25 May
Daily Market Commentary

Week-In-Review: Bullish Action Ahead Of The Long Weekend

Bullish Action Ahead Of The Long Weekend

The market had every chance in the world to fall last week and the fact that it didn’t is very bullish. Remember, it’s not the news that matters but how the market reacts to the news. When a market doesn’t fall on bearish news that is a bullish event and when a market can’t rally on bullish news that is a bearish event. Right now, the small-cap Russell 2000 is trading at a new all-time high which is also bullish for the broader market. The other popular indices are all tracing out a bullish “handle” just above their respective 50 DMA lines. Near-term support is the 50 DMA line and as long as that level is defended, odds favor higher prices will follow. Moreover, one or two “good” days and the market can easily begin a new leg higher. The bulls remain in clear control until any serious selling shows up. 

Mon-Wed Action:

Stocks opened higher on Monday after Treasury Secretary Steven Mnuchin said the so-called trade war with China is placed ‘on hold.’ The U.S. suspended its threat to impose tariffs on $150 billion in Chinese imports while the negotiations with China continue. President Trump does have the option to impose the tariffs if he’s not happy with the way things are moving along. On Tuesday, stocks fell 200 points after President Trump said the North Korea summit may not happen and that he was not happy with China’s trade talks. In other news, retailers were mixed to mostly lower after Kohl’s reported earnings. On Wednesday, stocks fell at the open but turned higher after the Fed minutes were released. Overnight, the so-called “risk-off” trade spread in Asia and the Turkish Lira plunged. Buyers showed up in the U.S. and protected support (50 DMA line for the major indices). Additionally, the Fed minutes came out and they were more dovish than expected and that helped lift the market. The Fed said it is willing to let inflation run above 2% for a while which is its way of saying, “easy money is here to stay.”

Thur & Fri Action:

On Thursday, stocks fell after Trump canceled the meeting with North Korea and the Commerce Department began looking into importing auto parts. In a bullish turn of events, stocks rallied back mid-day and the small-cap Russell 2000 actually closed higher. The fact the market didn’t fall on this bearish news is a bullish event. Remember, it’s not the news that matters, but how the market reacts to the news. So far, the action remains bullish. Stocks were quiet on Friday ahead of the long holiday weekend.

Market Outlook: Bullish Action

The small-cap Russell 2000 hit a new high which is bullish for the broader market. The other indices are tracing out a bullish handle and trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is the 200 DMA line and then February’s low. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Free Special Report: Want A Bargain? 3 Cheap Stocks That Are About To Breakout

18 May
Daily Market Commentary

Week-In-Review: Stocks End Week Mixed As Small Caps Hit New Highs

Stocks End Week Mixed As Small Caps Hit New Highs

The market ended mixed last week as the small-cap Russell 2000 hit a fresh record high. The fact that small-caps hit new highs last week is bullish and bodes well for the broader indices. In the short-term, the other popular averages are pausing to digest a recent/strong rally after important support was defended near the longer-term 200 DMA line a few weeks ago. It would be very healthy to see the major indices quietly pullback into their shorter-term 50 DMA line (formerly resistance, now support) before beginning their next leg higher. The bulk of earnings are now behind us and investors are now looking forward to the next bullish catalyst. 

Mon-Wed Action:

Stocks opened higher on Monday after President Trump pledged on Sunday to help Chinese technology firm ZTE Corp “get back into business, fast.” That helped allay concerns about trade tensions between the world’s two largest economies. Meanwhile, the small-cap Russell 2000 flirted with new record highs intra-day before pulling back and closing near its 2018 high. On Tuesday, fell after investors digested the latest round of economic and earnings data. Before the open, Home Depot missed estimates and that dragged the Dow and broader averages lower. Shortly thereafter, Retail Sales came in at +0.3%, which matched estimates. Separately, the home builder confidence came in at 70, beating estimates for 69. On Wednesday, stocks were mostly higher after Macy’s jumped after reporting earnings. The retail giant helped a slew of other retail stocks rally and that lifted the broader indices. Separately, the Small-Cap Russell 2000 broke out of its latest base and quietly hit a fresh all-time high.

