Week In Review: Early Christmas On Wall Street

The market continued to run last week and enjoyed its seventh consecutive weekly gain. In the process, the Dow topped 28,000 and the S&P 500 and Nasdaq both hit fresh record highs. On the surface, the big catalyst continues to be optimism on the U.S.-China trade front as many people are now expecting Phase 1 of the deal to get done relatively soon. Beneath the surface, the “real” catalyst is all the easy money being injected into the system from the Fed and other central banks. Take a look at the chart on Page 4 of the the FindLeadingStocks report that shows the Fed balance sheet “expanding” rapidly which many people are calling QE 4. Since the Fed signaled QE4 but they won’t say it’s QE4, stocks have ripped higher. Again, never underestimate the power of the easy money. In the short-term, the market is very extended and due to pull back. The near-term areas of support to watch are the 10 DMA line and then the 50 DMA line.  

Monday-Wednesday’s Action:

Stocks opened lower but ended near their highs for the day as buyers showed and erased a 166 point decline in the Dow. President Donald Trump said Friday he had not agreed to roll back tariffs on China which sent futures lower Sunday night and into Monday morning. Those comments came after the Chinese commerce ministry said that both sides had agreed to cancel existing tariffs in phases. A U.S. official also reportedly said both sides agreed to roll back the tariffs in tranches. On Tuesday, stocks were relatively quiet. The big news came after President Trump ripped into the Federal Reserve again saying he wants negative interest rates. Trump said other countries have negative rates and said, ‘Give me some of that money. On Wednesday, the market ended mixed to mostly higher after shares of Disney jumped by 7%, helping the Dow hit a fresh record high. In other news, Jay Powell spent the morning talking about the logic behind the Fed’s policy.

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