Wall Street: fresh record highs, but perhaps a correction is due on a technical basis

• Wall Street on Wednesday was risk-on with both the NASDAQ and S&P 500 making a record close for the fourth straight session in a row.
• For the Dow Jones Industrial Average, the index closed at its highest level since February and all benchmarks found optimism over the possibility of a deal being agreed between Mexico and the US with Canada as soon as this Friday.

Closes:

DJIA, climbed 60.55 points, adding 0.2%, to close at 26,124.57 - this was coming within 1.9% of its record close made on January 26th. For the S&P, this climbed 16.52 points, or by 0.6%, to end at 2,914.04 while the NASDAQ added another impressive 79.65 points, or 1%, to close at 8,109.69. (So far, for the month of August, the Dow is up nearly 3%, the S&P 500 is up 3.5% and the Nasdaq is up 5.7%).

Data:

The day started off on a strong foot with Q2 gross domestic product arriving at 4.2% as an annualized figure, beating the estimates that matched the initial reading at 4.1. This data was showing the economy at the fastest pace of expansion in almost four years. This, coupled with the recent run of strong corporate earnings plus positive sentiment around trade relations improving was a recipe for additional record highs. However, pending home sales were off the mark and they declined by 0.7% in July, according to the National Association of Realtors - (This is an area of the US economy that the Federal Reserve has flagged and one to keep an eye in terms of risk to an otherwise healthy US economy). That reading yesterday of the consumer confidence arriving at its highest level since October 2000 could also be seen to be showing that the levels of confidence are an indicator of rising complacency about the risks facing stocks - trade is still a concern, especially when it comes to China. 

Trade update:

The Canadian Foreign Minister Chrystia Freeland has been in discussions with the Trump administration officials. She, in fact, cancelled a trip yesterday to make it to Washington to meet following the headstart that the US and Mexico had made on Monday. The soundbites that have been coming through are encouraging and it seems that the bilateral trade agreement between the US and Mexico will ultimately result in a re-jig of the trilateral North American Free Trade Agreement. Mexico Pena Nieto said that he believes they are en route to achieving a trilateral NAFTA accord. However, China still remains a real concern and the trade dispute with China is hampering North Korea talks as well, according to Trump today, "China is `the Route to North Korea," Trump said. 

DJIA technicals

The Dow and S&P's daily charts remain in bullish form and some technical readings offer a bullish bias. Daily RSI remains positive and still has room to the upside before it might be considered due for a correction. However, the daily Bollinger bands are warning of a downside correction despite the strong daily continuation sticks - likely meaning it is time for a correction but the bull trend remains intact.