Market Direction: BULLISH alert issued 1/10/2019
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Market Direction Week Review: In a
holiday-shortened week, stocks gyrated around the flat line. Weakness in the
health care sector as a reaction to increasing political headlines was offset
by healthy gains in industrial stocks, driven by solid earnings and
better-than-expected manufacturing data from China. With valuations having
rebounded back to historical averages, most major U.S. indexes are now trading
near all-time highs. We think corporate earnings will likely be the key to
driving markets higher for the balance of the year.
The
major indexes were mixed for the week, with the smaller-cap benchmarks lagging
the large-cap indexes and the technology-heavy Nasdaq Composite Index. Despite
the release of a new round of major quarterly earnings reports, trading was
relatively subdued. The number of shares exchanging hands reached a new
year-to-date low on Monday, and the CBOE Volatility Index (VIX) hit an
eight-month low on Wednesday. The relative calm on Wall Street may have been
due in part to the holiday-shortened trading week. Markets were closed on
Friday in observance of Good Friday, which also coincided with the start of
Passover.
How
the market finished last week, the S&P 500 down 0.1%, the Nasdaq up 0.2%, and
the Dow up 0.6%.
Market Direction This Week: Expect much
of the same next week we’ll get a steady dose of economic data, along with a
barrage of earnings reports, so stay alert.
With
about one-third of the companies in the S&P 500 reporting first-quarter
results this week, investors will have plenty to digest. Earnings reports can
prompt volatility in individual stocks.
We track the stock market with our Bullish and Bearish Alerts and for the last 14 weeks the stock market has been Bullish. The returns since the alert was made have been amazing and very profitable for investors (see Market Direction Mid Week Update: Trading Strategy).
The
equivalent of the economy’s first-quarter report card will be released Friday,
with the first reading of GDP. The outlook for first-quarter growth has
suddenly shifted upward, after a series of better data releases later in the
quarter. CNBC/Moody’s Analytics Rapid Update survey shows economists’ median
forecast is now tracking at 2.4%, way above the 1% expected earlier in the
quarter, when severe winter weather and the government shutdown were stifling
the economy.
At
the same time, investors are feeling better about global growth and far less
fearful of a recession in the near term. One reason is that China’s data has
also been picking up. This past week, China reported first-quarter GDP at 6.4%,
slightly better than the 6.3% expected by economists.
Amazon,
Boeing, Microsoft and ExxonMobil are among more than 140 S&P 500 companies
reporting quarterly results. According to Refinitiv, 74% of the companies
reporting so far have beaten expectations. Based on forecasts and actual
reports, earnings for the S&P 500 as a whole are expected to decline 1.7%,
the first negative quarter in three years. Some forecasters had projected an
earnings decline of 4% or more.
$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. Building a community of investors one trade at a time. Share with a friend. Cha-ching!
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