Weekly Closing Numbers: Market Humming Along

Market Direction: BULLISH alert issued 10/24/2019

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The economy



The stock market plowed to new records this week, as earnings reports, economic data, trade news, and the bullish price action continued to bolster risk sentiment. The S&P 500 (+2.0%), Nasdaq Composite (+2.3%), and Russell 2000 (+2.5%) rose at least 2.0%, and the Dow Jones Industrial Average (+1.8%) followed right behind.

Six of the 11 S&P 500 sectors finished with gains of at least 2.0%, including a 3.8% gain in the defensive-oriented utilities sector. The energy sector (-1.1%) was the only sector to finish lower, as oil prices ($58.55/bbl, -0.44, -0.8%) continued to falter.

The macro news flow remained mostly positive and ultimately indicated that the economy is still growing at a steady pace, which could continue to favor equities. In economic data, retail sales and housing starts showed healthy gains in December, while inflation pressures remained muted. In trade news, the U.S. removed China from its currency manipulator list, the Phase One trade deal was signed, and the USMCA trade deal was passed in the Senate.

Separately, the Housing Starts report out of the U.S. was a gangbusters report.

Total housing starts surged 16.9% m/m to a seasonally adjusted annual rate of 1.608 million (Briefing.com consensus 1.380 million), driven by an 11.2% increase in single-family starts and a 30% increase in multi-unit starts. Building permits, meanwhile, declined 3.9% m/m to 1.416 million (Briefing.com consensus 1.460 million), with single-unit permits down 0.5%.

The key takeaway from the report is the huge starts number and the recognition that the largest homebuilding region -- the South -- saw an impressive 11.3% increase in single-family starts. That's a good sign as it relates to potential supply coming online and it's good simply as a positive growth indicator.
U.S. Treasuries were little changed in another quiet week of trading despite the rally in equities. The 2-yr yield was unchanged at 1.56%, and the 10-yr yield increased one basis point to 1.84%. The U.S. Dollar Index increased 0.3% to 97.662. On a related note, the Treasury Department said it will start issuing 20-yr bonds in the first half of this year.

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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
compared to Recommendation Numbers
	10/24/2019	1/17/2019	Difference
Dow Jones	26,805.50	29,348.10	2,542.60
Nasdaq	8,185.80	9,388.94	1,203.14
S&P 500	3,010.29	3,329.62	319.33

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