Daily Market Commentary

Stocks End Week Mixed As Earnings Season Officially Begins

14 Jul
SPX- Bulls Defend 50 DMA Line

SPX- Bulls Defend 50 DMA Line

Friday, July 13, 2012
Stock Market Commentary:

Stocks and a slew of other “risk-on” assets spent most of the week in the red before staging a strong rally on Friday to help send them into positive territory. The big catalyst for the week was stronger-than-expected earnings reports from US companies, especially JP Morgan (JPM) and Wells Fargo (WFC). The market is back in rally-mode which suggests the path of least resistance is higher. The current rally began on the June 29, 2012 follow-through day (in the immediate wake of late June’s EU summit). At this point, investors appear to be looking past the larger macro concerns (e.g. a slowing global economy, European debt crisis, fiscal and monetary cliff in the US, et al) as they continue to snap up risky assets.

Monday-Wednesday’s Action- Stocks Quiet Ahead of JPM & WFC Earnings:

Stocks ended lower on Monday as investors digested disappointing economic data from Asia and Spanish yields topped the closely watched 7% level. The Chinese consumer price index (CPI) rose +2.2% year-over-year. Meanwhile, core machinery orders in Japan tanked -14.8% month-over-month which missed estimates and bodes poorly for the global economy. Yields for Spanish 10-yr debt topped 7% for the umpteenth time this year. Historically, 7% or higher is considered a danger zone for sovereign debt so we’ll have to see how this plays out. After Monday’s close, earnings season officially began when Aloca (AA) reported their Q2 results. The aluminum giant reported a loss but beat estimates. AA shares fell close to -5% on Tuesday. Remember, as we make our way through earnings season, that it is very important to not only focus on the actual earnings data but focus on how individual stocks and the major averages react to the numbers. One of our trading secrets, that has helped us outperform the market since our inception in 2004, is to focus more on how stocks react to the news, than the actual news itself. 

Stocks fell on Tuesday after several US companies issued profit warnings and the latest dark clouds in Europe resurfaced. Stocks opened higher but closed lower, which is a sign of weakness, not strength, after EU officials gave Spain an additional year to meet a 3% budget deficit target. Euro-zone finance officials also agreed to allow Spain’s banks to access up to 30 billion euro ($36.9B) in additional funding by the end of July. The final figure, which will be announced on or before July 20, could hit 100 billion euros.  However, stocks fell after Italian Prime Minister Mario Monti reaffirmed that his country will not need a bailout but might access Europe’s stability fund, if needed. In the US, the National Federation of Independent Business said its small business index, which measures small business sentiment, fell hard in June for the second consecutive month. This bodes poorly for the ongoing economic recovery. 

Stocks fell on Wednesday after the minutes of the latest Fed meeting showed that they are not interested in another round of monetary easing anytime soon. The Fed said: “further policy stimulus likely would be necessary to promote satisfactory growth,”and that the Fed should study ‘new tools’ for easing.”  Several members of the FOMC are also concerned with a “significant slowdown” in China. This disappointed investors as they desperately want more easing from the Fed to help stimulate a slowing US and Global economy. Elsewhere, Brazil’s central bank cut its benchmark interest rate by 50 basis points to 8% which matched expectations. This is their latest rate cut to help stimulate their slowing economy.

Thursday & Friday’s Action- JPM & WFC Top Estimates:

Stocks opened sharply lower on Thursday but spent the rest of the day erasing earlier losses to close near the session’s highs. Stocks soared on Friday as investors digested the latest round of economic and earnings data. Before Friday’s open, overall producer prices swelled by +0.1% in June which topped the Street’s estimate for a decline of -0.6%. Meanwhile, core prices, which exclude food and energy, rose by +0.2% in June which matched estimates. The big news was that both JPM and WFC surprised the Street by reporting stronger-than-expected Q2 earnings results. This bodes well for earnings season and helped allay a lot of concerns that the US financial sector was suffering.

Market Outlook- Rally Under Pressure

From our point of view, the current rally is in a confirmed rally which means the path of least resistance is higher. It is somewhat encouraging to see all the major averages close above their respective 50 DMA lines. Technically, the 200 DMA line and June’s lows are the next level of support while April’s highs are the next level of resistance for the major averages.  As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!

