Market Direction Week of October 9, 2017©

Market Direction: BULLISH alert issued 9/21/2017

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: Stocks finished higher for the week, helped by encouraging economic data releases that showed stronger-than-expected trends in the manufacturing and services sectors, as well as auto sales. While Friday's September employment report was weaker, the impact from recent hurricanes was the primary driver instead of underlying trends that appear to remain healthy.

Stocks reached fresh record highs last week, including an eight-day winning streak for the S&P 500, the longest since 2013. The persistence and magnitude of the market’s gains have been impressive, and volatility has hovered near record lows, a combination that won’t continue uninterrupted forever.

While investors would be well-served to recalibrate appropriate expectations for returns and volatility ahead, comfort should also be found in the fact that underlying fundamentals appear sufficiently solid to support this bull market moving forward.

Employment trends will be a central driver of the economy -- personal spending is the largest contributor to U.S. GDP -- and the September employment report released last week offered a fresh look at the health of the labor market. Here are the key takeaways:

• Hurricanes cause job declines
• Unemployment drops to a 16-year low
• The broader trend is still quite healthy
• Phase 2: Wage Growth
• Implications for the Fed
• Support for the bull market

How the market finished last week, the S&P 500 up 1.2%, the Nasdaq up 1.5%, and the Dow up 1.6%.

This Week: US earnings season begins in earnest this week, with banks and asset management giant Blackrock updating the market. The continual stream of positive economic data that have pushed the SPX to 6 consecutive record highs and the VIX to an all-time closing low, should be closely watched.

Separately, news reports indicate that North Korea could be planning another missile test, possibly as soon as this weekend; this time using a missile that is capable of reaching the west coast of the US.
Should this occur, it is likely to roil markets early next week.

News reports indicate that with almost half of all plug-in vehicles in the world sold there, China is now the world’s largest electric-car market. While certainly not first to market in making electric cars, the Chinese government is funding domestic manufacturers, luring domestic buyers with incentives, building a large charging network, and making license plates available only for electric cars in some cities.

A court in Spain has blocked the Catalan vote on independence by suspending the regional parliament session where the results of Sunday’s referendum were to be discussed. The president of the Catalan parliament said the court’s decision to suspend it “harms freedom of expression”.

Thursday’s court ruling raises the question of how the Spanish state will respond. This issue, the worst political crisis in Spain for decades, is likely to get even worse before it improves.

Economic Calendar: JOLTS (10/11), PPI-FD (10/12), Consumer Price Index (10/13), Retail Sales (10/13), Consumer Sentiment (10/13)

Some of the major earnings announcements on deck: BLK, DAL, DPZ, FAST, C, JPM.

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