Thur & Fri Action:

On Thursday, stocks closed slightly lower after Trump said trade talks between the U.S. and China may not be successful. The U.S. and China kicked off the second round of trade talks and trump said, “China has become very spoiled. The European Union has become very spoiled. Other countries have become very spoiled, because they always got 100 percent of whatever they wanted from the United States.” That heightened concerns about the ongoing trade war between the U.S. and China. Stocks were quiet on Friday as investors waited to see what would happen on the geo-political front between China and North Korea.

Market Outlook: Bulls Defend Support

The small-cap Russell 2000 hit a new high which is bullish for the broader market. The other indices are trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is February’s low and the 200 DMA line. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Free Special Report: Want A Bargain? 3 Cheap Stocks That Are About To Breakout

11 May
Daily Market Commentary

Week-In-Review: Stocks Are Back In The Black For 2018

Stocks Are Back In The Black For 2018

The bulls regained decisive control of the market last week after the major indices turned positive for the year and jumped above near-term resistance. The Dow & S&P 500 both jumped above near-term resistance (50 DMA line) which was highlighted several times in this report for you in recent months. Going forward, the bulls want the 50 DMA line to become support as the market is now getting a little extended in the short-term. In other (bullish) news, it is very positive to see the small-cap Russell 2000 rally all the way back up to it’s 2018 high! Typically, small-cap stocks are a good barometer for broader risk appetite and the fact that the Russell is back at new highs bodes well for the other popular averages. 

Mon-Wed Action:

Stocks rallied on Monday as investors prepared for another busy week of earnings. Over the weekend, thousands of investors flocked to Omaha to attend Warren Buffet’s annual meeting. Buffet outlined succession plans and discussed a few of his bigger investments such as Apple and Wells Fargo. On Tuesday, stocks opened lower but closed flat after President Trump pulled out of the Iran deal. In corporate news, Comcast upped its bid to buy assets from Fox. On the earnings front, several high profile companies reported earnings and – so far – most continue to beat estimates. After the bell, Disney reported and the stock was flat. Disney said it is still interested in buying the fox assets as it moves more of its content to market directly to the consumer. Stocks opened higher on Wednesday after the latest round of earnings were released. Technically, the S&P 500 and Dow Jones Industrial Average both tried trading above their respective 50 DMA lines which have served as near-term resistance in recent weeks.

Thur & Fri Action:

On Thursday, stocks rallied nicely as the market digested the latest round of earnings and economic data. On average earnings continued to beat estimates which is a healthy sign. On the economic front, inflation came in less than expected which eased pressure on the Fed to raise rates in the future. That is a welcomed sign for the bulls. Stocks were relatively quiet on Friday as the market digested a big run off the 200 DMA line over the past week.

Market Outlook: Bulls Defend Support

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is February’s low and the 200 DMA line. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Not Happy With Your Results On Wall Street? Find Out What You Are Doing Wrong

04 May
Daily Market Commentary

Week-In-Review: Stocks End Flat After Support Was Defended

Stocks End Flat After Support Was Defended

It was another volatile week on Wall Street as investors digested a slew of economic and earnings data. Apple was the big standout winner last week as the stock shot up to new highs after reporting earnings and legendary investor Warren Buffet announced he was increasing his position in the stock. In other news, the bulls were happy after The Federal Reserve did not raise rates last week. Finally, the week ended on a positive note when the unemployment rate fell to only +3.9% which is the lowest rate since 2000. Remember, the stock market topped out in March 2000, so just some food for thought was we start seeing strong data in the weeks and months ahead. Remember, its not the news that counts, but how the market reacts to the news. For investors, the most important event that happened last week was that the bulls showed up and defended the longer-term 200 DMA line which is near term support. It is also encouraging to see the Russell 2000 and the Nasdaq composite both get above their respective 50 DMA lines which has served as near term resistance in recent weeks. Going forward, as long as the 200 DMA line is defended we will likely rally nicely from here.