Become a Client

Tags:
, ,
Newer Adam Sarhan Reuters Quote: PRECIOUS Metals-Gold rises 1 pct on oil rally, technicals improve
Back to list
Older Adam Sarhan Dow Jones Newswires Quote: Dow Industrials Components Chalk Up More Records

Related Posts

16 Jun
Daily Market Commentary

Week-In-Review: Stocks End Week Mixed; Tech Stocks Fall – Again

Stocks End Week Mixed; Tech Stocks Fall – Again

Once again, we are entering a very split tape as investors sold leaders (tech stocks) and bought laggards for the second straight week. The Nasdaq and Nasdaq 100, which were leading the market for all of 2017, fell last week as the Dow Jones Industrial Average hit a fresh record high. So far, this still remains a relatively shallow pullback. In the short term, the 50 DMA line is the next level of support to watch for the popular averages. In early June, the Nasdaq was up close to 18% year-to-date which is much stronger than the ~8% year-to-date gains the S&P 500 and Dow Jones Industrial average enjoyed this year. After a big run, it is perfectly normal to see the Nasdaq pullback to digest that move. The worrisome part is that it is pulling back on heavy volume which is not ideal. After the 50 DMA line, the next important levels of support to watch are: Russel 2000: 1351, then 1335, then 1308. The Dow Industrials: 20.6K, then 20.4k, S&P 500: 2352, then 2322.25, Nasdaq Composite: 5995, then 5805, then 5769.39. Until those levels are breached on a closing basis, the bulls remain in control on a short, intermediate, and long term time-frame. Keep in mind, if the selling gets worse, a defensive stance is warranted.

Mon-Wed Action:

Stocks opened lower but closed near their highs on Monday as the bulls showed up and defended the 50 day moving average line for the Nasdaq and Nasdaq 100. Monday was another very heavy volume day in the market but the fact that the major indices closed near their respective highs is a short-term positive. Stocks rallied nicely on Tuesday as the Fed began their two-day meeting and support was defended on Monday. Economic data was light, the NFIB Small Business optimism index came in at 104.5, beating estimates for 104.0. Separately, inflation was not a concern, the producer price index (PPI) came in at 0%, missing the Street’s estimate for +0.1% gain. On Wednesday, the Fed raised rates by a quarter point and Janet Yellen was a little more hawkish than people expected. The Dow Jones Industrial Average jumped to a fresh record high while the Nasdaq, S&P 500 and Russell 2000 ended lower.

Thur & Fri Action:

Stocks fell on Thursday as other global central banks came in a little more hawkish than initially expected. The market is beginning to realize that the era of ultra-easy money from global central banks is winding down, if not over. Once again, tech stocks were under pressure for most of the day. Stocks were quiet on Friday as the market digested a busy week and focused on the big blockbuster deal from Amazon. Amazon said it will buy Whole Foods for $13.7 billion. Shares of Wal-Mart, Kroger, Target, and other competitors fell sharply while shares of Amazon and Whole Foods jumped on the news.

Market Outlook: A More Cautious Tone Sets In

The market is split at best and the key now is to focus the health of this pullback. Will it be another short pullback in both size (small percent decline) and scope (short in duration) or something more severe? 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

09 Jun
Daily Market Commentary

Week-In-Review: Big Shift On Wall Street; Investors Sell Leaders, Buy Laggards

Big Shift On Wall Street; Investors Sell Leaders, Buy Laggards

The market is pulling back from over-bought conditions. Something important happened on Friday, when big investors dumped tech stocks (leaders) and bought laggards (small-caps and other under-performing sectors such as biotechs, retail, and financials, just to name a few). In the short term, last month’s lows are the next level of support to watch, then the 50 DMA line for the S&P 500, Dow Industrials, Nasdaq Composite, and Nasdaq 100. After that, the next important levels of support to watch are: Russel 2000: 1351, then 1335, then 1308. The Dow Industrials: 20.6K, then 20.4k, S&P 500: 2352, then 2322.25, Nasdaq Composite: 5995, then 5805, then 5769.39. Until those levels are breached on a closing basis, the bulls remain in control on a short, intermediate, and long term time-frame. The Russel 2000 tried to break out of range after moving sideways all year which bodes well for this ongoing and aging bull market. Keep in mind, if the selling gets worse, a defensive stance is warranted.

