'Be Wary Of Cashing In' - For The Week Ahead

The Past Week, In A Nutshell - What Happened

Stocks closed the week practically unchanged after mixed reactions to a slew of blow-out earnings results.

Remember This

“Although the stock market will certainly experience pullbacks, disappointments, and corrections along the way, the horses have just begun this race and investors should be wary of cashing in a winning Superfecta ticket too early,” said Jim Paulsen, chief investment strategist at the Leuthold Group.

Pictured: Profile chart of the S&P 500 E-mini Futures

Technical

Broad-market equity indices held onto recent gains, evidenced by the absence of directional surprise.

Recapping last week’s action

On Monday, July 27, after the prior week’s action brought the S&P 500 back to its monthly VWAP and $3,190, an area tested multiple times, participants sold the market further to Friday’s most traded price, as is usual, before impulsing higher, through the resting liquidity at $3,230, on upbeat economic news and stimulus hopes.

On Tuesday, July 28, the S&P 500 attempted to eat into the poor structure left from the July 23 sell-off, prior to allocating to safety on underwhelming quarterly earnings in the European session.

For the remainder of the American session, the S&P traded responsively and lower, with delta, into the close as U.S. fundamental data weakened. Intermediate-term buyer’s remained in control on Wednesday, July 29, as the S&P walked it’s way higher, albeit on poor structure and participation, as the Federal Reserve reiterated a pledge to support the economy and positive earnings updates.

On Thursday, July 30, after a gap down on more dismal earnings data from Europe, the S&P took a shot at some resting liquidity in the $3,200 area, prior to putting in an excess low and trading higher, behind the Nasdaq, to and through a prior low-volume area. On better than expected economic and fundamental releases out of the United States, the S&P continued its trek higher Friday, July 31, squeezing into the close, ahead of value.

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