Week-In-Review: Market Tests Support On Political Logjam

First Real Test Of Support Since The Election

Stocks fell last week and the major indices are testing support (50 day moving average line) for the first time since the election. The bulls argue that Trump’s pro-growth policies will get passed even if the healthcare bill doesn’t. On the other hand, the bears argue Trump’s other policies will not get passed because Healthcare was supposed to be a virtual lay-up. Only time will tell what happens but here are the facts. The small-cap Russell 2000 led on the way up (it surged 18% right after the election) and is now leading on the way down. Other important areas of the market, that soared on the so-called Trump Rally, are also under-performing. Put simply, the bulls must defend support, if not we could easily see a spring swoon that could cause the market to fall ~5-10%. Conversely, if support is defended, and Trump manages to get his policies passed, we could easily race higher from here. At this point, we know we are still in a very strong bull market and the market is way overdue to pullback and digest some of that move. This is exactly what is happening. Until we see any material damage emerge we have to expect this to be a normal pullback and will look to add more risk (buy) on the next bounce, after this pullback is over.

Mon-Wed Action:

Stocks closed mixed on Monday as the market lacked any clear direction. Traders waited for a busy week of speeches from Fed officials, including Janet Yellen, for signs of when the next Fed rate hike will be. Traders also waited to see if Trump would be able to repeal Obamacare. Stocks fell hard on Tuesday after talks broken down regarding healthcare reform. The market sold off on worries that President Trump’s other pro-growth policies will face similar roadblocks or not be passed at all. Stocks were relatively quiet on Wednesday as hope returned that a a deal will get done in the 11th hour. On the economic front, existing home sales came in at 5.48M, missing estimates for 5.55M.

Thur & Fri Action:

On Thursday, stocks were up in the morning but closed mostly lower after the House delayed the vote to repeal Obamacare. Elsewhere, Janet Yellen spoke in the morning and did not say anything new with respect to future rate hikes. Economic data was stronger than expected. New home sales rose by +6.1% in February to a 592,000 annualized rate. That easily beat the Street’s estimate for 565,000. Stocks closed mixed on Friday after the the House failed to get enough votes to pass Trumpcare. 

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. All the major central banks are still relatively “dovish” which is bullish for stocks. The U.S. Fed only raised rates by a quarter point to 0.75%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape. Want Adam To Be Your Personal Portfolio Consultant? You Don’t Have To Feel Alone In The Market, There Is A Better Way: Learn More

Week-In-Review: A Tight Bullish Pattern Is Forming On Wall Street

A Tight Bullish Pattern Is Forming On Wall Street

Stocks rallied last week after nearly every major Central Bank in the world continued to err on the side of caution. The big news came from the U.S. Fed when it raised rates by a quarter point for the second time in three months. For the first time since the 2008 financial crisis, the it appears that the Fed is back in the Driver’s Seat. Stocks rallied nicely after the Fed raised rates and that hasn’t happened since before the 2008 financial crisis. Confidence, a huge part of the investing equation, is slowly being restored in global central banks and the global economy. So, stepping back, monetary policy remains accommodative for investors and so does fiscal policy. When Trump won the historical election back in November 2016, stocks soared because so-called animal spirits were released. The famous economist John Maynard Keynes referred to animal spirits as spontaneous optimism. That said, as long as stocks continue to rally we could be (not there just yet) entering into a climax run. The two biggest climax runs happened in 1929 and 1999 and tend to occur in the latter stages of a bull market. This bull market just turned 8 and is the second longest bull market in history and at some point it will end. That doesn’t mean we can’t shoot higher for here and rally for a few more years but that we want to stay grounded and keep everything in perspective. 

Mon-Wed Action:

Stocks were quiet on Monday as investors waited for a busy week of market moving data. The benchmark S&P 500 traded in its tightest range of 2017. The big news of the day came from Bill Ackman. The billionaire investor sold his stake in Valeant Pharmaceuticals and the stock plunged -13% to $10.56 heavy volume. Stocks slid on Tuesday after crude oil fell 2% to hit a fresh three-month low. Oil fell after OPEC said oil inventories had continued to rise even though the cartel decided to cut production. Separately, Saudi Arabia surprised the Street when it self-reported a jump in production, despite the global deal to cut supply. The big news of the week came on Wednesday when the U.S. Federal Reserve raised rates by a quarter point and, for the first time in years, appeared to be operating from a position of strength, not weakness. The other big event came from the Dutch elections. The election did not take a populist turn which could have caused the country to leave the E.U.

