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
Positive responses to earnings reports from companies like NVIDIA (NVDA), Roku (ROKU), and Expedia Group (EXPE) have provided some bullish-minded support, but so has the otherwise ho-hum performances of foreign equity markets.
The resolve of markets in Asia, amid yet more reports of escalating coronavirus deaths and cases, and the resolve of markets in Europe, amid more reports of weak economic growth, has kept selling interest in check.
The Shanghai Composite, for instance, increased 0.4%; meanwhile, Germany's DAX Index is up 0.1% even though a flash GDP report showed the German economy stagnated (i.e. no growth) on a quarter-over-quarter basis in the fourth quarter.
Such reports just stir the pot of stimulus expectations, which naturally stir the bullish emotions of global equity markets that undoubtedly see central banks as their true love this Valentine's Day.
That love could be put to the test, though, in coming weeks as the Fed begins reducing its influence in the repo market. Daily overnight operations, according to the New York Federal Reserve, will be cut by $20 billion to a maximum of $100 billion.
Technically, this shouldn't be a source of upset for the stock market, unless the repo market seizes up again, but we point this out because it has been said that the stock market's strong finish last year and fast start this year has been aided by the Fed's reserve management efforts and bid to keep liquidity flowing in the repo market.
There were some accusations yesterday that the stock market's impressive rebound effort faded into the close after it was learned that the Fed would be reducing its influence over the repo market.
In any event, it is a narrative to keep tabs on in coming weeks, particularly if the stock market doesn't act well since this will be a popular excuse to explain any bad acting.
For now, some tabs are being kept on the Retail Sales report for January, which was in-line with expectations. Total retail sales increased 0.3%, as did retail sales, excluding autos. There were slight downward revisions to the December data.
The key takeaway from the report is that discretionary spending was modest in January, which will contribute to a sense that Q1 GDP growth was apt to be modest even without any impact from the coronavirus.
Separately, import prices were flat month-over-month in January and were up 0.2% excluding fuel. Export prices were up 0.7%, which was also the case excluding agricultural products.
On a year-over-year basis, import prices were up 0.3%, and down 0.9% excluding fuel. Export prices were up 0.5%, and up only 0.2% excluding agricultural products.
The key takeaway from the report is that there were no inflation alarm bells in it for the Federal Reserve.
There was still a defensive tone, though, evidenced by the gains in the real estate and utilities sectors. U.S. Treasuries finished the week little changed from the prior week. The 2-yr yield increased three basis points to 1.42%, while the 10-yr yield remained unchanged at 1.58%. The U.S. Dollar Index advanced 0.4% to 99.12.
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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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2/14/2020
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Difference
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26,805.50
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29,398.08
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2,592.58
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8,185.80
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9,731.18
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1,545.38
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3,010.29
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3,380.16
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369.87
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