The market remains VERY strong! The fact that the latest pullback literally only lasted one week speaks volumes to how strong the bulls are right now. The big news last week came after the House passed the tax cut bill. Now, the bill goes to the Senate where it will face some opposition. However, in my opinion, it will most likely get passed in some form. The fact that the bulls showed up (again) last week illustrates how strong the market is right now. Remember, in bull markets, weakness should be bought, not sold.
A Closer Look at What Happened Last Week…
Mon-Wed Action:
Stocks fell on Monday after General Electric (GE) cut its dividend by 50% and announced a massive plan to restructure itself.
On Tuesday, stocks were lower as investors continued to digest the latest round of earnings data. Overnight, China released some disappointing economic data on retail sales, industrial output and fixed asset investment growth which hurt global stocks. All of those reports missed expectations. In the U.S., the producer price index rose +0.4% in October which was stronger than the Street’s estimate for a gain of +0.1%.
Stocks fell on Wednesday after the International Energy Agency slashed its outlook for oil demand. The IEA cut its growth target by 100,000 barrels per day for 2017 and 2018. Crude oil futures and a slew of energy stocks fell and dragged the market lower.
Thur & Fri Action:
On Thursday, the Dow jumped nearly 200 points after the House passed the tax reform bill and Cisco and Wal-Mart reported stronger-than-expected earnings. In fact, Wal-Mart gapped up and hit a fresh all-time high after reporting earnings which bodes well for retail stocks and the Q4 holiday shopping season. After the close, Tesla (TSLA), unveiled its new electric truck and surprised the Street when it reported a new very fast roadster. On Friday, stocks were relatively quiet as investors digested a busy week.
Market Outlook: Bulls Are Strong
The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape.
