Stocks rallied last week after the narrative in D.C. shifted toward a tax cut. Technically, as long as Monday’s low holds, this appears to be another short-term and shallow pullback. The major indices are tracing out a new early entry (downward trendline) and a break above that level will trigger a new technical buy signal. The Dow Jones Industrial Average & the benchmark S&P 500 snapped a two-week losing streak as investors grew hopeful that the White House will be able to cut taxes. Meanwhile, the Nasdaq Composite and the Small-Cap Russell 2000 both snapped a 4-week losing streak as buyers showed up and quelled the bearish pressure. Finally, the Dow Jones Transportation Index continues to woefully under-perform its peers and is flirting with major support (recent lows). The fact that the transports continues to under-perform bodes poorly for both Wall Street and Main Street.
Thur & Fri Action:
Stocks edged higher on Thursday as investors waited to hear from global central banks at their annual meeting in Jackson Hole, Wyoming. Economic news was light, initial jobless claims rose by 2k to 234k just below the Street’s estimate for 238k. Stocks were quiet on Friday as the market waited to hear what the Central Banks had to say from the Jackson Hole meeting.
Market Outlook: Pull-back Mode
So far, it appears a near term low was placed on Monday. Going forward, as long as stocks trade above Monday’s low, this appears to be another nice shallow pullback. As always, keep your losses small and never argue with the tape. Get Our Free e-Book: Learn How To Buy Leading Stocks…EARLY. Get It Here…