Week-In-Review: Second Weekly Decline As Earnings Continues In Droves
The market fell for the second straight week as a slew of earnings continued to be released. As mentioned several times in this report over the past few weeks, the market was super extended and way over due to pullback ahead of earnings season. Right now, the pullback is not pretty but it is not ugly either. As long as the major indices and our leaders continue trading above their respective 50 DMA lines the market deserves the bullish benefit of the doubt. Separately, back in 2016, the market pulled back ahead of the election then soared. I wouldn’t be surprised to see that happen again this year, especially with Covid.
Thursday & Friday Action:
Stocks fell hard on Thursday as sellers finally showed up after a long hiatus. Treasury Secretary Steven Mnuchin said an extension in unemployment benefits will be based on “approximately 70% wage replacement” which was the first official hint of what the next stimulus plan will look like. Stocks fell on Friday as the market continued pulling back. Intel gapped down and that dragged the rest of the market lower.
Market Outlook: Flood The System With Liquidity
Global governments and global central banks stepped in with massive rate cuts and other “aid” packages to help “stimulate” both Main Street and Wall Street. So far, it is working as intended. As long as March’s lows hold, the market will likely move sideways to higher. On the other hand, if March’s lows are breached, then look out below. As always, keep your losses small and never argue with the tape.