Mon-Wed Action:

Stocks were slightly lower on Monday which was the last trading day of April. Since the beginning of earnings season, the market is up only 1% which pales in comparison to 20% gains on the earnings front. Telecom stocks fell after news broke on Sunday that T-Mobile agreed to buy Sprint for $26.5 billion. A lot of people were concerned that the deal would be blocked by the government. Technically, the market hit a wall near the 50 DMA line and began pulling back. Stocks ended mixed on Tuesday as investors waited for Apple to report earnings after the close. The Dow and the benchmark S&P 500 ended lower while the tech-heavy Nasdaq ended slightly higher. The Dow fell over 150 points on Wednesday after the Fed held rates steady but said inflation remains a concern. Remember, the Fed has a dual mandate, help the economy grow (jobs) and keep inflation under control. So, market participants are worried that if inflation picks up, the Fed will need to raise rates more aggressively which may hurt the market and the broader economy. Even though the market ended lower on Wed, Apple rallied.

Thur & Fri Action:

On Thursday, the Dow erased a 400 point loss as investors digested a slew of earnings data and the bulls showed up and defended the 200 DMA line. Overnight, the big news came from Elon Musk when he told analysts that they are “boring” and instead spent a lot of time answering “crowd-sourced” questions from a 25 year old YouTube personality. That was bizarre and the stock fell sharply on Thursday at the open. Stocks were quiet on Friday as investors digested the latest jobs report. Stocks rallied nicely on Friday as investors cheered the latest round of earnings and the monthly jobs report. Before Friday’s open, the Labor Department said U.S. employers added 164k, missing estimates for 191k. The big news came when the unemployment rate fell to only +3.9%, which was the lowest reading since 2000.

Market Outlook: Bulls Defend Support

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is February’s low and the 200 DMA line. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

27 Apr
Daily Market Commentary

Week-In-Review: Stocks End Week Flat As Earnings Continue

Stocks End Week Flat As Earnings Continue

It was another volatile week on Wall Street. Stocks ended flat as investors digested a slew of earnings reports and the bulls showed up and defended the longer term 200 DMA line. The major indices opened the week with a big selloff and then the bulls showed up right on cue and defended the 200 DMA line and stocks bounced back in the latter half of the week to end relatively flat to slightly lower. So far, earnings remain strong but a lot of that was already priced in so we are seeing a somewhat sluggish reaction on Wall Street. In the short term the 50 DMA line is the next area of resistance to watch while the 200 DMA line is the next area of support. Stepping back, we have to expect this sloppy sideways action to continue until one of those important areas are broken. From where I sit, the market looks like it wants to rally from here it is just taking a break to digest the very strong 2 -year rally we just enjoyed. Stay tuned, because a lot more earnings are slated to be released over the next few weeks. 

Mon-Wed Action:

Stocks were very quiet on Monday as investors waited for a busy week of earnings to be released. Stocks fell over 500 points on Tuesday even as earnings remained mostly positive. Separately, the yield on the 10-year treasury note topped 3% for the first time since 2014. CAT gapped up nicely after reporting earnings but the stock fell during the session. GOOGL fell nearly 5% after reporting earnings, even though the company beat on both the top and bottom line. Tuesday’s action came after the major indices failed to trade above their declining 50 DMA lines, which is not a healthy sign.

Stocks were quiet on Wednesday as a slew of mostly stronger-than-expected earnings were released. Big stocks such as BA, TWTR, FB QCOM, T, V, EBAY, and Ford were some of the well-known names to report numbers. Elsewhere, the benchmark 10-year Treasury yield traded at 3.03%. Investors are concerned that higher rates may slow the economy and hurt companies’ ability to buy back their own stock. The fact that the bulls showed up and defended the longer term 200 DMA line (once again) is a bullish sign.

Thur & Fri Action:

Stocks rallied nicely on Thursday after the bulls showed up and defended the longer term 200 DMA line on Wednesday. Investors also digested a slew of earnings data from AMZN, MSFT, INTC, and several others reported earnings. Stocks were quiet on Friday after the government said the U.S. economy grew by 2.3% in Q1 2018, which beat the Street’s estimate for 2%. Stay tuned, because a lot more earnings are slated to be released over the next few weeks.

