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Week Ahead: Rally Continues On Wall Street

Rally Continues On Wall Street

The market ended higher last week after the bulls continued to send stocks higher. The market shrugged off a spate of weaker-than-expected economic data last week because that means easy money will likely stay for the foreseeable future. In the short-term the market is over bought and due to pullback. The fact that it refuses to decline in a meaningful fashion is a net positive for the market and shows us that the bulls remain in clear control. The next big level of resistance to watch is 2018’s high and the next level of support is the 50 day moving average and then December 2018’s low. Until any damage shows up, the market deserves the bullish benefit of the doubt.  

Monday-Wednesday’s Action:

U.S. stocks were closed on Monday in observance of President’s Day. The market ended slightly higher on Tuesday after President Trump said the March Trade deadline was “flexible.” In other news, shares of Wal-Mart gapped up after the company reported earnings. Gold and silver stocks also caught a nice bid as they broke out to new multi-month highs. On Wednesday, the market ended higher after the Fed minutes were released. The Fed released the minutes from it’s January meeting which is when it did a 180 and reverted back to an “easy” money stance. The Fed is trimming its balance sheet and it is open to ending that process later this year due to “risks” in the global economy. Market participants interpret that to mean more easy money which is bullish for stocks.

Thursday & Friday Action:

Stocks fell on Thursday as investors digested a series of weaker-than-expected economic data. Existing home sales, Durable Goods, Leading Indicators and the Philly Fed Index all came in weaker-than-expected which sent the Dow down 100 points by the close. In other news, shares of Tesla fell over 3% after Consumer Reports said it would not recommend Tesla’s Model 3 because it was not reliable. Stocks were rallied on Friday as investors waited for clarity regarding the U.S.-China trade situation.

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 2018’s high while near-term support is 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: The Bulls Are Getting Stronger

The Bulls Are Getting Stronger:

Stocks ended the week nicely higher as optimism spread regarding the US-China trade deal and investors digested the latest round of earnings data. At this point, the rhetoric from both sides suggests a trade deal will get done and that is a “good” sign for the market. On the economic front, the big miss came from retail sales but that is bullish for stocks because it reduces pressure on the Fed to raise rates anytime soon. Remember, the market loves easy money so any weak data only furthers that cause. So, in some perverse way, we are back in that awkward phase where negative economic data is good for stocks. Technically, it is encouraging to see the Dow and S&P 500 both close above their respective 200 DMA lines which have served as near-term resistance. Meanwhile, the Nasdaq and the Russell 2000 both close near/below their respective 200 DMA lines. For now, the market is getting extended to the upside and due to pullback.  

Monday-Wednesday’s Action:

Stocks were quiet on Monday as investors digested the recent rally below resistance (200 DMA line). On Tuesday, stocks soared after news broke that a tentative border security deal was reached and the government would not shut down on Feb 15. The deal would not completely fund the wall but it would be enough to at least move the needle and get something built. That was considered a big win for Wall Street as it removed a lot of uncertainty regarding the potential impact of another government shutdown and the economic ramifications. On Wednesday, stocks rallied again on optimism that the trade war with China would be resolved.

Thursday & Friday Action:

Stocks ended mixed to mostly lower on Thursday after retail sales plunged in December 2018. The report was released late because of the government shutdown. The Commerce Department said retail sales slid by -1.2% in December which was the largest monthly drop in ten years. Stocks rallied nicely on Friday as optimism spread regarding a U.S.-China trade deal. In other news, energy prices rallied sharply as oil and gasoline prices rallied after a big sell-off a few months ago.

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 2018’s high while near-term support is 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: Stocks Fall After Hitting Resistance

Stock Fall After Hitting Resistance:

Stocks ended the week mixed to mostly lower as the market fell after hitting resistance (200 DMA line). At this point, it is perfectly normal to see the market pullback to digest its recent rally. On a relative basis, the Dow is trading near its 200 DMA line and is outperforming its peers. Meanwhile, the S&P 500, Nasdaq Composite, Nasdaq 100, and small-cap Russell 2000 are all below their respective 200 DMA lines. For now, the 200 DMA line is serving as important near-term resistance while the 50 DMA line is near-term support. Furthermore, until either level is taken out, I have to expect this sloppy action to continue. The bulls want to see the market get – and stay – above its 200 DMA while the bears want to see it break below its 50 DMA. If it breaks above its 200, the next important level of resistance to watch will be 2018’s high. Conversely, if it breaks below its 50 DMA line, then the next important level of support to watch is December 2018’s low. For now, patience is king as we are still digesting earnings and the latest round of economic data. 

Monday-Wednesday’s Action:

Stocks edged higher on Monday as investors waited for another busy week of earnings to be released. After the close, Alphabet, Gilead Sciences, Seagate Technology, and Beazer Homes were some of the companies to report earnings. In other news, Senators Charles Schumer and Bernie Sanders are proposing a law that would put limit the amount of shares a corporation could buy back at a given time. On Tuesday, the market rallied as investors digested the latest round of earnings data and waited for President Trump’s State of the Union address. On Wednesday stocks pulled back as the major indices flirted with near term resistance near the 200 DMA line. Disney, Snap, and Plantronics were some of the stocks that rallied after reporting earnings. 

Thursday & Friday Action:

On Thursday, stocks fell hard after the major indices slammed into resistance (200 DMA line) on Wednesday. At one point, the Dow fell over 300 points after President Trump said he will not meet with Chinese President Xi before the trade deadline. In other news, BB&T bought SunTrust in the country’s largest bank deal since the 2008 financial crisis. Stocks slid on Friday as investors digested the recent volatility.

