Market Direction Weekly Closing Numbers

Market Direction: BULLISH alert issued 6/2/2016

The economy

The stock market enjoyed its third consecutive weekly advance that sent the S&P 500 and Dow Jones Industrial Average to fresh record highs. The S&P 500 gained 1.5% for the week while the Dow (+2.0%) outperformed.

Cyclical sectors paced the advance amid rising stimulus hopes. However, those hopes remain on hold for the time being after the Bank of England made no changes to its policy stance on Thursday. Expectations remain high that the central bank will ease when it meets again in August. Before then, the Bank of Japan will meet on July 28 and 29 amid elevated expectations that new stimulus measures will be announced at the end of the meeting.

The past week marked the start of the second-quarter earnings season, which got off to a relatively quiet start. Alcoa (AA) advanced after beating earnings and revenue estimates while major financials like Citigroup (C) and JPMorgan Chase (JPM) also beat expectations. Another financial heavyweight—Wells Fargo (WFC)—reported in line with expectations, but retreated after showing a four-basis point decline in net interest margin (to 2.86%). According to FactSet, overall second-quarter earnings are expected to be down nearly 3.0%.

Rate hike expectations did edge up a little, but concerns about a rate hike taking place before the end of 2016 are almost non-existent. The fed funds futures market estimates the likelihood of a hike in July at 2.4% while the implied probability of a hike in December sits at 47.8%.

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By the numbers the weekly closing index numbers compared to the initial BULLISH recommendation closing numbers: 

Stock Market Closing Numbers
compared to Recommendation Numbers
	6/2/2016	7/15/2016	Difference
Dow Jones	17,838.56	18,516.55	677.99
Nasdaq	4,971.36	5,029.59	58.23
S&P 500	2,105.26	2,161.74	56.48

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