Market Outlook: Bulls Are Fighting

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is February’s low and the 200 DMA line. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

20 Apr
Daily Market Commentary

Week-In-Review: Stocks End Week Flat As Earning Season Begins

Stocks End Week Flat As Earnings Season Begins

Stocks opened the week on a positive note but ended relatively flat as investors continue to digest a slew of earnings. So far, most of the companies that have reported earnings have beat on both the top and bottom line which is an encouraging sign. It is important to keep in mind that we are only one week into earnings season and there are still a slew of companies that are slated to report earnings. Technically, the market started the week below its 50 DMA line and ended the week near it. For now, this is an important area of support that the bulls want to defend in order for the market to head higher in the weeks ahead. On the other hand, if the bulls can’t defend the 50 DMA line over the next few days, then we have to expect that sloppy sideways action to resume between the 50 and 200 dma line. For now, I remain optimistic because the long-term technical and fundamental action remains healthy.  

Mon-Wed Action:

On Monday, stocks rallied over 300 points after fears eased regarding the situation in Syria. Elsewhere, Bank of America and Netflix were some of the high profile companies to report earnings on Monday.

On Tuesday, stocks jumped over 200 points helping the major indices jump back above their respective 50 DMA line as investors digested the latest round of earnings data. UnitedHealth rallied over 3.5% after it reported better-than-expected earnings and raised its outlook for 2018. Goldman Sachs fell after posting better-than-expected earnings and revenue for the first quarter, boosted by a 38 percent jump in equities trading revenue. However, the stock fell after encountering resistance near its 50 DMA line. Johnson & Johnson fell after reporting earnings.

Stocks were relatively quiet on Wednesday as investors digested a slew of earnings data. IBM gapped down after reporting earnings which weighed on the Dow. Elsewhere, transportation stocks rallied after CSX posted quarterly results that easily beat Wall Street estimates, boosted by a series of cost-cutting measures. The transports also rally after United Airlines also beat estimates. According to Thomson Reuters, 79% of the S&P 500 companies that had reported through Wednesday beat estimates which is a healthy sign.

Thur & Fri Action:

Stocks fell on Thursday after Taiwan Semiconductor Manufacturing ($TMSC) said it lowered guidance which sent a slew of tech stocks lower. TMSC is a big chip supplier to Apple and other tech companies so the fact that they lowered guidance was seen as a negative sign for the space. Elsewhere, rising interest rates came back into the picture as the yield on the 10-year Treasury note broke above 2.9%. Stocks fell on Friday after the Democrats sued Trump, Russia and Wikileaks for interfering with the 2016 election.

Market Outlook: Bulls Are Fighting

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. On the downside, the big level of support to watch is February’s low and the 200 DMA line. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. On the upside, resistance is now 2018’s high.  As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

13 Apr
Daily Market Commentary

Week-In-Review: Stocks Bounce As Earnings Season Begins

Stocks Bounce As Earnings Season Begins

Stocks rallied nicely last week as earnings season officially began. Delta Airlines, BlackRock, JP Morgan Chase, Citigroup, and Wells Fargo, were just some of the big names that reported earnings last week. Surprisingly, they beat estimates but all traded lower on Friday. Two weeks ago, the bulls showed up and defended important support (200 DMA line) which set the stage for a nice rally into near term resistance (50 DMA line). On cue, stocks turned lower on Friday as the major indices bumped into their respective 50 DMA lines. For now, that is now the near term trading range. Stepping back, longer term resistance is 2018’s high and longer term support is 2018’s low. By definition, until either level is breached we have to expect this new sideways trading pattern to continue. 

Mon-Wed Action:

On Monday, stocks opened sharply higher after the U.S. softened its stance on the impending trade war with China. Treasury Secretary Steven Mnuchin said on Sunday he does not expect a trade war between the U.S. and China to take place. It should be noted that two days earlier, Mnuchin told CNBC’s “Power Lunch” that a trade war between the two largest economies was possible. Elsewhere, tech stock bounced as shares of Facebook, Amazon, Apple and Alphabet all jumped nicely. Technically, the bulls showed up and defended the longer-term 200 DMA line which is the first important level of support to watch. The next important level is Feb’s low. But stocks gave back most of their gains before the close when news spread that the FBI raided President Trump’s Attorney’s office. On Tuesday, stocks rallied nicely after China’s President Xi softened his stance about the impending trade war. Elsewhere, Mark Zuckerberg testified on Capitol Hill regarding the data breach. Stocks fell on  Wednesday after Trump canceled his trip to South America and said he would consider a military response to the situation in Syria. Trump said, “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!’ You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”

