Market Direction Week of July 14, 2014

Market Direction: BULLISH alert issued 06/19/2014

Last Week Review: Market volatility returned, fueled by concerns over the financial stability of one of Portugal’s largest lenders. Growing nervousness about Banco Espirito Santo had a ripple effect in stock and bond markets on Thursday. Hardest hit were European stocks, as well as Portuguese, Spanish and Italian government bonds. Perceived “safe-haven” US, German and UK government bonds all benefited from a fresh wave of risk aversion, and their yields tumbled

The US Federal Reserve plans to end the gradual tapering of its stimulus program of purchasing Treasury bonds and mortgage-backed securities by October, according to minutes of its June policy meeting. The Fed has already reduced its bond buying to $35 billion per month from a peak of $85 billion in steady $10 billion steps. The release of the minutes led to a modest rally, as investors seemed pleased with the absence of a clear signal on interest rate increases.

How the market finished last week, the Nasdaq 1.6%, the S&P 500 0.9% and the Dow Jones industrial average 0.7%. The small-cap Russell 2000 slid 3.8%.

This Week: With earnings season in full swing, markets will be bombarded with data to trade on. The week will also bring a host of economic data including China’s GDP and US retail sales. While Chinese growth is expected to have remained tepid, US retail sales likely grew in June. Investors will also keep an eye on the Fed next week as Chair Janet Yellen is scheduled to speak before congress to shine a light on the bank’s predictions for the US economy.

Economic Calendar: US Retail Sales (7/15), US PPI and Industrial Production (7/16), Philadelphia Fed Survey (7/17)

Some of the major earnings announcements on deck: GOOG, GE, JPM, GS.

$tockMarketDirection is in a BULLISH posture. We strongly encourage our many bloggers/followers to monitor positions closely, exercise proper money management strategies and to monitor $tockMarketDirection for ALERTS that we may issue advising of a change in our current posture. Cha-ching.