Market Outlook: Watch Resistance

The market has turned around after the Fed reversed its stance and moved back into the easy money camp. Near-term resistance is the 200 DMA line for the major indices and then 2018’s high. Separately, near-term support is the 50 DMA line and then 2018’s low. As always, keep your losses small and never argue with the tape.

Bear Bull 2

Week Ahead: Trifecta Of Data Boosts The Market Higher

Trifecta Of Data Boosts The Market Higher:

The market ended higher last week helped by a trifecta of positive data: The Fed, earnings, and economic data. The big move came from the Federal Reserve, after it said it will pause and not raise rates in the foreseeable future. That is a BIG shift from the Fed’s stance in October 2018 which sent the market diving 20% in a few weeks. After that big sell-off the Fed did a 180 and has now shifted back to an easy money stance. Remember, the market is very sensitive to easy money and that has been one of the primary catalysts for this entire 10-year bull market. Stocks also rallied nicely on a slew of positive reactions to earnings and economic data. For now, near-term resistance is the 200 DMA line for the major indices and then 2018’s high. Separately, near-term support is the 50 DMA line and then 2018’s low.

Monday-Wednesday’s Action:

On Monday, stocks fell more than 200 points after shares of Caterpillar and Nvidia plunged on earnings and weak guidance. Caterpillar’s stock fell hard after the company reported earnings. Separately, shares of Nvidia plunged after the company lowered guidance and warned of a weak quarter. Stocks were quiet on Tuesday as investors digested the latest round of earnings and waited for Apple to report after the close. Apple rallied after reporting earnings and this was a classic case where the tech giant lowered guidance before announcing numbers. If the company didn’t lower guidance significantly, it would have been a big miss. Wednesday was a big day on Wall Street as the market soared after the Fed said it will be patient and not raise rates again in the near future. That was a complete shift from what the Fed said in October (it would continue raising rates) and that comment sent stocks plunging 20% before bottoming on December 24, 2018. This lesson reiterates the importance of paying attention to the Fed. After Wednesday’s close, Facebook gapped up after reporting numbers.   

Thursday & Friday Action:
Thursday was the last day of the month and January 2019 was the strongest January since 1987. That could be a good thing or a bad thing depending on what happens later this year. Remember, the stock market crashed in October 1987 and lost over 22% in one day! Let’s hope that doesn’t happen again. Before Friday’s open, the Labor Department said US employers added 304,000 jobs last month (despite the government shutdown) which easily beat estimates. That was a very strong report and signaled continued economic strength. 

Market Outlook: Market Rally Continues 
The market has turned around after the Fed reversed its stance and moved back into the easy money camp. Near-term resistance is the 200 DMA line for the major indices and then 2018’s high. Separately, near-term support is the 50 DMA line and then 2018’s low. As always, keep your losses small and never argue

Week Ahead: Global Central Banks Juice Stocks…Again

Global Central Banks Juice Stocks – Again:

The market opened lower last week but closed mixed to higher after the Federal Reserve and the European Central Bank (ECB) made it abundantly clear that easy money is here to stay for the foreseeable future. The big bullish change is that the Fed put (which means the Fed will step in to help the market when it gets in trouble), is alive and well. Since the Great Recession, every time the market fell 10% or so, the Fed, and other central banks, would step in and announce more easy money. In October 2018, the Fed tried to shift its stance but the market quickly plunged 20% before the Fed blinked and reversed back to an easy money stance. For now, the market continues to react well to that easy money and as long as it continues to act well, the bulls are getting stronger. Near term, the 50 DMA line is support and the 200 DMA line is resistance. Longer-term, December 2018’s low is major support and 2018’s high is major resistance. The fact that the market refuses to fall is very bullish and, as long as that continues, it should be respected. To be clear, if the market starts falling again, and ignores all the easy money, then we will be in for a very ugly bear market. 

Monday-Wednesday’s Action:

On Monday, global stock markets ended mixed as the U.S., stock market was closed in observance of the MLK holiday. China said its economy grew +6.6% in 2018 which was the lowest rate in 28 years. Separately, the IMF cut its forecast for global growth to 3.5% in 2019 and 3.6 percent for 2020. On Tuesday, when markets reopened in the U.S., stocks fell hard as global economic growth concerns spooked investors. But the bulls showed up right near important support (50 DMA line) and defended it by the close. On Wednesday, stocks opened higher, after IBM, Comcast, and a handful of other companies reported earnings. But sellers showed up after the open and stocks fell into the red for the day before a late day rally helped the market close mostly higher. Stocks ended mixed on Thursday as investors digested the latest round of earnings and digested the recent (and robust) rally.

Thursday & Friday Action:
Before Thursday’s open, the European Central Bank (ECB) said that easy money is here to stay for the foreseeable future but that was not enough to send stocks higher as the market ended mixed. In D.C., the government shutdown continued which is a drag on the economy but it was resolved on Friday after Trump opened it up until Feb 15, 2019. Stocks soared on Friday after the Fed announced that it is open to scaling back its program to reduce its balance sheet. That is another way of them shifting back to an easy money stance. 

Market Outlook: Market Rally Continues 
The bulls are doing their best to rescue the market from falling any further. The market was extremely oversold and is currently bouncing to help work off that oversold condition. Resistance is the 200 DMA line for the major indices. After that, the next big level of resistance to watch is 2018’s high. Meanwhile, support is December 2018’s low. As always, keep your losses small and never argue with the tape.

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