Market Direction Week of February 27, 2017©

Market Direction: BULLISH alert issued 11/10/2016

Last Week Review: Stocks continued to move higher and have increased five weeks in a row as the Dow Jones Industrial Average closed at a record high on Friday. Helping stocks move higher has been a better-than-expected earnings season, as the blended earnings growth rate for the S&P 500 is nearly 5%, and about 66% of companies have reported earnings above analyst estimates. International stocks also rose as better-than-expected manufacturing data was reported in the eurozone. Better economic growth and earnings growth support rising stock prices, but there is uncertainty regarding upcoming policy changes, which could cause volatility.

The market rally seems to have hit another consolidation phase, but with a number of potential catalysts on the calendar next week, the probability of a volatility spike has increased dramatically.

How the market finished last week, the S&P 500 up 0.7%, the Nasdaq up 0.1%, and the Dow up 1.0%.

This Week: From a longer-term perspective, the solid economic backdrop, the consumer and business optimism and the animal-spirits I discussed last week are still very much alive, but the overall mood in the very short-term seems to have shifted just a bit. For the past 7 trading sessions, the VIX has been creeping very modestly higher, even as the equity markets have pressed further into record territory. It is quite unusual for the SPX and the VIX to rise together and when that happens the SPX doesn’t always drop, but more often than not it does stop rising.

As I also mentioned last week, there is still plenty of worry out there especially among the anti-Trump crowd, and at the moment the worry seems to be focused primarily on the following events / statistics:

• President Trump’s upcoming speech in front of a joint session of Congress on Tuesday (2/28)
• The January PCE and the February ISM Manufacturing reports on Wednesday (3/1)
• The February ISM Services report and Fed Chair Yellen’s speech on Friday (3/3)
• The SPX is +3.7% in February, +5.6% YTD, and +10.5% since the election
• The last time the SPX dropped >1% in a single day was way back on 10/12/2016

The market won’t pull back just because it hasn’t had a pullback for a while; it needs a catalyst. When/if any of these items is a strong enough catalyst is anyone’s guess, but any pullback is likely be relatively shallow and may represent a buying opportunity.

Economic Calendar: Durable Goods Orders (2/27), Chicago PMI (2/27), Consumer Confidence (2/27), ISM Mfg Index (3/1), Beige Book (3/1)

Some of the major earnings announcements on deck: PCLN, DLTR, MNST, COST.

$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.

Related Link: http://www.stockmarket-direction.com/