Week-In-Review: Stocks Slid Last Week As Earnings Season Begins

Stocks Slid Last Week As Earnings Season Begins

The major indices slid last week as earnings season begin in earnest. The market was mostly quiet last week as investors digested a slew of earnings and are waiting to see what the Fed will do at their next meeting. So far, earnings have been a mixed bag with a few big blow ups that hit the tape last week mainly: CSX and NFLX. Stepping back, it is perfectly normal (and healthy) to see the major indices pullback as the market digests a strong rally since early June (and wait for the Fed meeting). Investors want to see what will happen with earnings over the next few weeks and they want to see what the Fed will do at its next meeting (most likely cut rates).

Monday-Wednesday’s Action:

Stocks were quiet on Monday as investors waited a busy week of earnings. Before Monday’s open, Citigroup reported earnings which set a positive tone for other financials. In other news, rumors spread that Trump would replace Wilbur Ross. Stocks were quiet on Tuesday as investors digested the latest round of earnings and geopolitical headlines. President Trump said, there is a ‘long way to go’ on trade with China which was not ideal. The good news is that the market did not crash on the news. On Wednesday, the market was mostly lower as investors digested the latest round of earnings. Bank of America rallied after reporting earnings but CSX gapped down over 10% after the company announced lousy numbers and the CEO said he was “puzzled” by this economy. 

Thursday & Friday Action:

On Thursday, stocks were quiet as investors digested the latest round of earnings. Netflix gapped down after reporting disappointing numbers. After the close, Microsoft ticked higher after reporting earnings. In other news, The House passed a bill to hike the federal minimum wage to $15 per hour which may impact corporate earnings in the future and Trump said the US Navy destroyed an Iranian drone in a “defensive” action. Stocks slid on Friday ahead of the weekend. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. Earlier this year, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. Separately, the trade talks have resumed with China and the markets are back to new highs. As always, keep your losses small and never argue with the tape.

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2016.10.293129

Week-In-Review: Stocks Flirt With New Record Highs

Stocks Flirt With New Record Highs

The market is flirting with fresh record highs after the G-20 trade truce and hopes for more easy money from global central banks returned to the fore. Last week, the S&P 500 hit a fresh record high while the Dow Jones Industrial Average and the Nasdaq Composite both hit fresh closing highs. Meanwhile, the small-cap Russell 2000 is trading a few percentage points below its record high and is lagging a little. Stocks rallied in the first half of the week after Trump and Xi met at the G-20 and agreed to a trade truce. Then, the narrative quickly shifted to more easy money from the Fed and other global central banks. Remember, if you filter out all the noise, the single biggest driver for stocks has been easy money from the Fed and other central banks so that is front and center in my mind. Looking forward, we have some inflation data coming out next week and then a slew of earnings. Stay tuned! 

Monday-Wednesday’s Action:

On Monday, stocks gapped up after Trump and Xi agreed to a truce in their ongoing trade war. The market spent the day drifting lower and at one point the Russell 2000 turned negative. The bulls showed up before the close and helped the market close in the middle to lower half of the daily range. On a short-term basis, that is not ideal and suggests some near-term fatigue may be creeping in. Stocks were mostly quiet on Tuesday as investors digested the recent action. In other news, the IMF’s Christine Lagarde, was nominated for top job at European Central Bank. On Wednesday, stocks rallied and hit record highs on signs that more easy money will be coming from the Fed. Trump nominated two people who are considered dovish to join the Fed and the latest economic data was weaker-than-expected. ADP, the country’s largest private payrolls company, said US employers added 102,000 new jobs in June, missing estimates for 135,000.

Thursday & Friday Action:

The market closed was closed on Thursday for the July 4th holiday. Before Friday’s open, the government said the U.S. economy added a +224,000 jobs in June, easily beating estimates for a gain of 165,000. The market fell on Friday because the stronger than expected jobs report led many to speculate that the Fed may not cut rates at its July meeting. The good news is that if the economy is strong enough the market can rally on its own accord. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. Earlier this year, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. As always, keep your losses small and never argue with the tape.

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Week-In-Review: Stocks Pause Ahead of G-20 Meeting

Stocks Pause Ahead of G-20 Meeting

The market ended mixed last week as the Dow Jones Industrial Average, S&P 500, Nasdaq Composite, & Nasdaq 100 fell while the small-cap Russell 2000 rallied. The fact that the Russell rallied is a subtle but important bullish divergence and suggests the market can easily rip higher if a trade deal is announced soon. The major averages rallied sharply over the past three week and the fact they they pulled back last week is perfectly normal and healthy. It is not healthy to see the market rip higher week after week because that usually means we are in a climax run, and that usually means the end of a move is near. So, the fact that we erased May’s losses, rallied sharply in June, and are setting up nicely to breakout to new highs is bullish when you look at it objectively. Now, if the trade talks go sour, the market can easily fall from here. If not, then we will likely rally. From where I sit, at this point, both sides have flexed their muscles and now want a deal to get done. Based on that logic, I expect a deal to get done in the near future. 

Monday-Wednesday’s Action:

On Monday, stocks were mixed to flat as investors looked ahead to the G-20 summit. In other news, Trump signed an executive order to issue hard sanctions on Iran. In speculative news, Bitcoin rallied above $11,000, nearing a 15-month high after Facebook launched Libra, it’s crypto platform. Stocks were mostly lower on Tuesday after The Conference Board said, consumer confidence fell more than expected and hit the lowest level in nearly two years. That followed a separate report which showed that new home sales sank 7.8% in May, despite a big drop in mortgage rates. The market opened higher on Wednesday but closed mostly lower as sellers showed up in the afternoon. Before the open, Treasury Secretary Steven Mnuchin told CNBC that he is optimistic that a trade deal with China will get done soon and that helped stock futures jump higher. But sellers showed up by the close and the market ended mixed to mostly lower. 

