Market Direction: BULLISH alert issued 6/20/2019
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Market Direction Week Review: U.S.
stocks finished slightly lower last week, with most of the attention shifting
to corporate earnings announcements. Bank earnings kicked off the
second-quarter earnings season. While results were mixed, solid loan growth and
low credit losses indicate a healthy consumer, which bodes well for the
economy. The energy sector lagged, as oil prices declined for five straight
days, finishing 7% lower on global demand concerns. This week investors will
get a good read on the manufacturing trends with a number of industrial
companies reporting earnings. Sector leadership tends to alternate over time,
which underscores the importance of ensuring that portfolios are diversified
across sectors and subsectors.
In
what has seemingly become an annual event, the national debt ceiling debate has
reared its ugly head again this week in Washington DC; this time emerging
concurrent with the annual budget negotiations for the next fiscal year which
begins on 10/1. House Speaker, Nancy Pelosi rejected a White House request for
$150B in spending cuts on Friday (7/19), reportedly because she wants to pair
any spending level changes with a deal to raise the debt ceiling, to avoid
having to deal with the issue after the annual August recess; Pelosi has
apparently asked for budget spending increases. Both sides seem interested in
resolving both issues for the next 2 years, thus pushing them out past the 2020
election, so a deal seems likely in the next 2 weeks.
Since
President Trump and President Xi met following the G20 summit on 6/29, there
has been little progress made on the trade/tariff issue. But this week U.S.
Trade Representative Lighthizer and Treasury Secretary Mnuchin spoke to Chinese
trade negotiators by telephone. Details of their discussions have not been
released, but Commerce Secretary Ross said we should expect the negotiations to
be a “long, involved process”; in other words, no resolution any time soon.
President Trump also reiterated that he could still impose additional tariffs
at any moment, and thus far, no details have been released regarding what types
of technology can be sold to Huawei. These issues remain the single biggest
risk in the marketplace at the moment.
Again
this week the issue of the U.S. imposing tariffs on Airbus has been in the
headlines. Apparently within the next few weeks, the World Trade Organization
(WTO) is expected to grant the U.S. approval to impose the tariffs and others
that could be imposed on aircraft parts, and consumer goods such as cheese,
olives, pasta and whiskey. The U.S. has already added tariffs on steel and
aluminum products from the EU.
How
the market finished last week, the S&P 500 down 1.2%, the Nasdaq down 1.2%,
and the Dow down 0.7%.
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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).
Since the SPX not only broke out to another new high, but (at 3,780 days in duration) is by far the longest bull market in history, this is a good time to review how this bull market compares to others. As you can see in the updated table below, while the current bull market is now 328 days longer than the internet bull market, at +345%, it remains number 2 with regard to the actual percentage increase. The SPX would need to reach a level of about 3,500 to exceed the 417% gain of the strongest bull market in history.
Earnings season ramps up further next week, but the economic calendar is light; otherwise there are few market catalysts on the horizon until the following week. There were not many changes in the indicators this week, but those that did change, moved in a slightly more bearish direction. The markets are essentially in waiting mode for the 7/31 interest rate cut, a quarter point of which is seemingly already priced into the market.
However, with expectations of a half point cut on the rise, some participants seem to be hedging against a disappointed market if it doesn’t happen.
Economic Calendar: Existing Home Sale (7/23), New Home Sales (7/24), Durable Goods Orders (7/25), Weekly Job Claims (7/25)
Some of the major earnings announcements on deck: AMZN, TSLA, FB, V, GOOGL.
$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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