Market Direction Mid Week: Star Stocks Rising

The trading strategy this website uses as its signature tool is our bullish and bearish alerts. This indicator has effectively been used with accuracy since 2011. The website helps our followers stay in tune with the stock market and profits have been amazing. This post provides a mid-week update on how the stock market has preform. At the bottom of this post are the all-time numbers since the current alert was made. The current bullish alert is moving in the right direction.

Market Direction: BULLISH alert issued 4/10/2020

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U.S. stocks booked significant gains Wednesday, after Federal Reserve Chairman Jerome Powell vowed to mount a robust and protracted fight to offset fallout from the coronavirus pandemic, which he said “will weigh heavily” on economic activity, employment and inflation in the near term.

How did major indexes fare?

The Dow Jones Industrial Average DJIA, +2.20% gained 532.31 points, or 2.2%, to settle at 24,633.86, while the S&P 500 SPX, +2.65% added 76.12 points, or 2.7%, to close at 2,939.51. The Nasdaq Composite COMP, +3.56% advanced 306.98 points, or 3.6%, ending at 8,914.71.

The Russel 2000 Index RUT, +4.82%, which tracks smaller companies, rose 4.8%, or 66.38 points, to finish at 1,360.46. 

On Tuesday, stocks gave up early gains to end lower, with the Dow snapping a four-day winning streak to close at 24,101.55, down 32.23 points, or 0.1%. The S&P 500 lost 15.09 points, or 0.5%, to close at 2,863.39, while the Nasdaq Composite settled at 8,607.73, down 122.43 points, or 1.4%.

What drove the market?

Federal Reserve Chairman Jerome Powell said he expects the pandemic to weigh heavily on the U.S. economy, but also that the central banks is ready to bolster its unprecedented array of stimulus measures already in force.

The Fed’s emergency credit facilities are “wide open” and “we can do more of that,” Powell in a press conference following the two-day policy meeting. He also said the Fed’s support is based on “lending, not spending,” with the caveat that the central bank can’t make outright grants or lend to insolvent businesses.

“It may well be the case that the economy needs more support,” Powell said. “For now, we think our current stance is appropriate.”

Read: Fed chief Powell says Congress and central bank will likely have to spend more to ensure robust recovery

Economists expected the Fed to reassure investors and the public that it will try to cushion the largest economic downturn since the Great Depression of the 1930s.

“There’s no question that they have been much more proactive than in 2008,” Tim Courtney, chief investment officer at Exencial Wealth Advisors, told MarketWatch in an interview. “The amount of money they’re looking to potentially pump into market, that supports equity valuations as well.”

The central bank has unleashed a series of emergency measures since March in response to the coronavirus crisis. The Fed cut its policy interest rate to nearly zero, started an open-ended bond-buying program, and moved to backstop loans to Main Street and Wall Street to ensure financial markets continue to function.

Powell also said Wednesday that the Fed was in no hurry to push benchmark interest rates higher, but to expect several of its credit facilities to be up and running soon.

Read:Here’s the latest on the Fed’s actions to keep credit flowing to the U.S. economy

“The overarching theme of today’s FOMC statement and press conference was that the Fed is committed to doing ‘whatever it takes,’ and more, just to make sure as strong as possible a recovery can be reestablished,” said BlackRocks’ chief investment officer Rick Reider, in emailed commentary.

Stocks received an early boost after Gilead Sciences Inc.said Wednesday morning that a government-run clinical trial evaluating its experimental drug remdesivir in certain COVID-19 patients met the study’s main goal. The announcement stirred hopes that pharmaceutical companies were making progress toward a treatment of COVID-19, but investors are still awaiting details from the study.

See: Gilead reports early positive data in remdesivir studies as COVID-19 drug, though Chinese trial sees no benefit

The news helped to outweigh the bearish impact of a sharp slump in U.S. economic growth in the first quarter, with gross domestic product shrinking by 4.8% on an annualized basis.

See: GDP sinks 4.8% in the first quarter — biggest drop since 2008 and worst is yet to come

Economists surveyed by MarketWatch, on average, were looking for a 3.9% fall in GDP after a 2.1% expansion in the fourth quarter. The first-quarter decline is expected to be only a foretaste of the economic carnage caused by the pandemic lockdowns in the current quarter, but some investors are already looking into the future.

In other U.S. data, pending home sales fell to its lowest level since 2011.

“What the Fed is doing is a real confidence builder, and that brings money off the sidelines into riskier assets,” Bruce Bittles, chief investment strategist at Robert W. Baird & Co., told MarketWatch.

He also pointed to significant gains this week in stock benchmarks that track smaller business as a sign of the more bullish market sentiment.

“That’s what we’ve seen in the past three days, which suggests the rally since March 23 is more than a rally and could transform in to a new bull market.”

The global tally of COVID-19 cases climbed to 3.13 million on Wednesday, according to data aggregated by Johns Hopkins University. The U.S. has the highest number of cases at 1.01 million and the highest death toll at 58,355.

Investors also have been sifting through another deluge of first-quarter earnings reports, including a round of behemoths reporting after the bell Wednesday

Which companies were in focus?

·         Microsoft Corp. MSFT, +4.48% reported earnings that topped $10 billion after the bell, beating even pre-coronavirus expectations, which sent its shares up slightly after-hours.

·         Tesla Inc. TSLA, +4.08% posted a surprise profit in the first quarter, the first to reflect the economic destruction wrought by the coronavirus pandemic.

·         Facebook FB, +6.16%, which gleans nearly all of its revenue through advertising, reported better-than-expected revenue but missed on earnings.

·         Chip maker Qualcomm Inc. QCOM, +4.88% shares rose in the extended session Wednesday after the chip maker topped Wall Street estimates and its COVID-19-impaired outlook still was in the ballpark of analysts’ consensus.

·         Gilead Sciences Inc. GILD, +5.68% said the trial of its remdesivir drug treatment for COVID-19 met its main goal, and said the National Institute and Infectious Diseases will provide details at an upcoming meeting. The pharmaceutical company’s stock climbed 5.7%, after seeing a halt to trading before the opening bell.

·         Google parent Alphabet Inc. GOOG, +8.73% GOOGL, +8.89% delivered first-quarter results after the closing bell Tuesday, with earnings suffering from a “significant slowdown” in ad sales, though revenues topped expectations. Shares gained more than 8%. Opinion: Google gives Wall Street what it wants, and the stock shoots higher

How did other markets trade?

Crude prices recovered some ground, but still remained at depressed levels. West Texas Intermediate oil for June delivery CLM20, 14.48% rose $2.72, or 22%, to finish at $15.06 a barrel, on the New York Mercantile Exchange. Gold for June delivery GCM20, 0.83% fell $8.80, or 0.5%, to settle at $1,713.40 an ounce.

The 10-year Treasury note yield TMUBMUSD10Y, 0.615% was up 1.5 basis points to 0.625%. Bond prices move in the opposite direction of yields.

In overseas equities, the STOXX Europe 600 index SXXP, +1.75% finished up 1.8%. China’s benchmark CSI 300 000300, 1.25% index and Hong Kong’s Hang Seng index HSI, +0.27% posted slight gains. Japanese exchanges were closed in observance of the Golden Week holiday.

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The all-time highs since our initial recommendation to go LONG this market. Here is how the markets have performed:

Stock Market Direction Recommendation (4/10/2020)
Dow	up 1,045.40 points a 4.41% gain	4/29/20
Nasdaq	up 803.69 points a 9.86% gain	4/29/20
S&P 500	up 165.04 points a 5.92% gain	4/29/20

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