Market Direction Week of July 31, 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: The S&P 500 ended the week unchanged, but it reached a new record high on Wednesday. While the S&P 500 failed to expand upon its gains from the last two weeks, the Dow Jones Industrial Average rose by more than 1% as company earnings helped propel it higher. With more than half of the companies in the S&P 500 having reported second-quarter results, earnings are up 9.1% year-over-year, signaling that the profit rebound remains intact.

U.S. stocks touched another record high last week, the 29th new high so far this year. The market rallied 12% in the 4 months following the election, reflecting a shift in economic optimism predicated on president Trump’s pro-growth agenda (tax reform, deregulation, infrastructure stimulus). While we didn’t fully share the market’s optimism surrounding the speed or near-term impact of implementation of these reforms, we have maintained our broader positive view for equities.

More recently, we think expectations for pro-growth reforms have been appropriately tempered. The upshot from this is that the 1.8% gain over the past three weeks suggests that it’s strong earnings announcements and economic fundamentals – not simply policy hopes – that are powering equities to new highs.

How the market finished last week, the S&P 500 flat 0.0%, the Nasdaq down 0.2%, and the Dow up 1.2%.

This Week: A jam-packed week ahead on both the corporate and economic front, with volatility expected to ramp up, despite the summer lull dragging the VIX into a record low. On the economic front, the central banks remain a theme, with the Bank of England releasing their latest rate decision just hours after the crucial services purchasing managers index (PMI) reading. Of course the first week of the month means we have a focus on the US jobs market, with Wednesday’s ADP figure followed up by Friday’s full jobs report. When you add a host of eurozone data including inflation, GDP and PMI surveys, it is clear that there is likely to be significant amount of volatility ahead.

On the corporate calendar, stock market bulls will hope that US earnings continue to outperform, with the heavyweights such as Apple, Berkshire Hathaway, and Time Warner. However, the focus is likely to be more FTSE based for the week, where releases from the likes of HSBC, BP, Rio Tinto, and RBS are just a few of the many earnings releases to watch out for.

Economic Calendar: Chicago PMI (7/31), ISM Mfg Index (8/1), ADP Employment Report (8/2), Factory Orders (8/3), Employment Report (8/4)

Some of the major earnings announcements on deck: AAPL, CRUS, TSLA, CI, AGN.

$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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