realtors reported that its index of pending home sales fell 2.8% in January to 106.4. Lack of inventory and deteriorating affordability resulting from higher mortgage rates are the culprit. However, buyer traffic is outpacing seller traffic in metro areas and homes are selling at a much faster rate than a year ago.

This morning is beginning quietly with the Dow down a meaningless 3 points.

Oil

• Samo-samo. Mid $50’s.
• Prices remain stagnant.

WTI closed up 6¢ at $54.05 and Brent fell the exact same amount settling at $55.93. I’m really running out of things to talk about here. Prices are virtually unchanged from a week ago and have been remarkably involatile for 3 months. Expect more of the same until maybe spring when we may see an uptick when the summer driving commences. OPEC and “friends” have cut supply while U.S. production is once again over 9 million bpd, and expected to continue to climb. Additionally, as of the last CFTC report, the speculative traders are very long which means a lot of money has been spent accumulating the long position and the bulls may not want to get longer or have the resources to do it. Especially when their position isn’t making money.

The API releases its weekly crude and products report tonight. WTI is down 60¢ this morning.

Courtesy of MDA Information Systems LLC

Natural Gas

• Record warm weather continues
• Natural gas prices at 9 month low.

The April Nymex contract began its first day as the prompt falling 9.4¢ closing at $2.693. However, this is 7¢ higher than where the March contract expired. Traders remain bullish this summer and next year. The summer months are still trading just below $3.00 and calendar 2018 is $2.98, both materially above March and April low price. Here’s why the belated bullishness. Non-weather related demand remains strong. LNG send-outs will continue to increase this year, exports to Mexico will continue to climb and the economy is healthy. Maybe the biggest factor is that U.S. dry natural gas production (the stuff we burn in our house) is down 3% this year vs. last year at this time. I expect to see the $2.70 level hold. $2.70 will bring back in some gas burning electric generators vs. coal. In fact I see them coming in this morning. April is up 8.4¢.

Elsewhere

I’m not sure you heard this story but scientists have discovered a solar system with a few planets that meet the criteria for being Earths. Earth sized planets are ones that are not too big and lie within the habitable zone of a star. The star is called Trappist-1 and is located 40 light years away. Seven planets orbit the star and are fairly close to each other. If you were on one planet the next closet plant would look as big, if not bigger, than our moon. Three of the planets lie in the “Goldilocks zone.” This zone is the habitable zone where liquid water can exist on the surface of the planet. It’s not too hot and not too cold. NASA is calling the discovery record breaking. This is the first time astronomers have found so many Earth-sized planets circling the same sun. Scientists already know of thousands of planets beyond our own system. The tally of confirmed exoplanets stood at 3,449 but only a small number meet the criteria for being possible Earths.