Thur & Fri Action:

Stocks closed mixed to slightly lower on Thursday as investors digested a busy week of data. Overnight, The Bank of Japan held monetary policy steady and maintained a positive view on the economy. The BOJ said it did not expect to expand monetary stimulus in the near future. Separately, The Bank of England did not raise rates as Brexit approaches. In the U.S. housing starts came in at 1.288 million, beating estimates for 1.270 million. Stocks were relatively quiet on Friday as investors digested a busy week and looked ahead to the G-20 meeting. 

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. All the major central banks are still relatively “dovish” which is bullish for stocks. The U.S. Fed only raised rates by a quarter point to 0.75%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape. Want Adam To Be Your Personal Portfolio Consultant? You Don’t Have To Feel Alone In The Market, There Is A Better Way: Learn More

Week-In-Review: Stocks Snap A 6-Week Win Streak

Stocks End Snap A 6-Week Win Streak

Stocks finally snapped a very strong 6-week win streak as the market finally paused to consolidate the recent and robust rally. Small caps continued to lag and ended lower which is a sign of near term fatigue. The Small-Cap Russell 2000 broke below its 50 DMA line which is not ideal in the near term. Meanwhile, the S&P 500, Dow Jones Industrial Average, and the Nasdaq composite closed near their respective 10 day moving average lines last week. The next level of support to watch is the 21 day moving average line, then the more important 50 day moving average line. The jobs report came in stronger than expected and which means the Fed will most likely raise rates by a quarter point on Wednesday.  That would mean rates will go from 0.50% to 0.75%, which is still very bullish for stocks. Fiscally, the environment remains promising and the Trump administration said that they plan to announce tax reform within six months. 

Mon-Wed Action:

Stocks fell on Monday as the market continued pulling back after the prior Wednesday’s near term high (the day after Trump’s speech to Congress). Geopolitical tensions swelled after North Korea fired 4 ballistic missiles into the water near South Korea. Separately, market expectations jumped to 86.4%, according to the CME Group’s FedWatch tool that the Fed will raise rates next week. The Fed will announce its decision on March 15th when it concludes its latest two day meeting. Stocks fell again on Tuesday after the House GOP released its plan to repeal Obamacare. Biotech stocks led the way lower as consensus spread that the new plan will bring down drug prices. Stocks were quiet on Wednesday to mostly lower after oil prices plunged 5.4%. A slew of other commodities also fell after a big run. Separately, ADP, the country’s largest payrolls company, said U.S. employers added 298,000 new jobs last month, easily beating estimates for 190,000. The report represents the first full month under President Donald Trump, who has pledged to rebuild the nation’s aging infrastructure system and stimulate the economy. Billionaire Investor, David Tepper, went on CNBC and was bullish on stocks and bearish on bonds.

Thur & Fri Action:

Stocks were quiet on Thursday after the European Central Bank (ECB) held rates steady and said low rates are here to stay for an extended period of time. The ECB left its headline rate at 0%, its marginal lending rate at 0.25%, and its deposit facility rate at negative -0.4%. On Friday, the Labor Department said U.S. employers added 235,000 new jobs last month, easily beating estimates for around 200,000.

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  Do You Feel Alone In The Market? There Is A Better Way: Learn More

Week-In-Review: Stocks End Mixed To Mostly Higher As Small Caps Lag

Stocks End Mixed To Mostly Higher As Small Caps Lag

Stocks ended mixed to mostly higher for a sixth straight week, literally every week Trump has been in office. Small caps lagged and ended lower which is a sign of near term fatigue. Remember, markets do not go straight up. At this point, it is perfectly normal to see the market pause and digest the recent and very strong rally. Under the surface, not much as changed. The more we scan the market and look at leading stocks, sectors and industry groups, the more this feels like the very early stages of a 1999/1929 style climax/blow-off top. Of course, we are open for any possible scenario that may unfold but, for now, we are in a very strong bull market and weakness should be bought, not sold. The strength is broad based as big money continues to flow into the major indices and several important sectors: Financials ($XLF), Materials ($XLB), Industrials ($XLI), Steel ($SLX), and Technology, just to name a few. As long as pullbacks remain very shallow in both size (small % decline) and scope (short in duration), the bulls remain in clear control of this market. The first level of support to watch is 10 day moving average, then the 21 DMA, then the 50 DMA for the major indices.