Mon-Wed Action:

Stocks were quiet on Monday as investors waited for a big week of data. The PMI service index came in at 53.6, missing estimates for 54.0. Factory orders fell to negative -0.2%, which matched estimates. The ISM non-manufacturing index came in at 56.9, missing the Street’s estimate for 57.0. Stocks slid on Tuesday as investors waited for the ECB and Mr. Comey’s testimony on Thursday. In the afternoon, after ABC News reported, citing a source, that former FBI director James Comey will not say that President Donald Trump obstructed justice. But that did little to excite investors. MBA mortgage applications came in at +7.1%, beating last week’s -3.4% reading.

Thur & Fri Action:

Stocks were quiet on Thursday even after the ECB meeting and Mr. Comey spent most of the day testifying on Capitol Hill. Friday was a big day on Wall Street as investors finally dumped some of the high-flying tech stocks and bought some of the lagging sectors. At one point, the Nasdaq was down 2% after several big cap tech stocks fell in heavy volume. Overnight, Theresa May lost a big election which changed the balance of power post-brexit.

Market Outlook: A More Cautious Tone Sets In

A slew of leading stocks fell hard on Friday which is rarely a good sign. The key now is to ascertain the health of this pullback. Will it be another short pullback in both size (small percent decline) and scope (short in duration) or something more severe? 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

19 May
Daily Market Commentary

Week-In-Review: Stocks Bounce Back After Mid-Week Sell-Off

Stocks Bounce Back After Mid-Week Sell-Off

Last week, the market complexion changed and is a little weaker which means a defensive stance is warranted in the short-term. One of the hallmarks of a bull market is to see the market brush off nearly all negative news and just keep racing higher. Since the election, that was exactly what has been happening, but that dynamic changed last week. The market sold off hard on Wednesday after news broke about the Comey memo. Once again, the sell-off was very short in nature and the bulls showed up on Thursday and Friday, helping repair some of the damage. In the short term, last week’s lows are the next level of support to watch, then the 50 DMA line for the S&P 500, Nasdaq Composite, and Nasdaq 100. Then, the next important levels of support to watch are: Russel 2000: 1351, then 1335, then 1308. The Dow Industrials: 20.6K, then 20.4k, S&P 500: 2352, then 2322.25, Nasdaq Composite: 5995, then 5805, then 5769.39. Until those levels are breached on a closing basis, the bulls remain in control on an intermediate and longer term time-frame. We are often asked about why the market is holding up so well with everything that is happening in the political arena. The answer is simple: investors only care about what policies come out of D.C. that directly impact Main Street or Wall Street. So far, the policies have been bullish for the economy and, as investors look forward there appears to be more economic-friendly policies in the pipeline. As previously mentioned, the other, more important, reason is that we are in a very strong bull market, and we pay much more attention to how the market reacts to the news.

Mon-Wed Action:

The S&P 500 and Nasdaq hit record highs on Monday, led higher by big cap tech stocks. Economic news was light. The National Association of Home Builders survey showed sentiment among home builders hit 70 for May, which was nicely higher than last May’s reading of 58. Elsewhere, the Empire State manufacturing index fell to -1 in May from positive 5.2 in April. Stocks were quiet on Tuesday as the political drama in D.C. continued. Stock futures began falling after Tuesday’s close, when a report surfaced that former FBI Director James Comey wrote a memo that said President Donald Trump allegedly asked him to stop an investigation into Michael Flynn, the former national security adviser. Overnight, the selling intensified and investors spent the whole day on Wednesday aggressively dumping stocks. The U.S. dollar also fell as the political drama from D.C. hurt confidence in the greenback. So far, Wednesday was the single largest decline of the year.

Thur & Fri Action:

Stocks, and the U.S. dollar, edged higher on Thursday after the buy-the-dip crowd showed up after 2017’s largest single day decline. Stocks rallied on Friday as buyers showed up up after Wednesday’s sell-off. President Trump took his first official trip to the Middle East and oil prices jumped back above $50/barrel after OPEC said it may extend production cuts. 

