Market Direction Week of December 19, 2016©

Market Direction: BULLISH alert issued 11/10/2016

Last Week Review: Stocks were mixed on the week as the S&P 500 was marginally lower and the Dow Jones Industrial Average was modestly higher. However, both indexes closed at record highs on Tuesday but gave back some of these gains after the Federal Reserve (Fed) raised short-term interest rates for the second time in the current expansion. In reaction to the Fed's rate hike and increased expectations for three rate increases next year (as opposed to two), stocks fell while the dollar and interest rates rose. In particular, the rise in interest rates has caused bond prices to fall, and, in turn, caused diversified portfolios to lag popular market indexes. No one wants to feel left behind, but that doesn’t mean you should try to chase better-performing stocks or certain stock sectors.

How the market finished last week, the S&P 500 down 0.1%, the Nasdaq down 0.1%, and the Dow up 0.4%.

This Week: The final week before Christmas is not entirely devoid of economic news, but it will be a relatively quiet end. One interesting event will be the Bank of Japan’s meeting, which rounds off a busy year for central banks. The yen has taken a beating since the election, but perhaps some retracement is possible here if Japan’s central bank avoids striking a too-dovish tone this week. Company news is thin on the ground, as you would expect before Christmas, although Carnival’s quarterly figures will be of interest, given the stock price sits at all-time highs.

There are two things to keep in mind as the new year approaches: 1. Many investors holding capital gains are probably waiting until January to take them; not just so they can postpone paying capital gains taxes (this happens every year) but also in the hopes that those tax rates will be lower. 2. If this rally is indeed based on expectations about what the new administration will do, the date the Trump team has to begin to meet those expectations, begins on 1/20/2017, after the inauguration.

Economic Calendar: Janet Yellen Speaks (12/19), Durable Goods Orders (12/22), GDP (12/22), Leading Indicators (12/22), Consumer Sentiment (12/23) 

Some of the major earnings announcements on deck: LEN, DRI, FDS, FDX, NKE.

$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 you have a testimonial or comment of how this website has helped you we would like to know, write us. Share with a friend. Cha-ching.

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