Market Direction: BULLISH alert issued 10/24/2019
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Market Direction Week Review: On
Tuesday morning, House Speaker Nancy Pelosi, Chairman of the House Judiciary
Committee Jerrold Nadler, and Chairman of the House Intelligence Committee,
Adam Schiff officially announced articles of impeachment against President
Trump. Reaction in premarket equity futures was minimal.
Separately
and also on Tuesday, House Democrats announced that the United
States-Mexico-Canada Trade agreement (USMCA) will be voted on by the House of
Representatives; a key hurdle before the NAFTA replacement bill can be passed
through the Senate and on to President Trump for passage into law. However,
Senate Majority Leader Mitch McConnell said the Senate would not take up the
measure until after the conclusion of the impeachment trial; likely in January.
On
Tuesday morning (12/10) Chinese trade negotiators announced that China and the
US “are laying the groundwork” for a delay on the 15% tariffs scheduled to take
effect next week on about $165B in Chinese goods. The announcement came about
an hour before equities opened in NY, and produced an abrupt turnaround in
premarket S&P 500 futures from about a 14-point decline to about a 19-point
gain. US trade officials did not comment on the report, but the move appears to
be intended to allow more time for negotiation on the point of China committing
to specific US Agricultural purchases.
Then
on Thursday (12/12) the two sides apparently reached a deal “in principal” that
may or may not reduce existing tariff rates on Chinese goods, but will halt the
new tariffs that were set to take effect on Sunday (12/15). In return, China
has apparently agreed to purchase a “substantial” amount of U.S. farm goods. As
of the time of this writing (mid-day Friday 12/13) while some details were
still unclear, it does appear the new tariffs on 12/15 will not take effect and
some tariffs (imposed on 9/1/19) currently at 15% will be reduced to
7.5%.
On
Thursday (12/12), citizens of the UK voted in a snap general election intended
to end the Brexit impasse. Conservative Party leader, Prime Minister Boris
Johnson, and his primary opponent Labor Party leader, Jeremy Corbyn offered
differing views on how to resolve it. Johnson, who once vowed to push Brexit
though “no matter what” continued to walk a hard line. Corbyn by contrast,
continued to push for a renegotiation with the European Union (EU) followed by
a possible second referendum vote.
When
the votes were counted, Boris Johnson won a decisive majority (364 of 650
seats) in the House of Commons, paving the way for Parliament to initiate the
long-delayed divorce from the European Union by the end of January; about 3½
years after voters originally approved the referendum. Perhaps most surprising
was the decisiveness of the vote, which resulted in many long-held
working-class seats in England and Wales switching to the Conservative party.
How
the market finished last week, the S&P 500 up 0.7%, the Nasdaq up 0.9%, and
the Dow up 0.4%.
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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, markets will continue to monitor updates regarding the “phase one” trade
deal that was reached Friday. Meanwhile, economic reports including housing
starts, existing home sales, industrial production and personal consumption and
spending will also be in focus. While earnings reports are limited, FedEx and
Nike will release results Tuesday and Thursday, respectively.
After more
than a year, the U.S. and China announced that the two sides reached an initial
trade deal. The Nasdaq (^IXIC) and S&P 500 (^GSPC) closed at record highs Friday following the news. According to the U.S. Trade Representative’s office,
“The United States and China have reached an historic and enforceable agreement
on a Phase One trade deal that requires structural reforms and other changes to
China’s economic and trade regime in the areas of intellectual property,
technology transfer, agriculture, financial services, and currency and foreign
exchange. The Phase One agreement also includes a commitment by China
that it will make substantial additional purchases of U.S. goods and services
in the coming years.”
However, no
signing date has been scheduled yet. Investors will remain hyper-focused on
further developments until a formal signing is announced. “the main near-term
impact of the phase one deal, assuming it actually gets signed, is that it
removes the threat of final consumer tariffs and adds to the sense that the
downside risks to the economy are fading,” Capital Economics said in a note
Friday.
Economic Calendar: Industrial Production and Capacity Utilization (12/17), Leading Economic Indicator (12/19), GDP (12/20) Some of the major earnings announcements on deck: HEI, FDX, NKE, 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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