Market Outlook: Stocks Are Strong

The market is very strong. 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

12 May
Daily Market Commentary

Week-In-Review: Stocks End Mixed As Retail Stocks Sink

Stocks End Mixed As Retail Stocks Sink

Stocks ended mixed to mostly lower last week as investors digested the latest round of economic, political, and earnings data. The big take-away last week for the market was a slew of retail stocks gapped down after reporting earnings. On a positive note, the Nasdaq and Nasdaq 100 continue to outperform while the small-cap Russell 2000 continues to lag. The Dow & S&P 500 are acting relatively well as they continue tracing out bullish 3-week “handle” patterns just below record highs. The next important near term level of support to watch is the 50 day moving average line for the major indices. After the 50 DMA line, the next important levels of support to watch are: Russel 2000: 1335, then 1308, Dow Industrials: 20,379, then 20.1k, S&P 500: 2322.25, then 2300, Nasdaq Composite: 5769.39, then 5669. Until those levels are breached on a closing basis, the bulls remain in control. We are often asked about why the market is holding up so well with everything that is happening in the political arena. The answer is simple: investors only care about what policies come out of D.C. that directly impact Main Street or Wall Street. So far, the policies have been bullish for the economy and, as investors look forward there appears to be more economic-friendly policies in the pipeline. The other, more important, reason is that we are in a very strong bull market, and we pay much more attention to how the market reacts to the news. So far, the market action is bullish.

Mon-Wed Action:

Stocks were quiet on Monday after Emmanuel Macron won the French election. In other news, Sinclair Broadcast agreed to acquire Tribune Media for $3.9 billion, or $43.50 per share. Separately, Coach agreed to buy Kate Spade for $2.4 billion, or $18.50 per share, in an effort to resonate more with younger consumers and revive its brand. Additionally, the CBOE Volatility Index (VIX), fell below 10, for the first time in over decade. The last time that happened was 2007 and we all know what happened in 2008. Stocks fell on Tuesday after North Korea’s ambassador said the country will proceed with a nuclear test. After the close, President Trump fired FBI director James Comey which surprised many pundits but barely moved the market. Stocks ended mixed to lower on Wednesday after Disney and Boeing dragged the Dow lower. 

Thur & Fri Action:

Stocks fell on Thursday after Macy’s ($M) gapped down 17% after reporting earnings. The new over hyped IPO, Snap, was also clobbered after reporting earnings. In economic news, the producer price index grew by +0.5% in April, beating estimates of +0.2%. Initial jobless claims, came in at 236,000, just below the Street’s estimate for 245,000. Stocks were quiet to mostly lower on Friday after JC Penney plunged 10% after reporting earnings. JC Penney reported mixed quarterly results, with earnings beating expectations but same-stores sales missed estimates. The environment for retail stocks has been lousy in recent years and investors have very little to be bullish about in this beaten up sector.

Market Outlook: Stocks Are Strong

The market is very strong. 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

05 May
Daily Market Commentary

Week-In-Review: Stocks End Higher As Other Markets Crumble

Stocks End Week Higher As Other Markets Crumble

Stocks ended mixed to mostly higher last week as other markets crumbled and investors digested a plethora of earnings. A slew of currencies and commodities fell hard but sellers remained at bay on Wall Street. To be clear, we are still in a very strong bull market and until we see any major selling show up, the stock market has earned the bullish benefit of the doubt. The next important near term level of support to watch is the 50 day moving average line for the major indices. On a relative basis, the Nasdaq and Nasdaq 100 continue to out-perform the other popular indices. After the 50 DMA line, the next important levels of support to watch are: Russel 2000: 1335, then 1308, Dow Industrials: 20,379, then 20.1k, S&P 500: 2322.25, then 2300, Nasdaq Composite: 5769.39, then 5669. Until those levels are breached on a closing basis, the bulls remain in control.

Mon-Wed Action:

The Nasdaq jumped to a fresh record high on Monday. Bank shares also rallied after President Trump talked about breaking up the big banks. The market also digested several economic data points. The ISM manufacturing index slid to 54.8 in April from 57.2 and missed estimates. Construction spending slid in March from a record high. The Commerce Department said consumer spending remained flat in March, while personal income rose less than expected. The market edged higher on Tuesday as investors awaited a slew of high profile earnings to be released and the Fed began its two day meeting. Apple Inc reported after the bell and initially fell but turned higher by the end of the week. Stocks were quiet on Wednesday as the Fed ended its two-day meeting and left rates unchanged. The Fed said Q1 2017 GDP weakness was transitory and expects GDP to pick up by the end of the year.

Thur & Fri Action:

Stocks were quiet on Thursday even as crude oil plunged 5% and a slew of other commodities fell as well. Stocks are very strong as they simply refuse to budge even as other markets crumbled. On average, earnings remain positive as investors digested the latest round of earnings from Tesla, Facebook, and Regeneron, just to name a few. Before Friday’s open, the Labor Department said U.S. employers added 211,000 jobs in April and the unemployment rate fell to 4.4%. Economists polled by Reuters expected jobs growth of 185,000 and for the unemployment rate to hit 4.5 percent. Despite the strong beat, stocks were relatively quiet. 

