The Week Ahead: Will The Stock Rally Last?

Chart of the S&P 500 (SPX) - The Week Ahead: Will the Stock Rally Last?

Chart of the S&P 500 (SPX) – The Week Ahead: Will the Stock Rally Last? – Source: TheTechnicals.com and TradingView

Monday is a bank holiday in the U.S. – Presidents’ Day – so U.S. markets are closed. And for the shortened week ahead, a big question remains. Will the extended stock market rally we saw last week, which began in a big way from the late December lows, last much longer? In last week’s Week Ahead, we noted how the S&P 500 (SPX) had turned down from resistance at its 200-day moving average. And we wondered if the market had enough momentum to break out to the upside given ongoing concerns about U.S.-China trade.

Market Surges Higher

Well, needless to say, the market did break out. And in a pretty big way. On Friday, the S&P 500 hit a new 2-month (and year-to-date) high above its 200-day moving average. Does this mean we’re back in a bull market now? One technical definition of a bullish market is when there’s sustained trading above the 200-day moving average. Another definition is a +20% move or more above the most recent price trough, or low point. The Nasdaq Composite did that last week. But the S&P 500 is not quite there at only around +18% above its late December low. So the week ahead will be pivotal in determining whether or not a bull market will take hold once again.

Individual Stocks Stumble Despite Market Rally

Despite the strong market rally last week, some individual stocks had a hard time participating in the good cheer. Coca-Cola’s stock (KO) plunged after its earnings release, which featured a much-lowered earnings outlook. Mattel (MAT) was similarly hit hard by disappointing guidance for sales and earnings in 2019. Facebook (FB) fell back last week, as it will likely face a multi-billion dollar fine from U.S. authorities over the Cambridge Analytica scandal. Also, while it’s stock has not been affected in a major way yet, Amazon.com (AMZN) has scrapped its plans to build new headquarters in New York City amid opposition from local groups.

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Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock ...

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