Market Direction Week of June 17, 2019; A New Bullish Alert Just Started

Market Direction: BULLISH alert issued 6/20/2019



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: U.S. stocks finished higher for the third straight week, with the S&P 500 and the Dow closing at fresh record highs. The main catalyst for the rally in both bonds and stocks was the Federal Reserve (Fed) signaling its openness to rate cuts this year. The committee removed a previous statement about being patient in setting rates, which implied holding rates steady for some time, and added that it will act as appropriate to sustain the economic expansion. Other central banks are also shifting toward easier monetary policy, which has resulted in lower bond yields globally and increased risk appetite. Following the financial crisis in 2008, the U.S. stock market first achieved a new record high in early 2013. Since then, it has set 225 all-time highs (an impressive 14% of all trading days), indicating that new highs aren't a sign of exhaustion. We continue to believe that still-positive fundamentals, in combination with a favorable interest rate environment, provide a positive backdrop for stocks. But we expect more volatility along the way as this expansion matures.

With the DJI and SPX notching fresh all-time highs you might think that the VIX would be dropping down to 52-week lows but that really hasn’t been the case. While it seems a near certainty that global central banks will be accommodative in the coming months, there is still some question as to whether or not the U.S. and China (and even the U.S. and E.U.) will resolve trade disputes and subsequently drop tariffs. This is likely the reason for the recent 14-16 range on the VIX as demand for protection remains relevant until we get some clarity on the global trade outlook.

S&P 500 Index ($SPX - 2 to 2,951): The technical picture for the S&P 500 appears to have turned more bullish this week – the SPX cleared congestion around the 2,892-2,916 area and registered a fresh all-time closing high of 2,958 Thursday.

NASDAQ Composite ($COMPX - 12 to 8,039): The NASDAQ did not register a new all-time high this week, but it did clear some pretty heavy congestion around the 7,850-7,950 area.

U.S. Treasury Yield ($TNX + 0.69 to 2.068%): Yields on the 10-year are bouncing back from Thursday’s 1.975% level, which represented the lowest yield since November of 2016.

How the market finished last week, the S&P 500 up 2.2%, the Nasdaq up 3.0%, and the Dow up 2.4%.

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 new Bullish Alert recently started on 6/20/19 and we indicated to followers new positions could be entertained at this time. We will continue to provide you the current stock market conditions as they develop (see Market Direction Mid Week Update: Trading Strategies). 

In short there were three primary drivers that will influence the stock market going foward: a) Trump said that he had a very good telephone conversation with Chinese President Xi Jinping and will be having an extended meeting at next week’s G-20 meeting, b) Mario Draghi said that the European Central Bank is considering fresh stimulus measures, and c) The Federal Reserve conveyed their intention to help sustain economic expansion at this week’s FOMC meeting. While there is likely little doubt that global economic growth has been slowing recently, the prospects for trade resolution and economically stimulative measures from global central banks, not to mention falling bond yields which further support the T.I.N.A. (there is no alternative) thesis, help bolster the case for the bulls.

Wrapping up Q1 earnings for the S&P 500, 0.6% missed analyst’s estimates on the top line while 6.40% surpassed estimates on the bottom line. We are in-between the thick of earnings seasons but there were still some high-profile names that reported this week.

Next week is fairly full on the economic front, Historically June isn’t a bullish month for stocks, which makes this month’s near 200 point rally in the SPX that much more impressive. While the potential for trade resolution between the U.S. and China appears to have improved recently, it feels like the majority of the fuel behind this month’s rally is due to the expectation of easing monetary policy from the Fed, and other central banks for that matter. The “don’t fight the Fed” mentality that was reinforced in investors’ psyche over the past 10 years appears to be coming back to the forefront of the conversation. Whether or not the monetary easing re-ignites growth and/or inflation remains to be seen, but it’s difficult to go against that mentality when you look at how stocks have fared in the past. Regarding next week’s outlook, the potential for higher volatility is certainly in the cards given the near-term overbought nature in stocks, a G20 summit on Thursday/Friday, and expectations for some kind of an announcement from the U.S./China in regards to trade. Predicting exactly how things will play out next week is a little difficult all the issues above will decide which way the stock market will go.

Economic Calendar: Consumer Confidence (6/25), Durable Goods (6/26), GDP (6/27), PCE Price Index (6/28)

Some of the major earnings announcements on deck: MU, LEN, FDX, STZ, NKE.

$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!

Related Link: http://www.stockmarket-direction.com/