Market Direction Week of February 12, 2017©

Market Direction: BULLISH alert issued 11/10/2016

Last Week Review: The Dow Jones Industrial Average and the S&P 500 closed at record highs on Friday, with both gaining about 1% on the week. Most of the increase occurred late in the week after President Donald Trump said he would give an announcement regarding taxes in the next few weeks. Investors are increasingly optimistic that lower taxes, relaxed regulations and higher infrastructure spending could finally fuel faster economic growth, but the range of likely outcomes for economic growth, interest rates, inflation and the dollar is wider than in the past eight years, leading to higher uncertainty and probably more market volatility ahead.

The gravitational pull from Washington has kept nearly all of the recent focus on the United States. President Trump's proposed pro-growth policies have raised the enthusiasm level around domestic growth, and the U.S. stock market has responded by moving to new all-time highs again last week.

How the market finished last week, the S&P 500 up 0.8%, the Nasdaq up 1.2%, and the Dow up 1.0%.

This Week: Q4 earnings season has passed the midway point, and with 69% of the companies in the SPX reporting so far.

With multi-decade lows in jobless claims, oil prices rebounding back near YTD highs, strong earnings reports, President Trump promising tax cuts, his immigration ban blocked by the courts, and positive trade data from China, the markets had plenty to cheer about this week; and the new record highs among the major indices reflect that.

Building on a solid economic foundation, the Trump administration provided more reasons for the market to cheer than to groan; something that could continue for the foreseeable future.

The Trump administration is very unpredictable and actions in Washington have the potential to “trump” these indicators at any time. This week they seemingly gave the market a lift, but that may not always be the case; so short-term traders would be advised to pay close attention to political news for the foreseeable future.

UK data takes centre stage this week, with the trio of consumer price index (CPI), unemployment and retail sales providing the chance for sterling bulls to put the pound back on the front foot.

Also, worth watching out for will be US CPI, especially with a dollar resurgence apparently in the works.

Economic Calendar: PPI-FD (2/14), Retail Sales (2/15), Empire State Mfg Index (2/14), Philadelphia Fed Business Outlook Survey (2/16), Leading Indicators (2/17)

Some of the major earnings announcements on deck: DE, NTES, HLT, CSCO, CBS.

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