Market Direction: BULLISH alert
issued 11/10/2016
Last Week Review: The Dow Jones Industrial
Average was marginally higher on the week, but ended a seven-trading-day
post-election rally on Wednesday (Nov. 16), during which, the index gained more
than 5.7% and reached a new record high. The S&P 500 was up more than the
Dow on the week, as the industrial and financial services sectors (where the
Dow has relatively more exposure) lagged the index after their strong gains
witnessed immediately after the election. While some investors may choose to
speculate how new policies will affect the economic and investment landscape
under president-elect Trump, we believe the underlying fundamentals will not be
solely dependent upon them.
How
the market finished last week, the S&P 500 up 0.8%, the Nasdaq up 1.6%, and
the Dow up 0.1%.
This Week: After the excitement of recent
weeks, we enter a period of relative quiet on both the corporate and economic
data fronts. It seems as if fundamentals have taken a back seat to concerns and
hopes (depending on your view) about what the new administration might do. The
prevailing theme of the week has been US dollar strength, putting markets like
the euro, yen, gold and oil on the back foot. While December now looks nailed
on for a rate increase, we could see some of the dollar bullishness unwind, if
only because of profit taking, and as a result some currencies that have been
hit hard could see a breathing space. Strength in the likes of the euro and the
yen could result in difficult times for stock markets in these countries.
Back
in the US, we have seen strong performances by stock markets, with tech names
in particular recovering thanks to a lack of further news on what
president-elect Trump’s plans regarding tax. While stock markets here look
overextended, we are heading rapidly towards the Thanksgiving holiday, which is
a traditionally strong period. Thus, those hoping for another sell-off could be
disappointed, at least until the beginning of December.
Outside
of what Mr Trump does, the other key event is the UK’s Autumn Statement. Will
Mr Hammond, the chancellor, go for infrastructure spending or will he look to
steer a calm course through troubled waters?
Economic
Calendar: Durable Goods Orders (11/23), PMI Manufacturing Index Flash (11/23), Consumer
Sentiment (11/23), International Trade in Goods (11/25)
$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies
and follow us at $tockMarketDirection for ALERTS we may issue advising a
change in the current market direction. Stay tuned and follow us. If
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