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 closed at fresh record highs, helped by better-than feared corporate earnings results and a stronger-than-expected second-quarter GDP. Even though U.S. economic growth slowed in the second quarter as trade and business investment weighed on growth, consumer spending, the biggest part of the economy, topped estimates, increasing 4.3%. The strong GDP report comes as the Fed is expected to cut rates next week in response to low inflation and risks from slowing global growth. Despite a soft patch in manufacturing, the service sector of the economy is holding steady, which, in combination with healthy consumer conditions, supports our view that the economic expansion will continue.
Last week President Trump and Congressional leaders agreed to a 2-year debt ceiling and budget deal, which would increase discretionary spending to $1.37T for fiscal year 2020; an increase from $1.32T in 2019. As long as Congress passes the individual appropriations bills, this deal should prevent a government shutdown at the end of the current fiscal year (9/30) and remove the threat of a U.S. debt default and sequestration, which would have come into play if they could not come to an agreement.
As I mentioned last week, House Speaker, Nancy Pelosi sought a larger increase in spending, while Congressional Republicans sought an overall reduction in spending. And while neither got exactly what they wanted, the deal does avert the time crunch which would have occurred if these issues had been pushed out beyond the August recess, and it takes them off the table until after the 2020 election; something both sides wanted.
Chinese media is reporting that trade officials expect to meet with U.S. trade negotiators soon. This optimism is at least partially driven by reports that the two sides have been showing some goodwill recently. More specifically, the White House invited U.S. technology companies including Intel Corp. and Qualcomm Inc. to discuss a resumption of sales to Huawei, and China apparently met with buyers of U.S. soybeans this week, about a plan to purchase more U.S. products. While the 2 sides remain far apart, these actions do represent at least some forward progress, and recent reports indicate that U.S. trade negotiators will be traveling to China next week.
As expected, leading candidate and former foreign secretary, Boris Johnson was chosen this week to succeed Theresa May as the U.K.’s next Prime Minister. While Mr. Johnson is considered a polarizing politician, he won by the substantial margin of 66% in garnering the leadership role of Britain’s governing Conservative Party, and will assume the role effective Wednesday (7/24).
Of course this new role brings with it the challenging job of resolving the country’s 3-year Brexit debacle, with little more than 3 months to do so. It also brings the more recent confrontation with Iran which recently seized a British oil tanker sailing in the Strait of Hormuz; an apparent retaliation after the British Navy took control of an Iranian tanker heading for Syria, near the British territory of Gibraltar. How the market finished last week, the S&P 500 up 1.7%, the Nasdaq up 2.3%, and the Dow up 0.1%.
Last week President Trump and Congressional leaders agreed to a 2-year debt ceiling and budget deal, which would increase discretionary spending to $1.37T for fiscal year 2020; an increase from $1.32T in 2019. As long as Congress passes the individual appropriations bills, this deal should prevent a government shutdown at the end of the current fiscal year (9/30) and remove the threat of a U.S. debt default and sequestration, which would have come into play if they could not come to an agreement.
As I mentioned last week, House Speaker, Nancy Pelosi sought a larger increase in spending, while Congressional Republicans sought an overall reduction in spending. And while neither got exactly what they wanted, the deal does avert the time crunch which would have occurred if these issues had been pushed out beyond the August recess, and it takes them off the table until after the 2020 election; something both sides wanted.
Chinese media is reporting that trade officials expect to meet with U.S. trade negotiators soon. This optimism is at least partially driven by reports that the two sides have been showing some goodwill recently. More specifically, the White House invited U.S. technology companies including Intel Corp. and Qualcomm Inc. to discuss a resumption of sales to Huawei, and China apparently met with buyers of U.S. soybeans this week, about a plan to purchase more U.S. products. While the 2 sides remain far apart, these actions do represent at least some forward progress, and recent reports indicate that U.S. trade negotiators will be traveling to China next week.
As expected, leading candidate and former foreign secretary, Boris Johnson was chosen this week to succeed Theresa May as the U.K.’s next Prime Minister. While Mr. Johnson is considered a polarizing politician, he won by the substantial margin of 66% in garnering the leadership role of Britain’s governing Conservative Party, and will assume the role effective Wednesday (7/24).
Of course this new role brings with it the challenging job of resolving the country’s 3-year Brexit debacle, with little more than 3 months to do so. It also brings the more recent confrontation with Iran which recently seized a British oil tanker sailing in the Strait of Hormuz; an apparent retaliation after the British Navy took control of an Iranian tanker heading for Syria, near the British territory of Gibraltar. How the market finished last week, the S&P 500 up 1.7%, the Nasdaq up 2.3%, and the Dow up 0.1%.
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).
Equity markets remain at record highs, and investor optimism is good ahead of the first interest rate cut in 10 years, coming next Wednesday (7/31). It’s not whether or not we get a rate cut, it’s how much; the odds still favor 25 basis points (-0.25%).
While next week brings the monthly reports on the employment situation, since weekly jobless claims (which tend to lead the employment reports) have shown no sign of weakening at all, I expect those reports to remain strong too. As I mentioned last week, “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.” With Q2 GDP coming in above expectations, a quarter point cut is still the most likely outcome. However, since some participants are anticipating a half point cut, expectations for an increase in volatility next week (as evidenced by the CBOE VIX VPCR and VIX Futures) should not be completely ignored.
The market indicators this week, were in a slightly more bullish direction; enough so that the overall outlook for next week is moderately bullish. And while I don’t anticipate a lot of volatility if things go as anticipated, should the Fed decide to cut 50 bps or not at all, volatility is likely to increase substantially on Wednesday (7/31).
Economic Calendar: Personal Income and Spending (7/30), Consumer Confidence (7/30), FOMC Decision (7/31), Employment Report (8/2)
Some of the major earnings announcements on deck: MA, AAPL, GILD, CVX, QCOM.
$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!
No comments:
Post a Comment