Week-In-Review: Stocks Kick Off Earnings Season With A Bang

Strong Start To Earnings Season

The market continued marching higher last week as earnings season officially began. The market is moving higher as the major indices are now, once again, flirting with fresh all-time highs! The fact that this market refuses to fall is extremely bullish and is setting the stage for a climax run similar to what we saw back in 1929 and 1999. It’s still not clear if that is going to unfold that way or if the market will continue to grind higher. Stepping back, in the short-term the market is very extended and due to pullback. In the long-run, the bulls remain in clear control as long as the major indices continue trading above December 2018’s low. Looking forward, we are entering the heart of earnings season over the next few weeks and want to see how the market and individual stocks perform as they report earnings.  

Monday-Wednesday’s Action:

Stocks ended mixed to mostly lower on Monday as investors waited for earnings season to begin. Shares of Boeing and General Electric dragged the Dow lower after both stocks were downgraded for separate reasons. Elsewhere, the Nasdaq and the S&P 500 eked out a small gain. The big news on Monday came after several high profile billionaires said capitalism was broken due to income disparity and said taxes should be raised to level the playing field. On Tuesday, the Dow fell about 200 points after fear spread regarding earnings. The selling didn’t last long because the market rebounded nicely on Wednesday after Delta, Levis, and several other well-known companies reported earnings. In other news the European Central Bank held rates steady and expressed concern regarding the global economy.

Thursday & Friday Action:

The market was relatively quiet on Thursday as investors waited for the big banks to start reporting earnings on Friday. Stocks rallied hard on Friday after JP Morgan and Disney gapped up. JPM gapped up after reporting earnings and shares of Disney soared after the entertainment giant said it was releasing a new streaming services, Disney+, and pricing it at only $6.99/month – that is half of Netflix’s monthly rate. 

Market Outlook: Bullish Tailwind Continues

The market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March 2019’s low, then the 200 and 50 DMA lines, and then 2018’s low. As always, keep your losses small and never argue with the tape.

 

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Week In Review: Stocks Are Strong Ahead Of Earnings Season

Stocks Are Strong Ahead Of Earnings Season

The market rallied nicely last week after fears eased regarding the global economic slowdown. As a quick refresher, the market tanked 20% in Q4 2018 because the market was concerned that the global economy was slowing down and, at the time, the Fed was hawkish. Right after that decline, the Fed did a 180 and changed its stance and moved back into the easy money camp and now we are starting to see signs of stronger-than-expected economic activity. So the two big concerns that have weighed on the market have largely disappeared and that is why the major indices have ripped higher since the Dec 24, 2018 low. In other news, the US-China trade tensions eased considerably, and it now looks like we are very close to a deal on that front. Looking forward, the market will likely shift its attention to earnings over the next few weeks. The market is extended in the short-term and once again due to pullback. To be clear, until we see any substantial selling, the market deserves the bullish benefit of the doubt. 

Monday-Wednesday’s Action:

Stocks rallied sharply on Monday after positive manufacturing data from the U.S. and China was released. Overnight, China’s manufacturing index rose to a 6-month high and hit 50.5, beating February’s reading for 49.2. That was also above the boom/bust level of 50, which signals expansion. A few hours later, the U.S. ISM manufacturing index also expanded which confirmed China’s reading and eased concerns regarding the global economic slowdown. Bonds fell hard on the news (yields rose) which was a net positive for the financial stocks. Stocks were mixed on Tuesday as investors digested Monday’s strong rally. Shares of Walgreens Boots Alliance fell after the company reported a lousy quarter. Stocks were quiet on Wednesday after weaker than expected numbers were released. China reported a weaker than expected service report and in the US, ADP said private employers added only +129,000 new jobs in March, missing estimates for 173,000.

Thursday & Friday Action:

The market ended mixed on Thursday ahead of Friday’s payrolls report. President Trump said if a trade deal with China happens it will happen in the next four weeks. Before Friday’s open, the government said US employers added 196,000 new jobs last month, beating the Street’s estimate for 175,000.