Market Outlook: Stocks Are Strong

The market is very strong. 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

21 Apr
Daily Market Commentary

Week-In-Review: Stocks Edged Higher For The Week As Earnings Season Begins

Stocks Edged Higher Last Week As Earnings Season Begins

In Thursday’s pre-market report we noted that the market was ripe to rally, little did we know the Dow would soar nearly 300 points by the close. That’s just the way Wall Street works, when people want to step up and buy, they buy. Conversely, when people want to sell, they sell first and ask questions later. The 50 day moving average line is the next line in the sand to watch. On a relative basis, the Nasdaq and Nasdaq 100 continue to out-perform the other popular indices. The important levels of support to watch are: Russel 2000: 1335, then 1308, Dow Industrials: 20.4k, then 20.1k, S&P 500: 2322.25, then 2300, Nasdaq Composite: 5769.39, then 5669. Until those levels are breached on a closing basis, the bulls remain in control.

Mon-Wed Action:

Stocks edged higher on Monday led by financial stocks as investors waited for a slew of earnings to be released. Vice President Mike Pence said the “era of strategic patience” with North Korea was over but that failed to rattle markets. Pence made the comments on the border between North and South Korea a day after North Korea’s failed missile test. The Trump administration has made it clear that it is actively working with China and its allies on a response to North Korea’s missile program. The Dow fell 100 points on Tuesday after Goldman Sachs (GS) and Johnson & Johnson (JNJ) both fell after reporting earnings. Stocks closed mostly lower on Wednesday as investors continued to digest the latest round of big-cap earnings reports. This time, IBM dragged stocks lower after reporting earnings. 

Thur & Fri Action:

Stocks jumped nicely on Thursday after Treasury Secretary Steven Mnuchin hinted a tax deal may be reached sooner than expected and the latest round of earnings were released. Mr. Mnuchin said the administration was close to “major tax reform” which came after changed his earlier goal of passing tax reform by August. The White House said it will unveil a plan “very soon” and that was enough to send stocks sharply higher. Stocks were quiet on Friday after legendary Hedge Fund manager, Paul Tudor Jones, said, “U.S. Stocks Should ‘Terrify’ Janet Yellen,” and made the case that stocks were very over-valued.

Market Outlook: Market Breaks 50 DMA Line

The market is pulling back after a very strong post-election rally. 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

14 Apr
Daily Market Commentary

Week-In-Review: Geopolitical Fears Send Stocks Lower; Metals Soar

Geopolitical Fears Send Stocks Lower; Metals Soar

Stocks ended weaker last week and closed below important near term support (50 day moving average line) as the market continues to digest the very strong post-election rally. Last week was the first time we saw all of the major indices break down and close below their respective 50 DMA lines since the election which is not a good sign for the bulls. Remember, that, in and of itself, is not the end of the world but if the bulls do not show up quickly and quell the bearish selling, then lower prices will follow. As we have told you for the past month, defense is king as more and more important areas begin breaking down. The first “tell” that something was awry was the Russell 2000. It led on the way up after the election and then “stalled” in December and has been moving sideways since. Other macro markets also retraced most, if not all, of their post-election move (Gold, Silver, Mexican Peso, just to name a few). While that was happening, the other popular indices edged higher but one-by-one several important sectors stalled out and began to fall. As mentioned in prior reports, some of them are: Transports (IYT), Steel (SLX), Materials (XLB), Industrials (XLI), & Retail (XRT). Then, we saw the all-important Financials (XLF) and Semiconductor (SMH) stocks breakdown in recent days and that tipped the market to a much more defense stance. Moreover, as money was flowing out of equities we saw it flow into metals (gold and silver) and other safe-haven assets. For now, defense is still king until we see the market “bounce.” If the market can’t bounce and instead continues to fall, then odds favor we will see a deeper 5-10% pullback develop. The important levels of support to watch are: Russel 2000: 1335, then 1308, Dow Industrials: 20.4k, then 20.1k, S&P 500: 2322.25, then 2300, Nasdaq Composite: 5769.39, then 5669.

