The
trading strategy this website uses as its signature tool is our bullish
and
bearish alerts. This indicator has effectively been used with accuracy
since
2011. The website helps our followers stay in tune with the stock market
and profits have been amazing. This post provides a mid-week update on
how the stock market has preform.
At the bottom of this post are the all-time numbers since the current
alert was
made. The current bullish alert is moving in the right direction.
Market Direction: BULLISH alert issued 6/20/2019
Can the stock market keep climbing higher?
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U.S. stocks ended
Wednesday flat to higher, after the Federal Reserve announced it would cut its
benchmark federal funds rate a quarter percentage point, in line with market
expectations, but included language in its accompanying statement and economic
projections that called into question whether there will be another rate cut
this year or next.
Equities pared their
losses during a press conference by Chairman Jerome Powell, led by bank stocks,
and after he talked up the strength of the U.S. economy and suggested that the
Fed may need to expand its balance sheet in order to combat a liquidity
shortage that has beset money markets in recent days.
How did the major benchmarks fare?
The Dow Jones Industrial Average DJIA, +0.13% rose
36.28 points, or 0.1% to 27,147, while the S&P 500 SPX, +0.03%
added 1.03 point, or less than 0.1%, to 3,006.73. The Nasdaq COMP, -0.11% lost
8.63 points, or 0.1%, to close at 8,177.39.
At session lows, the
Dow was down 211.65 points, the S&P had lost 26.97 points and the Nasdaq
fell 99.80 points.
What drove the market?
The Fed announced it would cut the benchmark federal funds rate a
quarter percentage point to a range of 1.75% to 2% Wednesday afternoon, but
said in an accompanying statement that “sustained expansion of economic
activity, strong labor market conditions, and inflation near the Committee’s
symmetric 2% objective are the most likely outcomes.”
The language of the
statement appeared to communicate that Wednesday’s rate cut would be the final
one of the year, while fed funds futures markets have shown that investors
expected at least another rate cut between now Dec. 11, the interest-rate
setting committee’s final meeting of 2019.
The Fed also released
a survey of Fed Board members and regional Fed bank presidents, which showed
that the median respondent believes the Fed funds rate would be at present
levels through the end of 2020.
Three members of the
Federal Reserve’s interest-rate setting committee voted against Wednesday’s
decision, with Kansas City Fed President Ester George and Boston Fed President
Eric Rosengren voting against a rate cut, while St. Louis Fed President James
Bullard preferred to cut rates by 50 basis points, rather than 25.
“The statement was
largely unchanged from July and, along with the new economic projections that
were also almost completely unchanged – it suggests most Fed officials still
see a rebound in economic growth as their base case scenario, which means any
further rate cuts would be limited,” wrote Paul Ashworth, chief U.S. economist
at Capital Economics, in a note.
During a news
conference following the decision, Fed Chairman Jerome Powell talked up the
strength of the economy, saying that the Fed funds rate was cut “in order to
provide insurance against risks,” including weak global growth and concerns
over trade policy.
Bond yields rose in the wake of the decision, with the yield on
the 10-year U.S. Treasury note TMUBMUSD10Y, -0.58% paring
its losses from 7 basis points to 2 basis points, to 1.788%. The yield on the
2-year U.S. Treasury note TMUBMUSD02Y, +0.49% rose
3 basis points to 1.754%.
Those moves buoyed the banking sector, with shares of J.P. Morgan Chase & Co. JPM, +1.00% rising
1% and shares Goldman Sachs Group Inc. GS, +0.54% adding
0.5%. The two moves combined to add roughly 16 points to the Dow Jones
Industrial Average.
“Markets were already
pricing in a 25 basis-point cut, and what they wanted to learn was whether
there would be more cuts in the future,” Shawn Cruz, manager of trader strategy
at T.D. Ameritrade told MarketWatch. “The details we got out of the meeting and
the tone of the press conference told us it’s not a sure thing that we’ll see a
continuation of stimulus.”
Investors were also
watching the central bank’s intervention in money markets on Wednesday to
resolve unexpected liquidity issues. Major stock indices pulled back from their
worst levels on the day after Powell said “It is certainly possible that we’ll
need to resume the organic growth of the balance sheet sooner than we thought,”
in response to the liquidity shortage.
Though Powell stressed
that balance sheet expansion would not be a resumption of quantitative easing,
or Fed purchases of debt securities in an effort to reduce long-term interest
rates, equities moved higher nonetheless. “It’s still considered accommodative
as it can serve to put more dollars in circulation,” Cruz said, explaining the
move.
The New York Fed held a second repurchasing auction early Wednesday,
injecting another $75 billion by temporarily buying securities from Wall Street
dealers. The Fed on Tuesday carried out its first overnight repurchase auction
in a decade to bring the benchmark federal-funds rate, which jumped to a high
around 9%, back into a desired 2%-2.25% range by purchasing repos worth $53 billion.
Markets are also
watching Middle East developments after Saudi Arabia’s oil-processing hub was
attacked over the weekend by reported drone and missile attacks.
On Wednesday, Saudi Arabia’s Defense Ministry exhibited debris
from the recent attack on its facilities, saying they are evidence that Iran
was “unquestionably” behind the strike, adding the attack did not originate
from Yemen to the south but from the north and Iran. President Trump has said
he does not want war with Iran though U.S. Secretary of State Pompeo is heading
to Saudi Arabia and Trump on Wednesday called for more sanctions on Iran.
Saudi Arabia will soon restore most of its oil output and return
to normal production levels in weeks, the country’s energy ministry said
Tuesday, following the attacks last weekend on the country’s
facilities that hobbled the world’s largest oil exporter.
The attack initially caused the Brent price BRNX19, +0.11%, the
international benchmark, to rise 15% on Monday, the biggest single-session rise
on record dating back to 1988, but U.S. benchmark crude, West Texas
Intermediate grade CLV19, +0.21% and
Brent oil have been giving up much of their gains since then.
How did other markets trade?
Gold prices GCZ19, -0.86% rose
$2.40, or 0.2%, to settle at $1,515.80 an ounce, while the U.S. dollar, as
measured by the ICE U.S. Dollar Index DXY, -0.10%, a gauge
of the buck against a basket of leading rivals, rose 0.3%.
In Asia overnight, Hong Kong’s Hang Seng Index HSI, -1.24% fell
0.1%. China’s CSI 300 Index 000300, +0.01% gained
0.5% after a 1.7% drop on Tuesday, and Japan’s Nikkei 225 index NIK, +0.54% fell
0.2%.
In Europe, the Stoxx Europe 600 SXXP, +0.02% closed
virtually unchanged.
$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
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The all-time highs since our initial
recommendation to go LONG
this market. Here is how the markets have performed:
Stock Market
Direction Recommendation (9/5/2019)
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Dow
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up 578.58 points a 2.16% gain
|
9/12/19
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Nasdaq
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up 126.97 points a 1.56% gain
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9/12/19
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S&P 500
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up 44.74 points a 1.50% gain
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9/12/19
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Related Link: http://www.stockmarket-direction.com/
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