Monday-Wed’s Action: Stocks Grind Higher…For Now
Stocks edged higher on Monday as sellers remained almost no where to be found. In China, Monday was their equivalent to our cyber Monday. Shares of Alibaba (BABA) (giant Chinese retailer) soared after the company said they sold over $1B in 17 minutes! For the day, the company said sales topped the $9B mark which is a staggering some by any normal measure. The word, WOW is an understatement. In other China-related news, Chinese stocks rallied after China’s securities regulator approved a new law which allows foreigners to invest directly in Chinese stocks. In Europe, a report from the ECB showed that it bought 2.6 billion (Euros) of covered bonds in the prior week in an attempt to stimulate markets.
Stocks were quiet on Tuesday as the market paused to digest the recent rally. Thomson Reuters reported that out of the 449 companies in the S&P 500 that have reported third-quarter results, 74.6% have posted earnings above estimates, while 59.3% beat revenue expectations. That data bodes well for the ongoing recovery. Stocks opened lower on Wednesday after the U.S. and China reached a deal to reduce carbon emissions to combat climate change. Once again, the bulls (a.k.a. the buy the dip crowd) showed up shortly after the open and sent stocks back to break-even on the day. Wholesale inventories rose +0.3% in September, beating expectations for a +0.2% gain.
Thurs & Fri’s Action: Stocks Trade Near Highs
Stocks were quiet on Thursday as investors sat back and watched energy prices continue to implode. Crude oil plunged -2.5% and slid below $75 a barrel while RBOB Gasoline futures continued leading the way lower, plunging another 3.7%, hitting the lowest level since 2010! Shares of Wal-Mart (WMT) broke out of a big multi-year base after the company reported a larger-than-expected profit and said comparable sales at U.S. stores rose for the first quarter in seven. In other news, it was encouraging to see shares of Lennar Corp. (LEN) also break out of a very big base (earlier in the week) which also bodes well for the ongoing economic recovery. The Labor Department said initial jobless claims rose by 12k to 290k, topping estimates for 280k. On a more positive note, the total number was below 300k for the ninth consecutive week. Before Friday’s open, U.S. retail sales topped estimates and rose by 0.3% in October, which beat the 0.2% forecast. This echoes the bullish action we saw in a slew of retailers, led higher by the big base breakout in WMT on Thursday.
Market Outlook: The Central Bank Put Is Alive And Well
Remember, in bull markets surprises happen to the upside. We have also noted that the bull market is aging and may be in the process of forming a large topping pattern but that topping pattern was negated as stocks repaired a ton of technical damage in the latter half of October. Keep in mind that the bull market is aging (turned 5 in March 2014 and the last two major bull markets ended shortly after their 5th anniversary; 1994-March 2000 & Oct 2002-Oct 2007). As always, keep your losses small and never argue with the tape.