Market Direction Weekly Closing Numbers©

Market Direction: BULLISH alert issued 11/10/2016

The economy

The stock market appeared to be in jeopardy of recording its first down week in a month, but a recovery on Friday afternoon helped the S&P 500 add 0.7% for the week, extending its first quarter gain to 5.7%.

Equity indices motored higher to start the week, but investor sentiment soured a bit on Thursday, after Axios reported that Republican lawmakers are likely to delay a decision on infrastructure spending until 2018, giving Congress time to focus on tax and health care reform in 2017. The news weighed on construction and engineering names with Caterpillar (CAT) falling 3.3% during the final two sessions of the week.

However, the overall stock market took the news in stride, which was impressive, considering pro-growth policies were cited for the post-election charge that lifted the S&P 500 to a fresh record. The market did see some selling on Friday morning, but dip buyers helped the benchmark index turn positive by the close.

The past week was very quiet on the economic front, but investors did receive the most recent policy minutes from the Federal Open Market Committee. The minutes acknowledged that a rate hike will be in order fairly soon, if incoming data on jobs and inflation remains in line with expectations.

It is worth noting that some members of the FOMC expressed concern that low volatility in equity markets is inconsistent with considerable uncertainty attached to the outlook for changes to the fiscal landscape. The CBOE Volatility Index (VIX) held its ground in the 11.50% area, ending the week well below its 200-day moving average (13.80).

Rate hike expectations saw limited movement during the past week. The implied likelihood of a hike in May ticked up to 50.4% from last week's 44.1% while the implied probability of a rate hike in June slipped to 66.5% from last Friday's 69.9%.

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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
	11/10/2016	2/24/2017	Difference
Dow Jones	18,807.88	20,821.75	2,013.88
Nasdaq	5,208.80	5845.31	636.51
S&P 500	2,167.48	2,367.34	199.86

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