Mon-Wed Action:

Stocks were relatively quiet on Monday as the world waited for President Trump to address Congress. Over the weekend, Warren Buffett said he was still bullish on U.S. stocks and said America’s best days are ahead of us. Elsewhere, David Tepper, billionaire hedge fund manager, said he’s still long stocks and short bonds. In economic news, durable goods orders rose +1.8% in January, slightly above the expected 1.7% estimate. Separately, Pending home sales, fell -2.8% in January and hit their lowest level in a year. Stocks fell on Tuesday as the world waited for President Trump to deliver his first official speech to Congress. Economic news was mixed. The second reading on Q4 2016 GDP came in at 1.9%, missing estimates for 2.1%. The S&P Corelogic Case-Shiller Home Price Index came in at 0.9%, beating estimates for 0.7%. Elsewhere, Chicago PMI came in at 57.4, beating estimates for 53.0. The Richmond Fed Manufacturing index came in at 17, higher than the last reading of 12. Finally, consumer confidence jumped to 114.8, easily beating the Street’s estimate for 111.3. After Tuesday’s close, Trump gave a speech to Congress and stocks soared on Wednesday. The Dow vaulted above 21,000 and soared over 300 points! Clearly, the market continues to give Trump the bullish benefit of the doubt.

Thur & Fri Action:

Stocks fell on Thursday as the market finally pulled back from deeply overbought conditions. Snap — the parent company for social media platform Snapchat — finally IPO’d and its stock jumped over 40% from the IPO price of $17 a share. Separately, Attorney General Sessions said he will recuse himself from investigations related to Trump’s campaign and Russia. Separately, Caterpillar’s stock fell after a few government agencies raided three of its offices. Stocks were very quiet on Friday after Yellen left the door open for a rate hike in March.

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  Do You Feel Alone In The Market? There Is A Better Way: Learn More

Week-In-Review: Stocks End Mixed On Trump’s 5th Week In Office

Stocks End Mixed On Trump’s 5th Week In Office

Stocks ended mixed to mostly higher on Trump’s 5th week in office. The relentless rally, coupled with the inability for stocks to fall in a meaningful fashion, illustrates how strong the bulls are right now. The more we scan the market and look at leading stocks, sectors and industry groups, the more this feels like the very early stages of a 1999/1929 style climax/blow-off top. Of course, we are open for any possible scenario that may unfold but, for now, we are in a very strong bull market and weakness should be bought, not sold. The major indices are very extended from nearly all moving averages and a nice light volume pullback would be healthy for this aging bull market. The strength is broad based as big money continues to flow into the major indices and several important sectors: Financials ($XLF), Materials ($XLB), Industrials ($XLI), Steel ($SLX), and Technology, just to name a few. As long as pullbacks remain very shallow in both size (small % decline) and scope (short in duration), the bulls remain in clear control of this market. The first level of support to watch is 10 day moving average, then the 21 DMA, then the 50 DMA for the major indices.

Mon-Wed Action:

Stocks were closed on Monday for Presidents’ Day. On Tuesday, stocks rallied nicely as investors continued to buy stocks. The White House announced Monday that Lieutenant General H. R. McMaster will become the new national security advisor. McMaster replaces Michael Flynn, who resigned last week. Economic news was light. The flash read on the IHS Markit U.S. purchasing managers’ index came in at 54.3 in February, falling slightly from January’s 14-month peak. The “latest survey data indicated that business optimism moderated among U.S. private sector firms in February, driven by weaker confidence across the service economy,” IHS said. Stocks were relatively quiet on Wednesday as investors digested the recent and very strong rally. The Fed Minutes hinted that more rate hikes may be on the horizon, especially if Trump’s policies do indeed spur economic growth. In economic news, weekly mortgage applications slid by 2% amid tepid refinancing levels. A separate report showed that existing home sales grew by 3.3% in January.