Mon-Wed Action:

Stocks closed a little higher on Monday as earnings season officially began and geopolitical tensions remained elevated. Gold and Silver rallied all week as investors dumped stocks and moved into safe-haven assets. Stocks fell on Tuesday as geopolitical tensions remained elevated. The Dow transports fell after shares of United Continental tanked after a passenger was dragged off an overbooked flight. Secretary of State Rex Tillerson said the U.S. will stand up against anyone who commits crimes against humanity. Separately, President Trump tweeted and said, “North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.” Stocks fell again on Wednesday after the greenback tumbled. The U.S. dollar fell hard after President Donald Trump told the Wall Street Journal he thought the currency was getting “too strong.” The dollar index, which tracks the greenback’s performance against six major currencies, fell to the lowest level in a month after Trump’s comments.

Thur & Fri Action:

Stocks fell hard on Thursday causing all of the major indices to slice, and close, below their respective 50 day moving average lines. Stocks fell and gold/silver soared after the U.S. dropped “the mother of all bombs” in Afghanistan to fight ISIS. Elsewhere, earnings season has been anticipated as a potential positive catalyst for stocks. So far, analysts believe earnings will grow 10.4% in Q1 2017 vs Q1 2016. According to Thomson Reuters, that is a little better than the 10.3% in the third quarter of 2014, and the best since the 18% growth experienced in the third quarter, 2011. Meanwhile, revenues are expected to grow by more than 7%, also the best since 2011. On Friday, stocks were closed for the holiday but tension continued to grow with North Korea. 

Market Outlook: Market Breaks 50 DMA Line

The market is pulling back after a very strong post-election rally. 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

31 Mar
Daily Market Commentary

Week-In-Review: Bulls Defend Support

Bulls Defend Support

Here’s how the market performed in Q1 (& so far in 2017): DJ Industrial Avg +4.56%, S&P 500 +5.57%, Nasdaq Comp +9.82%, Russell 2000 +2.13%. The title of last week’s article was: Market Tests Support. On cue, the bulls showed up earlier in the week and defended support for the major indices (50 DMA line which was highlighted for you in last week’s report). That was the first real test of the 50 DMA line since the election. For now, the bulls emerged victorious because that level was defended. Going forward, the bulls remain in control as long as the major indices remain above that important level. I do want to note that the tape is getting a little messy and several important areas of are below their respective 50 DMA lines: Transports (IYT), Steel Stocks (SLX), Russell 2000 (IWM), Mid-Cap 400 (MDY), Materials (XLB), just to name a few. Right now, there are three options: 1. the market bounces from here, lifting these areas back above their 50 DMA lines. 2. The major indices rollover and break below support. 3. The market moves sideways for a few months to consolidate the recent move. Until the market cracks, the bulls have earned the benefit of the doubt and the market likely heads higher from here.   

Mon-Wed Action:

Stocks fell on Monday as the major indices tested their respective 50 DMA lines for the first time since the election. The Dow Jones Industrial Average posted a 8-day slide which was the longest since 2011. The narrative of the day was that investors were concerned Trump’s tax reform bill would get blocked because the Healthcare bill didn’t pass. Stocks opened lower and closed higher on Tuesday after the bulls showed up and defended support (50 DMA line). The Dow snapped its 8-day losing streak and rallied nicely causing the buy-the-dip crowd to step in and buy the first real dip since the election. Stocks closed mostly higher on Wednesday after the United Kingdom passed article 50 which officially begins the Brexit process.

Thur & Fri Action:

On Thursday, the market rallied nicely as bank and energy stocks bounced back from deeply oversold levels. The Nasdaq posted a record close as tech stocks continue to shine. In other news, oil jumped above $50 a barrel as it also bounced back from oversold levels. Stocks were relatively quiet on Friday which was the last day of the month and quarter. 

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

17 Mar
Daily Market Commentary

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

10 Mar
Daily Market Commentary

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

06 Mar
Media Quotes

CNBC: Stocks Close Lower As Financials and Materials Lag; March Rate Hike Becomes More Likely

