Market Direction: BULLISH alert issued 9/5/2019
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Market Direction Week Review: Stocks
finished slightly lower last week, following three straight weeks of gains. The
main events that captured investors' attention were the spike in oil prices and
the Federal Reserve's decision to cut rates for the second time this year. An
attack on key oil infrastructure in Saudi Arabia resulted in the worst oil
supply disruption in history, as 6% of the world's production was impacted. Oil
prices initially jumped 15% but gave back some early gains, finishing the week
6% higher as officials communicated that production will be largely back to
normal by the end of the month, sooner than some had feared. On the monetary
front, the Federal Reserve lowered its federal funds rate by a quarter point to
insure against risks from slower global growth and trade uncertainties. We
believe that an accommodative Fed can help extend the expansion, but aggressive
market expectations for the Fed to continue cutting rates could prompt short-term
volatility.
With
September’s FOMC meeting in the rear-view mirror, the focus likely turns back
to trade, which appears to be a little more uncertain after China trade
officials cancelled a planned meeting with U.S. farmers. From a near-term
perspective, taking a cautious stance is likely more prudent for traders.
Just
when you think things are improving on the trade front we received some mid-day
news that trade officials from China canceled a previously scheduled meeting
with the U.S. farm belt. At the time of this writing the reason behind the
cancellation is unknown but equity markets experienced a mid-day reversal
following the news. This variable makes it difficult to predict how markets
will play out next week, but I’d imagine it’s fairly likely that we get a
negative tweet from President Trump regarding this development which makes me a
little more cautious going into next week. At this point the U.S. is still
scheduled to meet with trade officials in China in early October but perhaps
investor optimism around some sort of a resolution is running a little high.
Therefore, I’d prefer to take more of a cautious stance heading into next week and
offer up a bearish-bias to next week’s outlook.
How
the market finished last week, the S&P 500 down 0.5%, the Nasdaq down 0.7%,
and the Dow down 1.0%.
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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 9/5/19 and we suggested to our followers they can trade any new long positions based on are model. We will continue to provide you the current stock market conditions as they develop. The current stock market environment is in an uptrend (see Market Direction Mid Week Update: Trading Strategies).
This week, market watchers will be keeping a close
eye on the Conference Board Consumer Confidence Index reading for September set
to be released Tuesday.
Even
as the U.S.-China trade war rages on with no end in sight, economists think
that U.S. consumer confidence remains high.
“We
expect the Conference Board’s measure of consumer confidence to remain elevated
in September at 135.0, down only slightly from the 135.8 in August,” Nomura
wrote in a note Friday. “The Conference Board’s measure tends to be more
correlated with the labor market, which remains strong despite a slowdown in
the pace of hiring. Elevated consumer confidence should continue to bolster
consumer spending over the near term, keeping the slowdown in US economic data
contained in the industrial sector.”
August’s
consumer confidence data revealed that Americans are still confident and
optimist about the current situation. The present situation gauge in August was
the highest level since November 2000.
Nevertheless,
Wells Fargo warned of a growing divergence between the Conference Board’s
reading of consumer confidence and the University of Michigan’s survey of
consumers. The firm argued that the disagreement between the two measures is a
worrisome sign. “A look at the nearby chart makes it clear that in the past 25
years, there have been very few times where there has been this much of a gap
between the two,” Wells Fargo wrote in a note Friday. “More worryingly, each of
the past three recessions were preceded by a widening gap. Some of the disparity
may have to do with the recent escalation in the trade war.”Economists polled by Bloomberg expect September’s Conference Board Consumer Confidence Index reading of 133, down from 135.1 in August.
Economic Calendar: Manufacturing PMI (9/23), Consumer Confidence (9/24), Wholesale Inventories (9/26), GDP (9/26)
Some of the major earnings announcements on deck: AZO, NKE, KBH, FDS, MU.
$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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