Thur & Fri Action:

Stocks were relatively quiet on Thursday after the new Treasury Secretary, Steve Mnuchin, said a “very significant” tax reform will be passed by August. Mnuchin said, “We’ve been working closely with the leadership in the House and the Senate and we’re looking at a combined plan.” Stocks have soared since the election, thanks, in part, to Trump’s pro-business policies, deregulation, and a big tax cut in the near future. Stocks slid on Friday as they pullback from very extended levels. Stocks opened lower and closed slightly higher on Friday as the bulls continue to buy nearly every dip in the market. President Trump signed another executive order which is designed to further cut regulations. Trump signed a regulatory reform task force which will evaluate major federal regulations and recommend whether to keep, repeal or change them.

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com

S&P, Dow And Nasdaq Post Record Closes Despite French Election Fears

Friday, February 17, 2017

U.S. equities closed mixed on Friday, but managed another record close, while investors kept an eye on France’s presidential election.

“Investors right now continue to shrug off almost all bearish news and continue buying stocks,” said Adam Sarhan, CEO of 50 Park Investments. “Pullbacks now last hours; not days.”

“Right now, we’re in a state of unadulterated buying in the market,” he said.

The Dow Jones industrial average closed just above breakeven, with UnitedHealth contributing the most losses and Boeing the most gains.

The S&P 500 closed 0.1 percent higher, with telecommunications outperforming. The telecommunications sector, which had been one of the worst performers for most of Friday’s session, erased losses in afternoon trade. Reuters reported that Japan’s SoftBank Group is prepared to give up control of Sprint to T-Mobile to clinch a merger of the two U.S. wireless carriers.

The Nasdaq composite outperformed, gaining 0.4 percent as the tech sector posted a 13-day winning streak. The indexes also posted weekly gains of more than 1 percent.

Dow, S&P and Nasdaq This Week:

Stocks traded mostly lower throughout Friday’s session, as investors digested the market’s recent gains.

“It’s not a surprise to see the market pause here,” said Quincy Krosby, market strategist at Prudential Financial. “The question is whether this is the beginning of a pullback or just a pause.”

The three major indexes had posted record closing highs five straight sessions before closing mixed Thursday. Lifting stocks were the prospects of President Donald Trump presenting a “phenomenal” tax plan soon, as well as solid economic data.

Trump held his first solo news conference Thursday, in which he berated the media and boasted about his accomplishments.

“If he doesn’t straighten it out in the next, I would say, 30 days, people will just stop listening to him,” said Maris Ogg, president at Tower Bridge Advisors.

Data released Thursday pointed to improving economic conditions in the U.S., with the Philadelphia Federal Reserve manufacturing index hitting its highest level since 1984, while weekly jobless claims remained around their lowest levels in decades.

The only major economic data released Friday are leading indicators, which rose 0.6 percent in January.

“When you look at the underlying fundamentals, they’re quite good. The big question on the horizon is Marine Le Pen,” said Tower Bridge’s Ogg. “If she wins, we’re going to have a recession.”

According to recent polls, Le Pen — France’s far-right, anti-European Union candidate — is the favorite to win the first round of voting, scheduled for April. However, it is not clear whether she will win the run-off vote in May.

Socialist Benoit Hamon and hard-left candidate Jean-Luc Melenchon held talks Friday about possibly joining forces to beat Le Pen. French bond yields ticked higher on the news, pushing the spread between 10-year French sovereigns and German bunds above 70 basis points.

However, “that simultaneously increases the chances for Le Pen to win because center-right voters might be more inclined to vote for her or not turn out,” said Luke Bartholomew, investment manager at Aberdeen Asset Management.

The pan-European Stoxx 600 index rose marginally on Friday, and posted weekly gains.

U.S. Treasurys rose, with the benchmark 10-year note yield falling to 2.42 percent and the short-term two-year note yield declining to 1.19 percent.

“With risk aversion rippling across the board amid the ongoing uncertainty, Wall Street may be vulnerable to further losses,” said Lukman Otunuga, research analyst at FXTM.

“Although global stocks have repeatedly hit record highs from the ‘Trump effect,’ markets could find themselves under renewed selling pressure if the proposed fiscal stimulus and tax cuts fall below market expectations,” he said.

