On cue, the bulls showed up and defended the 50 DMA line last week and sent the market bouncing back with a vengeance. China’s central bank pumped fired another round from its easy money bazooka and that was enough to send markets roaring back. The coronavirus has not stopped spreading but we now know more about it and it turns out that it is not as “bad” as people initially thought. For starters, the coronavirus is not a fully airborne virus, it can only be transmitted from direct contact with droplets of fluid produced by infected individuals. That, in and of itself, allowed the world to breath a huge sigh of relief. The clear takeaway is, for now, easy money continues to trump everything else.

Monday-Wednesday’s Action:

Stocks rallied nicely on Monday after China re-opened its markets from its extended New Year Holiday. News of the coronavirus outbreak began during the week-long New Year Holiday when China’s markets were closed. Then the government decided to extend the holiday and keep markets closed for a few more days and reopen markets on Monday. Right before markets reopened, China’s central bank said it will inject a new round of easy money aimed at stimulating markets. That worked wonders on Monday and then China did another round of easy money on Tuesday and markets soared overnight. After Monday’s close Alphabet reported earnings and the stock fell about 4%. In other news shares of Tesla soared nearly 20% on Monday in what appears to be a climax run for the auto giant. On Tuesday, stocks rallied sharply after the latest round of easy money was announced. Stocks rallied nicely on Wednesday even though shares of Tesla finally sank. The market tried to fall early in the session but buyers quickly showed up and bid stocks higher. That clearly illustrates a strong demand underneath the market which has bullish implications.

Thursday & Friday Action:

Stocks rallied on Thursday helping several of the major indices hit fresh record highs. Before Friday’s open, the government said, US employers added +225,000 new jobs in January, easily beating the Street’s estimates for a 158,000. The report also showed that the workforce participation rate rose 0.2 percentage point to 63.4%, matching its highest level since June 2013.

Market Outlook: Easy Money Is Back

Once again, global central banks are back on the easy money bandwagon after the Fed and the ECB both announced more easy money measures directly aimed at stimulating global markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. In 2019, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. Phase 1 of the trade deal was signed, now lets see what happens with Phase 2. As always, keep your losses small and never argue with the tape.