Thursday & Friday Action:

The market edged higher on Thursday after the bulls showed up to defend support (50 DMA line) in the S&P 500. Investors spent the day focused on what will happen at the G-20 meeting in Japan. Larry Kudlow, National Economic Council director, added to the uncertainty around trade. Kudlow told Fox News that no preconditions were set ahead of Trump’s meeting with Xi. He also said the U.S. may move forward with additional tariffs. Kudlow’s comments were largely ignored because the market rallied on the news. The market was quiet on Friday as the world waited for the outcome of the much anticipated G-20 meeting. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. Earlier this year, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. As always, keep your losses small and never argue with the tape.

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2016.10.293129

Week-In-Review: Stocks Hit All-Time Highs On More Easy Money

Stocks Hit New Highs On More Easy Money From Global Central Banks

The S&P 500 hit a fresh record high last week after global central banks pushed for more easy money. The Dow Jones Industrial Average, Nasdaq Composite, Nasdaq 100, and small-cap Russell 2000 index are all trading just below their record highs. The big take-away from last week is that easy money is here to stay which is a major driver of global equity markets. The U.S. Fed, European Central Bank (ECB) and a few other central banks all signaled more easy money is ready, if needed. Once again, in the short-term, the market is extended to the upside and due to pullback. The bulls want to see the 50 DMA line serve as support and will welcome a nice short-term pullback to consolidate the recent 3-week very strong Fed-induced rally. 

Monday-Wednesday’s Action:

Stocks edged higher as investors waited for another busy week from global central banks. The Fed hinted that it would cut rates and investors want to see what the Fed does when it ends its 2-day meeting on Wednesday. In other news, trade tensions are still lingering after Commerce Secretary Wilbur Ross said Monday that President Donald Trump is “perfectly happy ” to slap further tariffs on Chinese imports if the two countries cannot reach a deal. In other news, India announced new retaliatory trade tariffs against the US. The move came after Washington did not exempt Delhi from higher taxes on steel and aluminum imports. Stocks soared on Tuesday after Mario Draghi, head of the European Central Bank (ECB), said he’s ready to print more money and announce more easy money measures, if needed. Futures soared on the news and then Trump said he will have an extended meeting with China’s President Xi Jinping at the G-20 summit next week.
Stocks edged higher on wed after the fed concluded its two day meeting & said it does not plan to cut rates, but is ready to cut, if needed.

Thursday & Friday Action:

Overnight, buyers showed up because futures were up 250 points before Thursday’s open. That paved the way for a higher open as investors digested the Fed meeting and believed that it is just a matter of time until the Fed cuts. The S&P 500 hit a fresh record high on Thursday as investors cheered the easy money stance. In other news, Crude Oil vaulted 6% after Trump said Iran made a “very big mistake.” Stocks were relatively quiet on Friday as investors digested a busy week. The three big high-fliers this week were gold, crude oil and RBOB gasoline. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and the Federal Reserve reversed its stance and moved back into the easy money camp. Now, other central banks have followed suit and easy money is back to being front and center for the market. As always, keep your losses small and never argue with the tape.

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Week-In-Review: Stocks End Week Higher And Flirt With Important Level

Stocks End Week Higher And Flirt With Resistance

The market rallied last week as investors cheered more easy money from global central banks and waited for next week’s Fed meeting, then the G-20 meeting at the end of the month in Japan. At the end of May the market was oversold and then bounced sharply in early June after the Fed hinted at a possible rate cut in the near future. The market rallied sharply then traded near the 50 DMA line which has served as near-term resistance for some of the major indices. The Nasdaq, Nasdaq 100, and small-cap Russell 2000 are below that important level while the Dow Jones Industrial Average and S&P 500 are trading slightly above it. The 50 DMA line is resistance for the former and has turned into support for the Dow & S&P 500. For now, the action is normal and the key going forward is to see if the 50 DMA line can turn into support for the Nasdaq and Russell. After the big rally, it would be perfectly normal to see the market pause and digest the recent move ahead of the G-20 meeting. If the market races higher, that would be very bullish. 

Monday-Wednesday’s Action:

Stocks opened higher on Monday after the U.S. and Mexico reached a deal to avoid new tariffs. Separately, President Trumps said, If China’s President Xi does not attend G-20, more China tariffs will go into effect immediately. That sent stocks slightly lower mid-day. In M&A news, Raytheon and United Technologies agreed to an all-stock merger that would create a new company with $74 billion in annual sales. In other news, Salesforce.com announced it is acquiring big data company Tableau Software on Monday. Salesforce.com will pay $15.3 billion in an all-stock deal, marking the biggest purchase in the company’s history. Tableau’s stock vaulted by nearly 40% on Monday after the deal was announced. Stocks fell on Wednesday as the market continued to struggle near resistance. Billionaire Investor Paul Tudor Jones said he expects the Fed to cut rates and that should help yields, gold and stocks rally.

Thursday & Friday Action:

On Thursday, stocks rallied as the bulls showed up to defend the 50 DMA line. Separately, oil prices jumped after two oil tankers were attacked in the Gulf of Oman. The Trump administration said Iran was behind the attacks. Oil prices jumped one day after oil hit a 5-month low. The recent drop in oil came as supply grew and concern spread that demand will decline. 

Market Outlook: Easy Money Is Back

Once again, global central banks showed up and juiced markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and the Federal Reserve reversed its stance and moved back into the easy money camp. Now, other central banks have followed suit and easy money is back to being front and center for the market. As always, keep your losses small and never argue with the tape.

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