Symbol
Name
Price
Change
%Change
DJIA Dow Industrials 20624.05
4.28 0.02%
S&P 500 S&P 500 Index 2351.16
3.94 0.17%
NASDAQ NASDAQ Composite 5838.58
23.68 0.41%

The Dow Jones industrial average rose 4.28 points, or 0.02 percent, to close at 20,624.05, with Verizon leading advancers and UnitedHealth the top decliner.

The S&P 500 gained 3.94 points, or 0.17 percent, to end at 2,351.16, with telecommunications leading eight sectors higher and energy lagging.

The Nasdaq composite advanced 23.68 points, or 0.41 percent, to close at 5,838.58.

Decliners were a step ahead of advancers at the New York Stock Exchange, with an exchange volume of 944.57 million and a composite volume of 3.502 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.5.

High-frequency trading accounted for 52 percent of February’s daily trading volume of about 6.81 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Sources: 

http://www.cnbc.com/2017/02/17/us-markets.html

Week-In-Review: Stocks Rally On Trump’s 4th Week In Office

Stocks Rally On Trump’s 4th Week In Office

Stocks are up four weeks in a row and have literally rallied every week since Trump took office. The market hit another fresh record high last week as buyers continue to aggressively accumulate stocks. Just to reiterate, this feels like the very early stages of a 1999/1929 style climax/blow-off top. Of course, we are open for any possible scenario that may unfold but, for now, we are in a very strong bull market and weakness should be bought, not sold. The strength is broad based as big money continues to flow into the major indices and several important sectors: Financials ($XLF), Materials ($XLB), Industrials ($XLI), Steel ($SLX), and Technology, just to name a few. For now, pullbacks remain very shallow in both size (small % decline) and scope (short in duration). Until that changes, the bulls remain in clear control. We do want to note that markets do not go straight up and are getting very extended to the upside. A nice light volume pullback would be very welcomed. The first level of support to watch is 10 day moving average, then the 21 DMA then the 50 DMA for the major indices.

Mon-Wed Action:

Stocks soared on Monday as investors continued to buy stocks. President Trump met with Canadian Prime Minister Justin Trudeau and they reiterated the importance of maintaining a strong partnership. On the earnings front, Restaurant Brands International, Teva Pharma and First Data were among the companies posting quarterly results before the bell. Arch Capital Group, Noble Energy, Vornado Realty and OneMain Holdings are all due to report after the market close. Once again, stocks rallied on Tuesday as Janet Yellen spent the day testifying on Capitol Hill. For the first time in years, Yellen was slightly hawkish which should be expected now that all the “data” is bullish. Stocks are at record highs, the economy is growing, inflation is edging higher and the official unemployment rate is under 5%. Shares of Apple (AAPL) hit fresh record highs which helped the major indices race higher. Biotech stocks also got a nice bid as money begins to flow into that industry group.

Stocks rallied on Wednesday as Janet Yellen spent the day testifying on Capitol Hill. Economic news was mixed. The consumer price index (CPI) rose 0.6% in January, which was higher than the Street’s estimate for for 0.3%. Separately, Retail sales, rose 0.4% last month beating estimates for 0.1%. The Housing market index came in at 65, missing estimates for 68. Weekly mortgage applications fell -3.7%, which was sharply lower than last week’s reading of 2.3%. Meanwhile, the Empire State Manufacturing Index came in at 18.7, higher than the Street’s estimate for 7.5.

Thur & Fri Action:

Stocks slid on Thursday after 5 strong days of hitting fresh record highs. Energy shares lagged as crude oil pulled back. President Trump tweeted about the stock market and said, “Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism – even before tax plan rollout!” Economic data was strong with weekly jobless claims holding near their lowest levels in more than 40 years, while the Philadelphia Federal Reserve manufacturing index hit its highest level since January 1984. Stocks opened higher but closed higher on Friday as the market continued to pull back from fresh record highs.

