Market Direction Weekly Closing Numbers©

Market Direction: BULLISH alert issued 11/10/2016

The economy

After falling 1.4% last week, the S&P 500 rebounded, rising 0.8% for the week. The benchmark index wrapped up a solid first quarter (+5.5%), which was overshadowed by an even better performance from the Nasdaq, which gained 1.4% for the week, extending its first quarter gain to 9.8%.

There's no question that the GOP's failure to compromise on health care reform last Friday left an impression on this week's activities, maybe most notably on Monday. Investors kicked off the week cautiously as it remains largely unclear how the failure to bring the American Health Care Act to a vote will impact the widely-anticipated tax reform legislation.

In addition, investors are also starting to question the new administration's ability to find middle ground with some of the more conservative Republicans in Congress. This issue will certainly manifest itself in the debate on tax reform as the party remains divided on the need to include a border adjustment tax in the overall fiscal overhaul.

Despite the looming uncertainty, the S&P 500 bounced off its 50-day moving average on Tuesday to post its best performance of the week. House Speaker Paul Ryan and Majority Leader Kevin McCarthy stoked the fire by leaving the door open to revisiting health care reform. This was contrary to earlier remarks from President Donald Trump, who vowed to move to tax reform without looking back. For investors, if the GOP can cut health care costs, the savings could support a larger tax break.

Crude oil took center stage in the middle of the week following a bullish inventory report from the EIA and rumors that the OPEC/non-OPEC production cut may be extended beyond June. The energy component went on a three-day rally while the energy sector helped the stock market finish slightly higher on Wednesday and Thursday.

Equities closed out the week, and the quarter, with a flat showing on Friday that kept the S&P 500 inside an eight-point range.

A week of mostly hawkish talk from Federal Reserve officials brought rate hike expectations back to levels from two weeks ago. The implied probability of a rate hike in June climbed to 62.5% from last week's 49.6%, according to the fed funds futures market.

$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.

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	3/31/2017	Difference
Dow Jones	18,807.88	20,663.22	1,855.34
Nasdaq	5,208.80	5,911.74	702.94
S&P 500	2,167.48	2,362.72	195.24

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Market Direction Mid Week Update©

Market Direction: BULLISH alert issued 11/10/2016 

The tech-heavy Nasdaq closed higher for a fourth straight session Wednesday, while the Dow industrials finished lower, as stock investors digested hawkish comments from Federal Reserve speakers and a drop in U.S. gasoline inventories bolstered the energy sector.

The Nasdaq Composite Index COMP, +0.38%  climbed 22.41 points, or 0.4%, to finish at 5,897.55. The Dow Jones Industrial Average DJIA, -0.20%  fell 42.18 points, or 0.2%, to close at 20,659.32, for its ninth losing session in the past 10. Meanwhile, the S&P 500 index SPX, +0.11%  finished up 2.56 points, or 0.1%, at 2,361.13.

Gains in energy did most of the heavy lifting, as only five of the S&P 500’s 11 primary sectors finished in the green. Financials, which have been big gainers in recent months, led decliners, closing down 0.5%.

“It’s going to be touch-and-go until earnings season and then the entire conversation is going to change,” said Karyn Cavanaugh, senior market strategist at Voya Financial, in an interview. Cavanaugh said investors are focusing too much on the drama of President Donald Trump and Congress to appreciate the economic underpinnings of the market.

“We’re probably going to get double-digit earnings growth this quarter, showing that things are getting better even without Administration changes,” she said.

First-quarter earnings, with the bulk of reports beginning in mid-April, are expected to grow by 9.1%, in what would be the largest year-over-year quarterly gain since the fourth quarter of 2011, according to John Butters, senior earnings analyst at FactSet. Voya’s Cavanaugh feels that will easily become a double-digit gain since estimates are traditionally conservative.

“Today is just a pause,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab. “Valuations are a bit stretched, but that’s nothing unusual. Meanwhile, economic data remains strong and markets are optimistic that we’ll see progress on tax reform out of Washington.”
Traders are also tracking the U.K.’s invocation of Article 50, which officially starts its withdrawal from the European Union.

“This has never happened before, so no one knows how it will play out,” Frederick said. “It’s an important event, but I’m not sure it’s a negative event, at least as far as the market goes.”

$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, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 2,361.23 points a 12.55% gain	3/1/17
Nasdaq	up 719.26 points a 13.81% gain	3/21/17
S&P 500	up 233.50 points a 10.77% gain	3/1/17

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

Consider Taking Some Profits

Since Wednesday March 22, 2017 we have suggested investors consider taking some profits.The stock market retreated from the low of 184 points on the DOW today, our recommendation remains the same. If you have any positive gains in your stock positions you should monitor them closely.

Market Direction Week of March 27, 2017©

Market Direction: BULLISH alert issued 11/10/2016 

Last Week Review: Stocks were lower and bonds were higher on the week, with most of the stock market's losses coming on Tuesday as investor angst grew with doubts about the passage of the health care bill in the House of Representatives. This week's decline was the worst of the year, and Tuesday's 1.2% decline was the largest daily decline since mid-October, a span of 109 trading days.

Equity markets have a positive bias early Friday morning as the Dow Jones Industrial Average (DJI) was last seen up 29 to 20,686, the NASDAQ Composite up 30 to 5,848 while the S&P 500 Index was tacking on 6 to 2,352. On the week however the SPX is down over 1% and looks like it is on track to post its third weekly decline of the year. The uncertainty around whether President Trump can get his healthcare bill through Republican-controlled Congress appears to be the catalyst for this week’s downdraft in equity markets. Investors aren’t necessarily concerned about whether the bill passes or not but are using the initiative as a proxy for Trump’s ability to deliver on his legislative agenda, which has been the primary market driver over since the election.

How the market finished last week, the S&P 500 down 1.4%, the Nasdaq down 1.2%, and the Dow down 1.5%.

This Week: The stock market tone for this week will likely be established by outcome of House vote on health care we could see some heightened volatility.

Another, big event of the week will be the article 50 notification by the UK. Given this has been expected, any significant reaction is unlikely, unless the reception in the EU is particularly strident.

Additionally, we have final revisions of UK and US GDP, while China’s PMI figures should drive activity.

Economic Calendar: Consumer Confidence (3/28), GDP (3/30), Personal Income (3/31), PCE Price Index (3/31), Michigan Sentiment (3/31)

Some of the major earnings announcements on deck: RHT, FDS, DRI, PLAY, LULU.

$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/

Market Direction Weekly Closing Numbers©

Market Direction: BULLISH alert issued 11/10/2016

The economy

The theme of the stock market this week was repeal and replace Obamacare. It seems the Republicans were not able to deliver on this issue. On Wednesday, our proprietary models indicated investors should consider taking profits. We continue to advise followers to beware of the current stock market turbulence. This is the first time the stock market has suffered a significant decline since the election. Next week will be interesting and could determine if the stock market continues to decline.

Investors who have gotten accustomed to a steady string of gains in the stock market were taken aback by this week's action, which sent the S&P 500 lower by 1.4%. This marked the fourth weekly decline of 2017 and was the largest weekly drop since early November.

The week got off to an unassuming start as Monday's action was confined to a narrow range. There was no noteworthy earnings or economic news to digest, and the impending House vote on the plan to repeal and replace the Affordable Care Act led to caution among participants.

That caution turned into outright selling on Tuesday, sending the S&P 500 lower by 1.2%. A number of factors were cited for the decline, but the day's selling was most aggressive in the financial sector as the SPDR S&P Bank ETF (KBE) fell 4.8%. The industry group stumbled as the yield curve continued flattening in a manner that contradicts the pro-growth narrative that accompanied the stock market on its charge to a fresh record.

Furthermore, the prospect of health care reform making its way through the legislative process dimmed as the week went on. The House of Representatives was scheduled to take part in a Thursday vote, but that vote got put on hold and cancelled on Friday afternoon due to a lack of support. Investors are acutely aware that a delay in passing health care reform means that tax reform will also need to wait.

Although the week was quiet on the economic front, it is worth noting that February Existing Home Sales (5.48 million; Briefing.com consensus 5.54 million) missed estimates while February New Home Sales (592K; Briefing.com consensus 560K) and February Durable Orders (+1.7%; Briefing.com consensus 1.3%) were better than expected. The Durable Orders report caused the Atlanta Fed to nudge its GDPNowcast for the first quarter up to 1.0% from 0.9%. To be fair, excluding transportation, Durable Orders (+0.4%; Briefing.com consensus 0.7%) came up shy of estimates, indicating relatively weak business spending.

$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.

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	3/24/2017	Difference
Dow Jones	18,807.88	20,596.72	1,788.84
Nasdaq	5,208.80	5,828.74	619.94
S&P 500	2,167.48	2,343.98	176.50

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Consider Taking Some Profits

Market Direction: BULLISH alert issued 11/10/2016 

Consider taking profit or monitor positions held very closely. This is the first time the stock market has shown considerable weakness. The stock market has been relatively robust for the last 20 weeks since president Trump won the election. The stock market can't always go up some type of correction is to be expected sooner or later. What’s next...

What happens after the stock market suffers a sharp drop for the first time following a protracted period of quietude? That is precisely the question Wall Street investors may be pondering after Tuesday’s downdraft—the biggest daily decline for the U.S. stock-index benchmark since Oct. 11—resulted in the end of a 109-day streak of days without decline of at least 1%.

Read: Blame options expiration, not politics, for stock-market pullback: analyst

Strategists at Bespoke Investment Group ran the numbers on returns for the S&P 500 SPX, +0.19% going back to 1928 following a period of 100 days or more without a 1% decline. The data group cited only 11 such instances in which trading without a down day hit the century mark, and on average during the week, month and three months following the first decline during those periods, the broad-market S&P 500 tends to end higher.

Check out: Survey sees bear market for stocks if 10-year Treasury yield hits this level

For the week, the average gain is 0.65%, advancing 8 out of 11 times. The average return after a month is 2.34%, with returns positive in 9 out those 11 occasions. After three months, average returns are about 2.44%, boasting gains in 8 out of those 11 periods (see table below).

To be sure, those statistics may offer no solace (and no guarantee of future gains) to investors fretting that the wheels may be coming off the equity train that has been powered by promises of fiscal stimulus from President Donald Trump. Anticipated delays in his health-care overhaul has led some to fret that the slog toward implementing pro-business policies, including deregulation, tax cuts and infrastructure spending could be longer than initially expected.

But it isn’t exactly clear, beyond lingering concerns about lofty stock valuations, what set off a sharp tumble in stocks on Tuesday, which saw the Dow DJIA, -0.03% fall 237 points, or 1.1%, to end at 20,668, the S&P 500 sink 1.2% to close at 2,344, and the Nasdaq Composite Index COMP, +0.48%  to suffer a 1.8% drop to finish at 5,793. Broadly, it was the worst daily drop for the benchmarks in months.

To many, the market selloff was overdue. But it is hardly anything to write about because as Salil Mehta, a graduate school finance professor, who has worked at Georgetown University and New York University, has noted, stock markets normally decline by least 1% once every 6 sessions.

The four-month period without a drop for the Dow and S&P 500 was uncanny and historic, but may provide some brave souls with buying opportunities, while others wait for the next shoe to drop.

Also read: Here’s the latest sign that the ‘Trump trade’ is losing traction

 

$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, email us. Share with a friend.

The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (11/10/2016)
Dow	up 2,361.23 points a 12.55% gain	3/1/17
Nasdaq	up 719.26 points a 13.81% gain	3/21/17
S&P 500	up 233.50 points a 10.77% gain	3/1/17

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