Market Outlook: Bullish Tailwind Continues

The market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March 2019’s low, then the 200 and 50 DMA lines, and then 2018’s low. As always, keep your losses small and never argue with the tape.

 

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Week Ahead: Strongest First Quarter Since 1998

Strongest Q1 Since 1998

The first quarter of 2019 has officially ended, and stocks enjoyed their largest first quarter gain since 1998. That leads me to believe that we are headed into a climax run similar to what happened in 1998-2000 and 1927-1929. In 1998, the market had rallied for several years then briefly fell just over 20% in August after Long Term Capital Management failed and the Asian Financial Crisis hurt markets. After that brief and steep “correction” the market came roaring back and enjoyed a massive rally until the Dot Com Bubble burst in March 2000. Fast forward to today – the market has been rallying for the past decade, in Q4 2018, it briefly fell 20%, then came roaring back (the gains enjoyed during Q1 2019). Now the market is perched below its record high and pausing to digest the recent and robust rally from December 24, 2018’s low. During this time, Central Banks, have resumed their easy money stance and that has been a major driver for the entire bull market we have enjoyed for the past decade. Now, once again (similar to the late 20’s and 90’s) we are in an aging bull market that may just explode and turn into a climax top. Of course, this is only one possibility and I know anything is possible. What we know for certain is that the market deserves the bullish benefit of the doubt until any real selling shows up.

Monday-Wednesday’s Action:

On Monday, stocks ended mixed to mostly lower as global economic growth concerns continued to dominate the headlines. Over the weekend, Mueller submitted his report without incriminating evidence against Trump. Monday was the first trading day after the report was submitted and the market barely reacted. In other news, Apple announced, a new subscription service, a new credit card and a new TV service aimed at growing its “service” business. On Tuesday, stocks rallied but fears of an economic slowdown prevailed. The Conference Board said, housing starts slid -8.7% in February, easily missing expectations. Building permits also fell but at a slower rate than forecast. Separately, consumer confidence fell to 124.1 in March from 131.4 in February. On Wednesday, stocks ended lower as the yield on the 10 year Treasury hit the lowest level since 2007, further stoking recessionary woes.

Thursday & Friday Action:

Stocks rallied on Thursday the U.S. – China trade talks resumed and mortgage rates plunged after the recent move in the 10-year Treasury. On the economic front, the U.S. economy grew by +2.2% in the fourth quarter, which missed the Street’s estimate for a 2.4% gain. Stocks rallied on Friday after positive comments were made regarding the U.S. & China Trade Talks. Friday was the last trading day of the month and quarter.  

Market Outlook: Bullish Tailwind Continues

The market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March 2019’s low, then the 200 and 50 DMA lines, and then 2018’s low. As always, keep your losses small and never argue with the tape.

 

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Week Ahead: Market Falls Despite Dovish Fed

Market Falls Despite Dovish Fed

The market fell hard on Friday wiping out the week’s gain after fears resurfaced regarding the global economy. Before Friday’s sell-off, the big news came from the Federal Reserve after it publicly moved back into the dovish (easy money) camp and cited concerns regarding the global slowdown. The Fed said it would not raise rates again in 2019, which is lower than the two hikes expected before the meeting. The Fed also said it wants to end the reduction of its massive $4.2 trillion balance sheet by September which means more easy money for Wall Street. The fact that them market ended the week lower could be the beginning of the Great Disconnect, an event that means the market is now longer marching higher on any signs of more easy money. Remember, the primary driver of the entire bull market we have witnessed since the historic 2009 low has been easy money from global central banks. So, when the Fed speaks, I’ve learned to listen. But if that relationship is changing – we need to pay attention. 

Monday-Wednesday’s Action:

Stocks were quiet on Monday as the financials broke above resistance and led the market higher. Meanwhile, shares of Boeing were under pressure after The Wall Street Journal reported the Department of Transportation and federal prosecutors were scrutinizing the development of the company’s 737 Max planes. In other news, shares of Facebook were also under pressure after worry spread regarding the possibility of more regulatory scrutiny.