Monday, March 06, 2017
U.S. equities fell on Monday as the chances of tighter monetary policy from the Federal Reserve sunk in for investors, while geopolitical concerns increased.
“It feels like the fundamental picture is still there,” said Art Hogan, chief market strategist at Wunderlich Securities. “But at the same time you’ve got some events happening in March that are getting people worried. I think you’re starting to see that.”
The Dow Jones industrial average closed about 50 points, with Travelers contributing the most losses. The S&P 500 declined 0.3 percent, with financials and materials leading decliners. The Nasdaq pulled back around 0.4 percent.
Market expectations for a rate hike were 86.4 percent Monday, according to the CME Group’s FedWatch tool. The Fed’s monetary policy committee is set to meet between March 14 and 15.
“The March rate hike doesn’t matter. What matters is how many times they raise,” said Jeremy Klein, chief market strategist at FBN Securities. “If they stay at three times [for this year], then the market will be fine.”
The only potential obstacle for the Fed to raise rates at this point is the February jobs report, which is scheduled for release on Friday. Economists polled by Reuters expect the U.S. economy to have added 186,000 jobs last month.
“I think the market treads water ahead of the jobs report. That could give you the next 15 percent” in rate hike expectations, said Kim Forrest, senior equity analyst at Fort Pitt Capital. “But if it’s a dramatic miss, it could take it off the table.”
Investors also kept an eye on the geopolitical front after North Korea fired four ballistic missiles Monday, three of which landed in Japan’s exclusive economic zone, according to Japanese Prime Minister Shinzo Abe.
The Japanese Nikkei 225 fell 0.46 percent overnight, lagging the rest of the region.
Meanwhile, in Europe, stocks declined broadly as bank stocks were led lower by Deutsche Bank. Germany’s biggest lender announced it will raise $8.5 billion to boost its capital position and has set new financial targets.
“At the same time, the bank is going to cut its stake in asset management units by focusing more on its core business,” said Naeem Aslam, chief market analyst at Think Markets in London. “Deutsche Bank is going to remain on traders’ dashboards as they try to make sense of company’s future.”
Deutsche’s U.S.-listed shares fell 3.8 percent, while the pan-European Stoxx 600 index pulled back 0.52 percent.
Stocks in the U.S. are coming off a record-setting week after a speech from President Donald Trump lifted expectations that the administration’s agenda — especially regarding tax reform and deregulation — could become reality in the near future.
However, the Trump administration called for an investigation Sunday on whether former president Barack Obama wiretapped Trump Tower during last year’s election. Trump originally leveled the accusations against Obama on Saturday via Twitter, but did not provide and evidence supporting them.
“If the dynamic changes and the market believes Trump’s pro-growth agenda will not go through, that would change the game on Wall Street,” said Adam Sarhan, CEO of 50 Park Investments.
Trump signed a new travel ban Thursday, doubling down on the most divisive action of his young presidency.

Symbol
Name
Price
Change
%Change
DJIA Dow Industrials 20954.34
-51.37 -0.24%
S&P 500 S&P 500 Index 2375.31
-7.81 -0.33%
NASDAQ NASDAQ Composite 5849.17
-21.58 -0.37%
The Dow Jones industrial average fell 51.37 points, or 0.24 percent, to close at 20,954.34, with Travelers leading decliners and Caterpillar leading advancers.
The S&P 500 declined 7.81 points, or 0.33 percent, to end at 2,375.31, with materials and financials leading 10 sectors lower and energy as the only riser.
The Nasdaq dropped 21.58 points, or 0.37 percent, to close at 5,849.17.
About three stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 795.71 million and a composite volume of 3.224 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.3.
—CNBC’s Jacob Pramuk, Aza Wee Sile and Reuters contributed to this report.
On tap this week:
Monday
CERAWeek conference begins
3:00 p.m. Minneapolis Fed President Neel Kashkari
Tuesday
Earnings: Brown-Forman, H&R Block, Michaels Cos, Dick’s Sporting Goods, Urban Outfitters, Navistar
8:30 a.m. Trade deficit
3:00 p.m. Consumer credit
Wednesday
Earnings: Adidas, Bob Evans, Ciena, Express, Hovnanian, Children’s Place, Camping World, Sunrun, United Natural Foods
8:15 a.m. ADP payrolls
8:30 a.m. Productivity and costs
10:00 a.m. Wholesale trade
Thursday
Earnings: Staples, Ulta Beauty, El Pollo Loco, Verifone, Zumiez, International Game Technology, Party City, Signet Jewelers, Embraer
7:45 a.m. European Central Bank rate decision
8:30 a.m. ECB President Mario Draghi briefing
8:30 a.m. Jobless claims
8:30 a.m. Import prices
Friday
Earnings: The Buckle, Vail Resorts
8:30 a.m. Employment report
2:00 p.m. Federal budget

 
LINK: http://www.cnbc.com/2017/03/06/us-markets.html

24 Feb
Daily Market Commentary

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