Bull Market Turns 9, Correction Ends As Nasdaq Hits New High
So that was fast! The latest correction is now pretty much over as the Nasdaq Composite and Nasdaq 100 both hit fresh record highs on Friday. The other popular averages are only a few percentage points below their record highs but are quickly marching higher. The Dow Jones Industrial Average, benchmark S&P 500 and small-cap Russell 2000 are just about all back above their respective 50 DMA lines and marching back to their recent 2018 highs. The weaker areas of the market include: The Transports, Utilities, REITs, Housing, Commodities, and to a smaller extend retail. Stepping back, it looks like the market wants to continue racing higher as buyers continue to show up and buy the latest dip.
A CLOSER LOOK AT WHAT HAPPENED LAST WEEK…
On Monday, stocks rallied nicely as investors bought stocks after President Trump opened the door to renegotiate NAFTA. In a series of tweets Monday morning, Trump said: “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,” adding that “Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done.”
On Tuesday, stocks were quiet after North Korea said it was open to talking to the U.S. about it’s nuclear program. In other news, Trump tweeted and said people may leave the White House. Separately, rumor spread that Gary Cohen may leave if the Tariffs are imposed. After Tuesday’s close, Gary Cohen officially resigned which sent futures down a few hundred points. As expected stocks opened lower on Wednesday and were under pressure most of the day due to the turmoil in D.C.
Thur & Fri Action:
Stocks rallied on Thursday after President Trump said he would exempt Canada and Mexico and the leave the door open to exempt other countries from the tariffs on Steel and Aluminum. In other news, before the open, the European Central Bank (ECB) held its latest meeting and once again it was largely dovish. Before Friday’s open, the Labor Department said U.S. employers added 313,000 new jobs last month (easily beating the 205k estimate) but wages were weaker than expected.
Market Outlook: Market Bouncing Back
The market is bouncing back after a quick 10% pullback. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as that level holds, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape.