Market Direction Week of April 17, 2017©

Market Direction: BULLISH alert issued 11/10/2016 

Last Week Review: Stocks posted their second straight weekly decline in a holiday-shortened week, as investors digested bank earnings and as tensions with Syria, North Korea, and Russia, along with a bombing that targeted ISIS on Friday, prompted some unease in the markets. While the year started out with very modest volatility, it's realistic to expect periods of higher stock price movements, underscoring the importance of balance across sectors and asset classes. Overall, the backdrop for stocks remains mostly favorable, supported by improving economic growth expectations and earnings growth.

U.S. stocks are near all-time highs, propelled by optimism about pro-growth policy changes. Valuations are high, but volatility has remained low. We think both economic growth and earnings growth are improving and are recharging the long-running bull market in U.S. stocks. However, investors should have realistic expectations going forward, as domestic policy disappointments and changes, combined with rising global tensions, could contribute to more normal stock market volatility this year. Long-term investors should consider adding stocks during pullbacks, taking advantage of lower prices.

How the market finished last week, the S&P 500 down 1.1%, the Nasdaq down 1.2%, and the Dow down 1.0%.

This Week: Four weeks ago, our proprietary model signaled the stock market is under pressure. Last week’s movement in the market confirmed the stock market is still under pressure. Investors should be cautious and monitor the market closely for changes this week. The Trump administration and geopolitical issues are also something to worry about.

US earnings season continues to dominate proceedings this week, as financial sector firms and a slew of others announce figures.

Despite soggy first-quarter growth, we think the economy is accelerating modestly, based on solid job growth, rising wages and improving optimism. The synchronized global uptick in growth should also help. But the shift toward faster growth isn’t likely to be smooth or quick, and the range of possible outcomes is wider than usual, increasing uncertainty. Investors who expect an immediate impact from domestic pro-growth policies may be disappointed, since they’re likely to take longer and be more modest than expected.

Economic Calendar: Empire State Mfg Survey (4/17), Industrial Production (4/18), Beige Book (4/19), Leading Indicators (4/20), PMI Composite Flash (4/21)

Some of the major earnings announcements on deck: GS, JNJ, EBAY, V, VZ, QCOM.

$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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