Market Direction: BULLISH alert
issued 10/24/2019
What is the current stock market direction?
Vote BULLISH (Up) or BEARISH (Down) in the upper right side bar, the current stock market direction weekly closing numbers. Leave a comment. Now for the news…
The economy
Stocks struggled to fend off coronavirus headlines and overvaluation talk during this holiday-shortened trading week. The S&P 500 (-1.0%), Dow Jones Industrial Average (-1.2%), and Nasdaq Composite (-0.8%) set new highs mid-week but were hit with noticeable losses on Friday. The Russell 2000 continued to underperform with a 2.2% weekly decline.
A new strain of coronavirus originated in Wuhan, China and forced the country to lock down several cities right before the Lunar New Year festivities. There were two confirmed cases in the U.S., one in Seattle and the other in Chicago, but the World Health Organization did not declare an international virus alert or public health emergency.
There were concerns that economic activity would slow down, as well as earnings growth as a result, which provided sellers a convenient excuse to sell a market some think is overvalued. Growth concerns were manifested in the 7.4% weekly drop in WTI crude ($54.21/bbl, -$4.34), the advance in Treasuries, and the heavy losses in the cyclical energy (-4.3%), materials (-2.3%), and financials (-2.2%) sectors.
The flash composite PMI for January held steady at 50.9, helped somewhat by a flash manufacturing PMI reading of 47.8 that was up from the final reading of 46.3 for December. A number below 50 connotes contraction, yet the uptick from December connotes a slower pace of contraction; ergo, it is good news in the market's mind.
Major bourses in Europe are up more than 1.0%, drawing some added relief from yesterday's announcement from the World Health Organization that it is not declaring an international virus alert, or public health emergency, for the coronavirus.
China for its part is seeing things differently and is quarantining entire cities, as well as canceling Lunar New Year celebrations, in an effort to stop the spread of the coronoavirus, which has reportedly caused 26 deaths now and has sparked more than 800 confirmed cases.
The Chinese stock market was closed for the start of the Lunar New Year. That point aside, it is acutely evident that China's economic growth is going to be curtailed by the nesting effect taking root there-- forced or otherwise.
This will have some adverse implications for U.S. companies doing business in China. The bid in the futures market this morning, however, and the run to new highs by the market as reports about the Wuhan coronavirus have spread (no pun intended), underscores that the U.S. stock market isn't infected yet with any material concern about earnings in 2020 failing to live up to hopeful expectations.
The U.S. Treasury market experienced some curve-flattening activity. The 2-yr yield dropped eight basis points to 1.48%, and the 10-yr yield dropped 16 basis points to 1.68%. The U.S. Dollar Index advanced 0.3% to 97.86.
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The market direction weekly closing numbers for the indexes this week compared to the initial BULLISH recommendation closing numbers:
Stock Market Closing Numbers
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compared to Recommendation Numbers
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10/24/2019
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1/24/2019
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Difference
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26,805.50
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28,989.73
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2,184.23
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8,185.80
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9,314.91
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1,129.11
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3,010.29
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3,295.47
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285.18
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