Market Direction: BULLISH alert issued 1/10/2019
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Market Direction Week Review: U.S.
stocks rallied to record closing highs (S&P 500 and Nasdaq), erasing last
year's decline in less than six months. A more accommodative stance from
central banks, rising earnings, and signs of easing trade tensions have all
helped improve sentiment over the last several months. The main driver for
stocks last week was corporate earnings. With over 40% of the S&P 500 companies
having reported results, corporate profits appear to be on track for small
gains in the first quarter, supporting our positive outlook. On the economic
front, the U.S. GDP came in stronger than expected, but growth was aided by a
buildup in inventories and a surge in net exports, which are likely to be
reversed in future quarters.
Stocks
generated modest gains for the week, with the technology-heavy Nasdaq Composite
Index and smaller-cap benchmarks outperforming large-cap indexes. The S&P
500 Index hit record highs on Tuesday and, after losing some of its upward
momentum, again on Friday. The S&P 500 has now climbed about 25% from its
recent low on December 24, 2018.
On
Friday, the Commerce Department said that U.S. gross domestic product (GDP)
grew at a 3.2% annual pace in the first quarter, surprising many observers who
had expected slower growth in a quarter that featured a government shutdown and
severe winter weather. However, the GDP report showed that consumer spending
increased at a disappointing 1.2% rate, slowing significantly from 2.5% in the
fourth quarter of 2018. The positive and negative aspects of the GDP data
seemed to offset each other, resulting in little effect on the market.
How
the market finished last week, the S&P 500 up 1.2%, the Nasdaq up 1.9%, and
the Dow down 0.1%.
Market Direction This Week: We track the stock market with our Bullish and Bearish Alerts and for the last 15 weeks the stock market has been Bullish. The returns since the alert was made have been amazing and continue to be impressive (see Market Direction Mid Week Update: Trading Strategies).
Next
week is going to be busy on the economic (and earnings) front, including a
two-day FOMC meeting on Tuesday/Wednesday. There are multiple data points that
could trigger market reaction, so stay alert!
Q1
earnings season really revved up last week and so far, roughly 53% have beat on
the top line while 79% have beat on the bottom line (vs. the respective 50% and
90% from the prior quarter).
The
U.S. equity markets could go higher (and the SPX could test the 2,940 level)
and on the other hand we might be a little stretched near-term and due for some
consolidation. With a heavy dose of earnings reports, economic data, and
continuing trade talks with China and a FOMC meeting and we will likely see
volatility pick up some next week.
Economic
Calendar: Consumer Confidence (4/30), FOMC Rate Decision (5/1), ISM Mfg Index (5/1), Non-ISM Mfg Index (5/3), Employment Report (5/3)
Some of the major earnings announcements on
deck: GOOGL, AAPL, MA, MCD, SQ.
$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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