Stocks opened higher but closed mixed to lower on Tuesday after conflicting reports were announced regarding the progress of the U.S. China trade negotiations. In other news, the Fed started its two-day meeting. After the close, FedEx fell after they slashed guidance and basically said the global economy is slowing considerably. On Wednesday, stocks ended mixed after President Trump said China’s sanctions may last for a long time. In the afternoon, the Fed ended its meeting and said there will not be any more rate hikes in 2019, which is lower than the two hikes expected on Wall Street. The Fed also said it wants to end the reduction of its massive $4.2 trillion balance sheet by September. The Fed also lowered its economic growth forecast the year.

Thursday & Friday Action:

Stocks rallied on Thursday after mortgage rates fell and investors cheered more easy money. Shares of Apple and Micron rallied nicely which helped lift tech stocks and the broader market. Elsewhere, Levi Strauss started trading after a 34-year hiatus and jumped 35% above its IPO price. On the downside, shares of Biogen plunged after the biotech company ended its trials for Alzheimer. Shares of Guess? Inc fell 15% after the company reported lousy earnings. On Friday, the market fell on renewed fear of a global economic slowdown. 

Market Outlook: Bullish Tailwind Continues

The market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March 2019’s low, the 50 DMA line, and then 2018’s low. As always, keep your losses small and never argue with the tape. Do you know the most under-valued stocks in the market? Our Members Do. Take a FREE TRIAL – CheapBargainStocks.com

Week Ahead: Bullish Tailwind Continues On Wall Street

Bullish Tailwind Continues On Wall Street

The bullish tailwind continues on Wall Street as the market had every chance to fall but didn’t. The market fell in the first week of March after the weak jobs report was announced. Within a few hours, the bulls promptly showed up and defended support which was a very encouraging sign. Then, even in the face of more negative news (China delayed the meeting between Xi and Trump, shares of Boeing and Facebook tanked on negative news for each company, and economic data was lackluster at best), the market still rallied. That, ladies and gentlemen, is the definition of a bullish tailwind. Remember, it is not the news that matters but how the market reacts to the news. For now, near-term support is March’s low and near term resistance is 2018’s high. By definition, until either level is breached we have to expect this sideways action to continue.

Monday-Wednesday’s Action:

Shares of Boeing fell hard on Monday after another Boeing plane crashed over the weekend. At Monday’s open, the Dow fell around 200 points due to the crash but buyers showed up shortly after the open and sent stocks higher. Separately, on Sunday Fed Chairman Jay Powell told “60 Minutes” that he thinks the U.S. economy is still acting well but acknowledged that the global economic slowdown could impact the U.S. Mr. Powell said, “I would say there’s no reason why this economy cannot continue to expand.” He also said, President Trump legally could not fire him which garnered a lot of headlines on Monday. Additionally, shares of Apple rallied hard after the stock was upgraded at Bank of America. Stocks were quiet on Tuesday as more and more airlines grounded Boeing’s 737 max plane. That put more pressure on Boeing’s stock which weighed on the Dow. In other news, the British Pound plunged after Theresa May’s Brexit deal suffered a surprise legal setback. Stocks rallied nicely on Wednesday even after more countries grounded Boeing’s 737 Max airplanes, including the US and Canada.

Thursday & Friday Action:

Stocks were quiet on Thursday after China’s Xi delayed his meeting with President Trump. If that news broke in Q4 2018, the market would have plunged but now the market barely moved. That illustrates how strong the market is right now. On Friday, stocks marched higher as investors digested a strong weekly gain. 

Market Outlook: Bulls Are Back In Control

The market has turned around after the Fed reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March’s low, the 50 DMA line, and then 2018’s low. As always, keep your losses small and never argue with the tape. Do you know the most under-valued stocks in the market? Our Members Do. Take a FREE TRIAL – CheapBargainStocks.com

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