Stocks ended higher last week ahead of the long holiday weekend but the S&P 500 still closed below long-term resistance. The Dow Jones Industrial Average, S&P 500, and Small-Cap Russell 2000 all closed below their respective 200 DMA lines which currently serve as long-term resistance. Meanwhile, the Nasdaq and Nasdaq 100 are above that level and positive for the year. In fact, the Nasdaq and Nasdaq 100 are only a few percentage points below a record high! For now, the market has had a HUGE run from the March 23 low an I have to expect a nice little pullback before another leg higher. 

Monday-Wednesday’s Action:

Stocks soared on Monday after Jay Powell said on 60 Minutes that the Fed has a lot more ammunition if needed. In other news, MRNA announced some positive data with respect to its Covid-19 vaccine as several areas of the country (and the world) re-opened. On Tuesday, the market opened higher but sold off hard before the close after a report surfaced that questioned the validity of the MRNA trial data. In other news, Federal Reserve Chairman Jerome Powell testified along with U.S. Treasury Secretary Steven Mnuchin at a virtual hearing of the Senate Banking Committee and said more stimulus may be needed. Stocks rallied nicely on Wednesday after Lowes and Target both reported earnings. In other news, shares of Facebook hit a fresh record high helping lift the tech sector.

Thursday & Friday Action:

Stocks fell on Thursday as weekly jobless claims jumped by another 2.4 million, bringing the pandemic’s toll to more than 38 million jobless claims (and counting). The Nasdaq led the way lower as some profit-taking hit some of the market’s stronger sectors. In other news rising tensions between China and the U.S. is what triggered the decline. On Wednesday, the Senate passed a bill that could ban Chinese companies such as Alibaba and Baidu from listing on U.S. exchanges and then some of these companies threatened to delist on their own from U.S. exchanges. Stocks were quiet on Friday ahead of the long weekend. 

Market Outlook: Flood The System With Liquidity

Global governments and global central banks stepped in with massive rate cuts and other “aid” packages to help “stimulate” both Main Street and Wall Street. So far, it is working as intended. As long as March’s lows hold, the market will likely move sideways to higher. On the other hand, if March’s lows are breached, then look out below. As always, keep your losses small and never argue with the tape.