Stocks End Mixed To Mostly Higher Ahead of Earnings Season

Stocks ended mixed to mostly higher on the first week of the third quarter. Stepping back, the market remains split: tech stocks remain under a little pressure while the Dow Industrials, S&P 500 and Russell 2000 all closed above their respective 50 DMA lines. The bulls showed up on Friday and defended the 50 DMA line for the S&P 500 which is a near term positive. The market is simply pulling back to digest the recent and very strong post-election rally.  At this point, the pullback remains relatively mild/healthy. One or two good up days will easily set the market up for another leg higher. Conversely, if the selling continues and the recent lows are breached, then lower prices will likely follow. I do want to note that the Nasdaq is sending mixed signals. On one hand, it is tracing out a somewhat bearish head and shoulders top pattern and it is also tracing out a somewhat bullish double bottom continuation pattern. Until we see more heavy selling coupled with more technical damage, odds favor we still head higher from here. On another note, the big macro catalyst that we have to deal with in the second half of 2017 (and beyond) is a slightly more hawkish environment from global central banks. The era of ultra-easy money is behind us (until the next crisis hits). On a shorter to more intermediate term basis, the next big catalyst ahead of us is earnings season.

Mon-Wed Action:

Thur & Fri Action:

On Thursday, stocks fell hard as investors digested a slew of economic data and the European Central Bank (ECB) was a little more hawkish than expected. Crude oil also plunged hard for the week which dragged a slew of energy stocks lower. Stocks rallied nicely on Friday after the jobs report beat estimates. The Labor Department said U.S. employers added 222,000 new jobs last month, beating estimates for 170,000. That capped the strongest quarter for jobs since 2010. Separately, the G-20 started their much anticipated meeting.

Market Outlook: Bulls Defend Support – For Now

The bulls showed up and defended important support last week (50 dma line) in the S&P 500. As long as support holds, the bulls remain in control of this market. 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…