Market Direction: BEARISH alert issued 5/23/2019
Be a part of our book of the quarter community get Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The Worlds (Sponsored Link) Make the decision to be a lifelong learner.
Stock on the Radar (STAR)© is a service we provide. If there is a new stock strategy for the week we typically make it available Sunday evening. This allows investors time to research the strategy and decide if they want to take a position Monday when the stock market opens. Our competitive advantage is we provide our strategy for "FREE" to registered members.
Congratulations! Register below or login to get the next potentially explosive Stock on the Radar (STAR)© strategy. You be the judge.
Register here!
Market Direction Week Review: Stocks
finished the week higher, with the S&P 500 rallying 4.4%, the best weekly
gain in six months. At the same time bond yields declined to the lowest levels
in two years. Increased expectations of a Fed rate cut, hopes that the U.S. and
Mexico can reach a deal to avoid tariffs, and improved valuations, all helped
stocks move higher. Economic data were mixed, as strength from the services
sector was offset by weakness in the manufacturing sector. Job gains for the
month of May came in below expectations, but the unemployment rate held steady
at a 50-year low. At this stage of the economic cycle we expect a more balanced
mix of positive and negative surprises.
Stocks
bounced back from losses in May as anticipation grew that the Federal Reserve
could cut short-term interest rates later in the year. The large-cap S&P
500 Index had its best week of the year and ended within roughly 3% of its
all-time high, while the Dow Jones Industrial Average escaped its longest
weekly losing streak since 2011.
All
S&P 500 sectors saw gains, led by the relatively small materials segment.
Energy shares lagged, weighed down by continued weakness in oil prices, and the
typically defensive utilities and real estate sectors also underperformed.
Shares of major tech-oriented companies pulled back sharply early in the week
following news that antitrust officials were preparing investigations into
Apple, Amazon.com, Facebook, and Alphabet (Google). The House Judiciary
Committee also announced its own investigation on Monday into competition in
digital markets.
How
the market finished last week, the S&P 500 up 4.4%, the Nasdaq up 3.9%, and
the Dow up 4.7%.
Trade
stocks & options for as low as $1 until Independence Day 2019 at ZacksTrade (Ad)
Market Direction This Week: We track the stock
market based on our Bullish and Bearish Alerts a Bearish Alert recently
started on 5/23/19 and since the Alert the stock market indexes have fallen
tremendously. Taking new positions at this time should be done with caution. We
will continue to advise you of the current stock market conditions (see Market Direction Mid Week Update: Trading Strategies).
U.S.
equities register the best week of the year but it’s a little early to give the
“all clear” signal on stocks.
Equity markets closed around the highs on Friday with the Dow Jones Industrial Average up 294 to 26,115, the S&P 500 higher by 34 to 2,877, and the NASDAQ Composite (COMPX) gaining 134 to 7,750. This week’s rally in stocks has been impressive, and I can see why the bulls strung together such momentum – a technically oversold condition + dovish Fed commentary + trade optimism. However, from a near-term perspective we might have moved a little far too fast, especially given the remaining uncertainties around trade. I think we can pretty much all agree that we want to see trade resolution and avoid tariffs, but at this point we can’t be sure how things will play out and what the potential impact tariffs will have on corporate earnings and the global economy. Back on May 17th in this weekly blog I mentioned that the risk-reward set-up in stocks was asymmetrical in my opinion, and that’s likely the case given where we currently stand. Until the government resolves some of the geopolitical issues current on the table the near-term potential downside outweighs the potential upside. From a bullish perspective, it appears like the odds are that the Mexico tariffs do not go into effect on Monday, and the Fed is going to be accommodative, but trade negotiations with China and the EU still remain a question mark. Therefore, we could see some continued upward momentum in stocks in the early part of the week (assuming Mexico tariffs don’t go into effect), but expect some consolidation following that and therefore have an overall slightly bearish outlook for next week.
Equity markets closed around the highs on Friday with the Dow Jones Industrial Average up 294 to 26,115, the S&P 500 higher by 34 to 2,877, and the NASDAQ Composite (COMPX) gaining 134 to 7,750. This week’s rally in stocks has been impressive, and I can see why the bulls strung together such momentum – a technically oversold condition + dovish Fed commentary + trade optimism. However, from a near-term perspective we might have moved a little far too fast, especially given the remaining uncertainties around trade. I think we can pretty much all agree that we want to see trade resolution and avoid tariffs, but at this point we can’t be sure how things will play out and what the potential impact tariffs will have on corporate earnings and the global economy. Back on May 17th in this weekly blog I mentioned that the risk-reward set-up in stocks was asymmetrical in my opinion, and that’s likely the case given where we currently stand. Until the government resolves some of the geopolitical issues current on the table the near-term potential downside outweighs the potential upside. From a bullish perspective, it appears like the odds are that the Mexico tariffs do not go into effect on Monday, and the Fed is going to be accommodative, but trade negotiations with China and the EU still remain a question mark. Therefore, we could see some continued upward momentum in stocks in the early part of the week (assuming Mexico tariffs don’t go into effect), but expect some consolidation following that and therefore have an overall slightly bearish outlook for next week.
Keep
following our post during the week and if our propriety model changes to a
bullish alert we will post something to let our followers know.
Economic
Calendar: JOLTS (6/10), PPI (6/11), CPI (6/12), Retail Sales (6/14), Capacity
Utilization (6/14), Industrial Production (6/14)
$tockMarketDirection proprietary model is currently BEARISH. 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!
No comments:
Post a Comment