Bulls Defend Critical Support
Stocks ended mostly higher last week after the bulls showed up and defended critical support. As we have said since the beginning of June, the 50 day moving average line is the critical line in the sand to watch for the major indices. It was encouraging to see that important level defended, especially for the Nasdaq and Nasdaq 100. Once again, the latest pullback has been very shallow in both size (small percent decline) and scope (short in duration). The Nasdaq is not out of the woods just yet, but the bulls remain in clear control as long as the 50 DMA line holds. So far, this appears to be a perfectly normal and healthy pullback after a big run. Underneath the surface we are seeing big money rotate into undervalued sectors which bodes well for this strong bull market. Looking ahead, the next important areas 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. Remember, next week is the end of the month which normally has a slight upward bias. Keep in mind, if the selling gets worse, a defensive stance is warranted.
Thur & Fri Action:
Stocks were quiet on Thursday as investors digested the latest round of economic data. Weekly Jobless claims came in at 241,000, beating estimates for 240,000. The FHFA House Price Index grew by +0.7%, beating estimates for +0.5%. Leading indicators grew by +0.3%, matching estimates for +0.3%. The Kansas City Fed Manufacturing Index came in at 11, higher than the last reading of 8. Stocks were quiet on Friday after New Home Sales came in at 610k, beating estimates for 590k.
Market Outlook: Bulls Defend Support
The bulls showed up and defended important support last week (50 dma line). As long as support holds, the bulls remain in clear 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…