Week-In-Review: Stocks Snap 8-Week Win Streak

Stocks (Finally) Snap 8-Week Win Streak

Remember, ladies and gentlemen, stocks do not go up forever. Even in very strong bull markets (present market included) it’s perfectly normal (and healthy) to see the market pullback and digest a recent rally. Last week, the major indices ended lower and the benchmark S&P 500 and Dow Jones Industrial Average both snapped a very strong 8-week win streak. One relatively small down week after 8 strong up weeks is perfectly normal – and healthy. The key now is to analyze the health of this pullback to see if it turns into another small/healthy pullback or something more severe. The first big level of support to watch for the major indices is the 50 day moving average line. As long as the market stays above that level, the bulls remain in clear control. I welcome this pullback with open arms and will look to buy the bounce after this pullback is over.

Mon-Wed Action:

Stocks closed at fresh record highs on Monday after Broadcom (AVGO) offered to buy Qualcomm (QCOM) for $70 a share. If completed, the deal would be the largest tech deal – ever. Separately, shares of Advanced Micro Devices ($AMD) jumped on deal making news and Disney (DIS) hinted it would want to acquire 21st Century Fox (FOX). Stocks fell on Tuesday after financials dragged the market lower. Separately, shares of Priceline (PCLN) gapped down after reporting earnings. Overnight, Democrats won a few big races which put some pressure on the GOP. Financials and junk bonds (JNK) continued to fall which put pressure on the market. Financials are under pressure from a flattening yield curve. Stocks edged higher on Wednesday.

Thur & Fri Action:

On Thursday, the Dow fell as much as 250 points intra-day (but ended down 101 points) – after fear spread that the tax bill will be delayed. The small-cap Russell 2000, has been under pressure recently because small-cap companies have more to gain from an immediate domestic tax cut since they are more likely to be U.S.-based and not have a huge multi-national footprint. Stocks were relatively quiet on Friday as the market digested a busy week of data.

Market Outlook: Bulls Are Strong

The bulls are back in control and the market remains very strong. 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…

Similar Posts

  • Stocks Rally On Disconcerting Economic Data

    Thursday, January, 14, 2010 Market Commentary: Stocks edged higher after weaker than expected economic data was released. Volume was reported slightly higher than the prior session’s totals on the NYSE and about even on the Nasdaq exchange, which suggested large institutions were buying stocks. Advancers led decliners by nearly a 11-to-8 ratio on the NYSE and by a 16-to-11 ratio on the…

  • Stocks Fall On Weak Economic News

    The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong. Looking forward, the window is open for disciplined investors to carefully buy high-ranked stocks, while many pundits are expecting that markets may consolidate following recent gains. Since the major averages negatively reversed (opened higher and closed lower) on Tuesday (after the Fed meeting) stocks have steadily declined and have now closed below support (formerly resistance) which corresponds with their summer highs. Looking forward, the next level of support for the major averages is their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

  • 2nd Half Of 2011 Begins!

    Market Outlook- Market In A Correction:
    The market is back in a correction after another failed follow-through day on Tuesday, June 21, 2011. Now that we are back in a correction, defense remains the best offense. The next level of support for the major averages is their respective 200 DMA lines and then their March lows. The next level of resistance for the major averages is their respective 50 DMA lines. Trade accordingly.
    For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday, June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. On June 21, 2011 we changed our Market Outlook to a “Confirmed Rally” after the latest FTD was produced. Two days later, on Thursday, June 23, 2011, our outlook changed to “Market In A Correction”after the market sold off hard on renewed economic woes. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Want To Follow Trends?
    Learn How We Can Help You!

  • Stocks Fall On Central Bank, EU Debt, & Recession Woes

    Wednesday, April 04, 2012 Stock Market Commentary: Stocks and other risk assets fell on Wednesday after fresh EU debt/recession fears re-emerged. In Q1, the Nasdaq composite surged nearly 19% which was its strongest quarter since 1991! The benchmark S&P 500 jumped nearly 12% or its best quarter sine 1998! Meanwhile, the Dow Jones Industrial Average…

  • U.S. Stocks; Forming A New Base

    Mortgage Apps Fall & Produce Price Index Jumps!
    Before Wednesday’s open, the Mortgage Bankers Association (MBA) said mortgage applications slid by a disturbingly large -9.1%. The report blamed tepid economic conditions and a volatile stock market for the two primary reasons behind the large decline. Separately, the Labor Department said its produce price index (PPI) rose +0.2% despite lower energy prices. Core prices, which exclude food and energy, rose +0.4% which was the largest increase since January and rose +0.3% in June. Since the March 2009 bottom, inflation has remained largely at bay which has helped alleviate pressure on the Federal Reserve to raise rates. However, if inflation swells over the next few quarters than the Fed may be put in a precarious situation; raise rates to curb inflation or leave rates low to stimulate the stale economy?

Leave a Reply

Your email address will not be published. Required fields are marked *