Thur & Fri Action:

On Thursday, stocks rallied nicely after Trump tweeted and said, “Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our “Thank you America?” That helped set the stage for a nice rally on Wall Street. Elsewhere, Delta Airlines and BlackRock both rallied after reporting earnings. Stock were quiet on Friday after JP Morgan Chase, Citigroup, and Wells Fargo all reported stronger-than-expected earnings.

Market Outlook: Bulls Defend Support

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

06 Apr
Daily Market Commentary

Week-In-Review: Bulls Defend Support…For Now

Bulls Defend Support…For Now

This was an important week on Wall Street. The Bulls showed up and defended the longer-term 200 DMA line which is important support for the major indices. Stocks ended lower last week as fear spread that a trade war may derail the global economy and adversely affect corporate earnings. This is a critical time for the market because if support can’t hold, then odds favor this turns into a large top and we could easily fall into a long-overdue bear market. For now, the next two important areas to watch are the 200 DMA lines and then Feb’s low. To keep it really simple, as long as support holds, we are likely to move sideways or higher. Conversely, if Feb’s lows are breached then odds favor we are going to fall the dreaded -20% which would signal a bear market. The next big catalyst is earnings season which is supposed to be strong. So if earnings fail to impress- that could also hurt the market. 

Mon-Wed Action:

Stocks were smacked hard on Monday causing the market to experience its worst start to the second quarter since the Great Depression. At one point, the Dow was down over 700 points but, thanks to a late day rally, ended down over 500 points. That may have been an important near term low for the market as many bulls finally capitulated and the market successfully tested important support (200 DMA line for the S&P 500). Stocks snapped back and rallied over 300 points on Tuesday as investors stepped in and defended important areas of support. In other news, Spotify finally IPO’d and it came out higher than the expected range. One should be careful with high profile IPOs because most of them do not act well on Day 1. Wednesday was an important day on Wall Street because overnight China announced they would issue tariffs on 106 U.S. products and futures fell over 500 points. On cue, the bulls showed up and defended support helping the market close higher by over 200 points.

Thur & Fri Action:

On Thursday, stocks continued to bounce as the bulls showed up and added to Wednesday’s rally. On the economic front, weekly jobless claims came in at 242,000, higher than the Street’s estimate for 225,000. Even the slight uptick was written off because claims are still near their lowest levels since the 1970s. Before Friday’s open, the Labor Department said U.S. employers added 103k new jobs which missed estimates for 175k. Separately, the threat of the trade war increased after the rhetoric between Beijing and the White House intensified.

Market Outlook: Bulls Try To Defend Support

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

30 Mar
Daily Market Commentary

Quarter-In-Review: Volatility Returns With A Vengeance

Volatility Returns With A Vengeance

Stocks ended mixed to mostly lower in Q1 2018 as volatility returned with a vengeance. The VIX, a popular measure of market volatility, surged in the first quarter and marked one of its largest quarterly advances in history. The Dow Jones Industrial Average, benchmark S&P 500, and small-cap Russell 2000 all ended the quarter and year in the red as the tech-heavy Nasdaq Composite ended slightly higher. The big concern that I have is that all this “selling” and “volatility” is happening in an aging bull market. Imagine what will happen in the next bear market! The good news is that the fundamental outlook remains bullish as both earnings and the economy are set to grow nicely for the rest of 2018 and 2019. At this point, the next important level to watch is the 200 DMA line then Feb’s low. If those levels are breached we have to expect lower prices to follow. Conversely, if those levels hold, sideways/higher prices will likely follow. It is also important to note that stocks have a slight upward bias during the first two weeks of April. On average, the market tends to rally over 1% in the first two weeks of April which is much stronger than the 0.2% gain experienced during the first two weeks of the other months.

