Market Direction: BULLISH alert
issued 5/21/2020
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
Yesterday's advance got flattened late in the session when it became known that President Trump is planning to hold a press event today on China. The timing of that press event is unknown, yet the uncertainty factor is elevated, which is partly why the futures for the major indices are pointing to a mixed to slightly lower start.
Mixed isn't bad or good. It's just mixed, because there isn't much conviction behind the trades. There isn't much conviction, because market participants don't know what the president is going to say about China.
He could take a really hard line and revoke Hong Kong's favored status. He could take a middle road and announce sanctions on Chinese officials linked to human rights violations against the Uyghurs. He could take a softer approach by threatening a number of possible actions, but not taking any action.
There is just no telling.
Conversely, the president has made it abundantly clear that he wants to take action against social media platforms by signing an executive order that compels regulators to rethink the liability protection these platforms are afforded under Section 230 of the Communications Decency Act.
Twitter (TWTR), among all social media platforms, is in the president's crosshairs at the moment. Twitter affixed a fact-check label to a recent tweet from the president discussing mail-in voting issues, and today the platform attached a rule-violation warning about glorifying violence to a tweet the president wrote about the protests in Minneapolis over the death of George Floyd.
Both issues -- China and the social media factor -- promise to play out repeatedly in coming months as we move closer to the November election. Neither issue, though, is playing all that nicely right now, which is why market participants look more intent to keep to the sidelines after what has been a good week and month for the stock market.
The S&P 500 is up 2.5% in the last three sessions and has gained 4.0% month-to-date. Since the start of the second quarter, which is anticipated to produce the largest decline in GDP on record, the S&P 500 has risen 17.2% versus a 22.8% gain for the S&P Midcap 400 Index, a 21.7% gain for the Nasdaq Composite, a 21.5% gain for the Russell 2000, and a 15.9% gain for the Dow Jones Industrial Average.
Speaking of large gains, personal income in April surged 10.5% (Briefing.com consensus -6.5%) with a huge assist from the receipt of economic recovery payments authorized by Congress. Personal spending, however, plummeted 13.6% (Briefing.com consensus -15.0%) with real PCE declining 13.2%.
The PCE Price Index fell 0.5% (Briefing.com consensus -0.6%) while the core PCE Price Index, which excludes food and energy, dropped 0.4% (Briefing.com consensus -0.3%). That left the yr/yr changes at 0.5% and 1.0%, respectively, versus 1.3% and 1.7% for March.
Something else that jumped out in the report was the personal savings rate, as a percentage of disposable income, which skyrocketed to 33.0%! That's a lot of pent-up spending potential. Then again, it might also reflect an increased propensity to save money in preparation for a long recovery and extended period of high unemployment.
What is done with those savings will be key to the recovery trajectory. We discussed that point in The Big Picture column published last Friday.
For the time being, the market is saving judgment on a strong trading bias ahead of the open. The press event from the president is the big event today, but it's also worth noting that Fed Chair Powell is speaking at 11:00 a.m. ET via webcast to a Princeton group about economic issues. That should command some added interest for the market.
$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, write us. Share with a friend.
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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5/21/2020
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5/29/2020
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Difference
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24,474.12
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25,383.11
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908.99
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9,284.88
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9,489.87
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204.99
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2,948.51
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3,044.31
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95.80 | |
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