Week-In-Review: Market Rally Continues Ahead of Christmas
The market continued to hit new highs last week as the major indices continued to rally without a hint of weakness. The fact that the market refuses to pullback illustrates how strong the bulls are right now. In the short-term the market is very extended and way overdue to pullback. Remember, markets go up, down, and sideways and right now we are just in a very strong up period. Eventually, that will change and when it does we will be ready but until then, we are long and very comfortable.
Stocks edged higher on Monday after the latest round of economic data from China ticked higher. China’s factory production and consumer spending both improved in November which bodes well for the global economy. The WSJ said, “The better-than-expected results for industrial production and retail sales may help alleviate investors’ concerns about growth in the world’s second-largest economy.” On Tuesday, the market edged higher helping the major indices hit fresh record highs and allowing the S&P 500 to enjoy its longest winning streak in over a month. The market paused on Wednesday to digest the latest sprint higher and wait as the House began it impeachment hearing.
Thursday & Friday Action:
On Thursday, stocks rallied helping the benchmark S&P 500 jump above 3,200 for the first time ever even though the House wants to impeach President Trump. On Friday, the government said the US economy grew by 2.1% last quarter which matched the last reading.
Market Outlook: Easy Money Is Back
Once again, global central banks are back on the easy money bandwagon after the Fed and the ECB both announced more easy money measures directly aimed at stimulating global 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 are moving in the right direction which is another positive. As always, keep your losses small and never argue with the tape.