Stocks surged last week on a trifecta of positive news. First, the French Election came back with a market-friendly outcome. Second, President Trump announced his much-awaited Tax plan. Finally, the long earnings recession is over. Technically, the bulls showed up and defended major support for the indices and sent stocks soaring back above their respective 50 day moving average lines and other important areas of resistance. On a relative basis, the Nasdaq and Nasdaq 100 continue to out-perform the other popular indices with the Nasdaq topping 6,000 for the first time ever. In the short term the market went from being over sold to a little extended to the upside but nothing too crazy. The bulls are in clear control until we see support taken out on a closing basis.
A Closer Look at What Happened Last Week…
Mon-Wed Action:
Stocks surged on Monday after the French Election came back with a market friendly outcome. Emmanuel Macron beat the front runner, Marine Le Pen, and the pair will face off again on May 7. So far, most polls show Macron easily beating Le Pen in the second round. Stocks soared on Tuesday helping the tech-heavy Nasdaq Composite jump above 6,000 for the first time ever! It’s important to note that approximately 40% of the Nasdaq 100 are made up of only 5 stocks: Amazon, Facebook, Netflix, Alphabet and Apple. If we see selling in those stocks, the Nasdaq and Nasdaq 100 could be in trouble. Stocks were quiet on Wednesday after President Trump unveiled his tax plan. Stocks opened higher but closed lower on Wednesday after the White House released its tax plan and President Trump said he wants to renegotiate NAFTA.
Thur & Fri Action:
Stocks were relatively quiet on Thursday as the world waited for a slew of big cap tech stocks to announce earnings after the bell and for GDP to be released before Friday’s open. After the bell a slew of stocks including: Alphabet, Microsoft, Amazon, and Intel, just to name a few reported earnings and most of them did well. Before Friday’s open, the government said GDP only grew by 0.7% which was the slowest reading in three years. Stocks were quiet as the market pauses to digest a very strong rally.
Market Outlook: Bulls In Control
The bulls are back in control after a nice 8-week pullback. As always, keep your losses small and never argue with the tape.