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com

Week-In-Review: Stocks Are Up Every Week Since Trump Became President

Stocks Rally On Trump’s 3rd Week In Office

Stocks are up three weeks in a row and have literally rallied every week since Trump took office. The market closed at fresh record highs as buyers continue to accumulate stocks. Stepping back, this is beginning to feel like the very early stages of a 1999 style climax/blow-off top. Of course, we are open for any possible scenario that may unfold but, for now, we are in a very strong bull market and weakness should be bought, not sold. The strength is broad based as big money continues to flow into the major indices and several important sectors: Financials ($XLF), Materials ($XLB), Industrials ($XLI), Steel ($SLX), and Technology, just to name a few. For now, pullbacks remain very shallow in both size (small % decline) and scope (short in duration). Until that changes, the bulls remain in clear control. We do want to note that markets do not go straight up and are getting extended to the upside. A nice light volume pullback would be very welcomed.

Mon-Wed Action:

Stocks ended slightly lower on Monday as investors digested the latest round of earnings. Energy stocks weighed on the market as crude oil fell. So far, over half of the S&P 500 companies have reported fourth-quarter results, and about two-thirds of them beat Wall Street expectations, according to Thomson Reuters. Furthermore, the long earnings recession is most likely over.Stocks were relatively quiet on Tuesday as investors continued to digest the latest round of earnings and economic data. Energy prices continued to fall as the US dollar rallied. Shares of General Motors (GM) tumbled over 4.5% after the company reported earnings. The automobile giant said it will pay each employee $12,000 in an effort to help retention and boost morale. Stocks closed mixed on Wednesday as  metals rallied.  Investors are looking forward to Trump’s pro-growth policies such as cutting taxes, deregulation and government spending…but nothing happening just yet. The S&P 500 hasn’t had a 1% intraday move since Dec 14! That is the longest period of intra-day nothingness in history.

Thur & Fri Action:

Stocks rallied on Thursday after Trump promised a “big league” tax announcement. The market has been looking forward to hearing Trump’s tax plan because that is expected to be a big boost to the economy. Economic data was quiet. Weekly jobless claims slid by 12,000 to 234,000, which was lower than the Street’s estimate for 250,000. Separately, wholesale trade data for December showed a 1% increase on inventories. Stocks rallied on Friday after Trump took a big step closer to strengthening relations with both Japan and China.

Market Outlook: Strong Action Continues

The market remains strong as the major indices continue to hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically, is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com

Week-In-Review: Stocks Rally On Trump’s 2nd Week In Office

Stocks Rally On Trump’s 2nd Week In Office

I mentioned last week that the market was extended and due to pullback. That happened but only lasted a few days. Stocks rallied last week as investors digested a slew of economic, earnings, and central bank data. The big take-away is that the bulls remain in clear control of this market and weakness should be bought (until this very strong bull market ends), not sold. Right now, we are in the middle of a major transition on Wall Street, which I call: The Great Hand-Off: from Monetary Policy to Fiscal Policy. The Fed, and a handful of other major central banks, met last week and the world barely noticed. Instead, nearly everyone was focused on D.C. and what President Trump is doing. Remember, Central Banks control monetary policy and the D.C. political machine controls fiscal policy. So far, the action in the major indices is very healthy as pullback remain very shallow in both size (small % decline) and scope (short in duration). The next level of support to watch is the 50 day moving average for the major indices. Until that the major indices break, and close, below that level, the market remains in very good shape.   

Mon-Wed Action:

Stocks experienced the worst trading day in 2017 after Trump immigration backlash. The Dow negated its latest breakout and fell below 20,000. The S&P 500 also negated its latest breakout and is in pullback mode. The good news is that the market closed off its lows and the Dow, S&P 500 and Nasdaq, at this point, are still above their 50 day moving average lines. Meanwhile, the small-cap Russell 2000 closed just below its respective 50 DMA line. Stocks closed mixed to mostly lower on Tuesday as investors continued to digest the latest round of earnings and economic data. Overnight, the Bank of Japan concluded its latest meeting and did not make any changes to monetary policy. In economic news, U.S. labor costs rose in the fourth quarter but missed estimates. The Labor Department said the Employment Cost Index, the broadest measure of labor costs, rose +0.5% after rising +0.6% in the third quarter. Separately, the Chicago PMI adjusted January index came in at 50.3, lower than December’s 53.9 reading. Finally, consumer confidence hit 111.8, below an estimate of 113. After the close, Apple (AAPL) gapped up after reporting earnings. Stocks closed mostly higher after Apple (AAPL) surged 6% and the Fed held rates steady. Overall, earnings are on track to grow 7% in Q4 2016 which means the earnings recession is over. The Fed held rates steady and said “Measures of consumer and business sentiment have improved of late.” This was led many people to believe the Fed may begin “normalizing” rates sooner rather than later. After the close, Facebook (FB) gapped up after reporting strong numbers.

