Market Direction Week of July 24, 2017©

Market Direction: BULLISH alert issued 11/10/2016

Stock on the Radar (STAR)© was launched 6/19/2017 Sunday evening. When there is a new stock recommendations for the week it is typically made available late Sunday, so investors can prepare to take a position when the market opens Monday for trading.

Last Week Review: After a few quiet months, U.S. large-cap stocks jumped 2% over the past two weeks, setting a series of record highs along the way. International stocks resumed their performance leadership, with developed-market large-cap stocks gaining 3% and emerging-market stocks rising by more than 5% over the same period. Amid the short-term global market rally, investors have largely ignored the political headlines regarding Russia as well as the ongoing debates on health care and tax reform, and instead have taken stocks higher as prospects for accelerating global growth proved to be the dominant market driver.

As was largely expected, on Thursday (7/20) the ECB (European Central Bank) left its monetary policy stance unchanged, but ECB President Mario Draghi affirmed that the tapering of quantitative easing would be reviewed in the Fall. These comments resulted in sharp gains in the euro against the dollar; now up a staggering 11.8% YTD.

In a complete reversal of the apparent slowdown in March & April, Q2 Chinese GDP was released this week and at +6.9% y/o/y was an upside surprise versus the +6.8% expectation. This was partially supported by strong results in both retail sales and industrial production, and should reduce any concerns that China could spark a global economic slowdown.

How the market finished last week, the S&P 500 up 0.5%, the Nasdaq up 1.2%, and the Dow down 0.3%.

This Week: Earnings come through thick and fast next week, from US, Europe, and the UK, and so markets will be hard pressed to keep up with the news. As US markets hit all-time highs, it will be interesting to see whether their divergence compared to European indices, weighed down by the euro, is warranted.

Virtually every dip since the November Presidential Election has been met with buyers either immediately or shortly thereafter, and there are few reasons to think that trend will not continue; even though the SPX has risen more than 16%. While the probability of another small pullback will continue to rise with the market, such pullbacks could continue to represent buying opportunities for those looking to add exposure in certain sectors.

Despite the VIX being at record lows, the market hitting record highs, and fairly high expectations for earnings season, the indicators are saying that participants do not think the market has topped out yet.

Meanwhile, a Fed meeting and purchasing managers index (PMIs) from around the globe mean that the economic calendar is also busy, although no changes in policy from the US central bank are expected. 

Economic Calendar: PMI Composite Flash (7/24), FOMC Meeting (7/25), FOMC Meeting Announcement (7/26), Durable Goods (7/27), GDP (7/28)

Some of the major earnings announcements on deck: AMZN, SBUX, VZ, BA, AMGN.

$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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