Market Direction Week of July 11, 2016

Market Direction: BULLISH alert issued 6/2/2016

Last Week Review: Stocks were higher for the second week in a row and have regained all of the losses incurred after the U.K. voted to exit the European Union two weeks ago. With this 4% gain in the market over the past two weeks, the S&P 500 closed just below its all-time high. Helping stocks accelerate toward all-time highs were strong economic data last week, as the economy added 287,000 jobs in June and the ISM Non-manufacturing Index hit its highest level in 2016. In addition to this strong data, the Federal Reserve's meeting minutes assured the market that it would raise short-term interest rates at a gradual pace. As the domestic stock market approaches all-time highs, we think it is appropriate to take a balanced approach towards investing, ensuring that you have the right amount allocated to both stocks and bonds given your comfort with risk and long-term financial goals.

How the market finished last week, the S&P 500 up 1.3%, the Nasdaq up 1.9%, and the Dow up 1.1%.

This Week: Brexit concerns have seemingly given way to an equity rally fueled by low interest rates and a strong labor market. As earnings season begins next week, a lack of bad news may be all that is needed for the SPX to finally reach a new all-time high.

The market seems to have realized that while the fallout from the Brexit referendum could last a very long time, it is unlikely to affect US markets at all in the near-term. Indicators are all over the map again and while the SPX seems likely to reach a new record high next week, it could also be met with a combination of earnings concerns and technical resistance resulting in more volatile moves. 

Economic Calendar: JOLTS (7/12), Import and Export Prices (7/13), Beige Book (7/13), Consumer Sentiment (7/15)

Some of the major earnings announcements on deck: AA, FAST, CSX, DAL, JPM.

 

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