Thur & Fri Action:

Stocks closed mostly flat on Thursday as investors digested the latest round of earnings. Facebook (FB) ended lower by 1.8% even though it was up nicely in the after hours. That just reiterates the importance of waiting for the stock to start trading during normal hours before making any big decisions. Lots of people get caught up in the extended hours but there is a very little to no correlation between that and where the stock trades in the normal session. A slew of stocks reported earnings after the close and earnings roulette continues (some gap up and some gap down). Stocks rallied on Friday after the jobs report came in stronger than expected. The Dow enjoyed its largest rally of the year and the Nasdaq closed at a fresh record high. The financials surged after Trump said he’s rolling back a lot of the Dodd-Frank regulation which has been seen as a big hindrance for the banks. The major indices ended higher for the week and remain very strong.

Market Outlook: Strong Action Continues

The market remains strong as the major indices trade just shy of their record highs. The bulls have a very strong fundamental backdrop of monetary and now fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically,  is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com

Week In Review: Stocks Soar On Trump’s 1st Week In Office

Stocks Rally On Trump’s 1st Week In Office

The bulls have been waiting for a catalyst to send the Dow above 20k and it turned out to be Trump’s first week in office. The Dow broke above 20k and the S&P 500 briefly broke above 2,300 over the past few days. The key now is to see if the gains can hold. Elsewhere, the Nasdaq and Nasdaq 100 both hit fresh record highs while the small-cap Russell 2000 is still consolidating its very strong post-election gain. Since Trump won the election the market has been in a very bullish state. The bullish backdrop occurred when a very easy monetary policy (from global central banks) collided with a bullish fiscal policy. Moving forward, until we see any significant selling, this trading window (bullish state), clearly suggests weakness should be bought, not sold. I would be remiss not to note that the major indices are getting extended and a nice light volume pullback would do wonders to restore the health of this market. 

Mon-Wed Action:

Stocks ended a little lower on Monday on Donald Trump’s first official day in office. As promised, President Trump met with Business CEOs and made it clear that he is focused on creating an environment in which businesses can thrive. In the meeting, Trump made it clear that he wants to cut regulations and cut taxes. Stocks rallied on Tuesday after the bulls showed up and defended major support (50 DMA line) in many important areas. The benchmark S&P 500 and Nasdaq Composite closed at fresh record highs while the Dow closed below 20,000. The financials, materials, energy transports and small caps were among key areas that surged off their respective 50 DMA lines. Once that happened, more buyers showed up and stocks just raced higher. Stocks soared on Wednesday fueled by more action from President Trump. On Tuesday, President Trump signed executive orders that will make it easier for TransCanada to build the Keystone XL pipeline. On Wednesday, Trump made it clear that he’s ready to build the Wall on our southern border. The fact that Trump is moving swiftly on his pro-growth policies was enough to send stocks higher and help the Dow top 20,000 for the first time in history.

Thur & Fri Action:

Stocks closed on mixed on Thursday as investors digested the latest round of earnings, economic and political data. Earnings were mixed with some large cap stocks gapping up and some gapping down. Economic data was also mixed. U.S. new home sales fell to 536K, missing estimates for 593K. Weekly jobless claims rose to 259K, missing estimates for 246K. The PMI services index came in at 55.1, higher than the last reading of 53.4. Leading indicators rose 0.5%, beating estimates for 0.4%. Stocks were quiet on Friday as investors digested the latest round of mixed earnings and economic data. The first reading on Q4 2016 GDP came in at 1.9%, missing estimates for 2.2%. Durable goods also missed estimates and came in at -0.4%, compared to the 2.6% forecast. Finally, consumer sentiment came in at 98.5, beating estimates for 98.2.

Market Outlook: Strong Action Continues

The market remains strong as the major indices broke out and hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically,  is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com