Mon-Wed Action:

On Monday, stocks soared nearly 700 points in one of the largest single-day rallies in history after concern eased about the so-called trade-war between the U.S. and China. The Financial Times reported China has offered to buy more semiconductors from the U.S. to help cut its trade surplus with the U.S and that senior officials from both sides were actively discussing a feasible solution. Technically, the bulls showed up and defended the longer-term 200 DMA line for the S&P 500 which has served as important support since the 2016 election. Stocks opened higher but closed lower on Tuesday as investors digested Monday’s monstrous rally. Tech stocks fell after Reuters reported that Nvidia will temporarily suspend self-driving tests. This came after a few fatal accidents in recent months from self-driving vehicles. Stocks fell on Wednesday as the tech heavy Nasdaq composite fell for a second straight day. Shares of Amazon got smacked after President Trump tweeted that he wants to go after them and change the way they are taxed. Other tech stocks were under pressure as investors sold tech stocks after they recently hit new highs.

Thur & Fri Action:

On Thursday, stocks rallied nicely on the last trading day of the month and the quarter. Shares of Facebook jumped over 4% as value investors stepped in and bought the latest dip. Other tech giants also rallied as investors jumped back into tech stocks after Microsoft announced a major reorganization. Stocks were closed on Friday in observance of Good Friday.

Market Outlook: Bulls Try To Defend Support

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

23 Mar
Daily Market Commentary

Week-In-Review: Stocks Fall Hard; Some Calling For A Big Top

Stocks Fall Hard; Some Calling For A Big Top

Stocks fell hard again last week as fear of a looming trade war between the U.S. and China grew. I think the fear is overblown but the market’s opinion is all that matters. It’s important to keep in mind, all things being equal, investors like to preserve the status quo and fear change (unless it is a massive tax cut). Having said that, the fact that the market is down substantially this month should come at no surprise considering all of the major political headlines we have seen out of D.C. Some people, specifically, the strict chart reading market technicians out there, are calling for a big top. Clearly, this has the potential to turn into a big top but it also has the potential to turn into another bullish base that the market will use to rally from. After a big move (Q1 2016-Q1 2018), it is perfectly normal and healthy to see the market pause for a few quarters to digest the rally. Only time will tell if this will be another bullish base or turn into a big ominous top. The market has 3 bullish fundamental things going for it: 1. Earnings are expected to grow massively, 2. The economy (both U.S. and global economy) is expected to grow & 3. The tax cut is going to kick in which should spark more upward momentum. Stepping back, the next big important levels to watch are 2018’s high (resistance) for the major indices and February’s low (support) for the market. Until either level is broken, by definition, I have to expect this sloppy sideways choppy action to continue. Remember, next week is the last week of the month and quarter which usually has a small upward bias. 

Mon-Wed Action:

On Monday, stocks sold off hard as Facebook and negative political headlines, dragged the market lower. Facebook was the worst-performing stock in the S&P 500, after shares of the social media giant fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people’s profiles without their consent. Separately, President Trump tweeted a lot over the weekend and specifically named Robert Mueller for the first time. Stocks bounced back on Tuesday after Facebook continued to fall and the Fed started its 2-day meeting. Shares of other tech stocks bounced back nicely on Tuesday, helping the market bounce back from deeply oversold levels. On Wednesday, the market was quiet after the Fed raised rates by a quarter point and hiked its expectation for GDP.

Thur & Fri Action:

On Thursday, stocks plunged over 700 points as fear spread regarding a potential trade war with China. The selling intensified into the close as the Dow fell nearly 300 points in the final hour and change of trading. The Trump administration unveiled tariffs designed to punish China for intellectual property theft, imposing about $60 billion in retaliatory charges. Overnight, China said they will impose tariffs on 128 items they import from the U.S.  Stocks fell hard again on Friday as the tough week came to an end.

Market Outlook: Chop City

The market is trading between important resistance (2018’s high) and important support (February’s low). Until either level is broken, I have to expect this sloppy, sideways action to continue. The big level of support to watch is February’s low and then the 200 DMA line for the major indices. For now, as long as those levels hold, the longer-term uptrend remains intact. As always, keep your losses small and never argue with the tape. Want 1-0n-1 Coaching Lessons From Adam? Click Here To Learn More

‹1234›»