Trade Deal: A Reason To Buy?

President Trump Meets With China's Vice Premier  Amid Trade Talks In Washington

U.S. President Donald Trump shakes hands with Chinese Vice Premier Liu (Photo by Win McNamee/Getty Images) GETTY IMAGES

It's been another solid week for the stock market, as positive comments on the trade deal gave stocks a further boost last week. The market’s strength since the October lows has moved nearly all of the market sectors sharply higher.

There are of course still some questions to be answered, as no details have been reported regarding the phase one trade deal. American and Chinese officials are expressing hopes that something will be signed in January. The new tariffs that were scheduled to be going into effect this weekend have been canceled, but I doubt we have seen the last of trade-related volatility during U.S.-China trade negotiations.

Markets

Markets TOM ASPRAY-VIPERREPORT.COM

For the week, the Nasdaq 100 (NDX) led the way, up 1.14%, followed by a 0.74% gain in the S&P 500. After that, the Dow Jones Transportation Average did slightly better than the Dow Jones Industrial Average, but all six market averages closed the week higher.

Spyder Trust

SPY TOM ASPRAY-VIPERREPORT.COM

The Spyder Trust (SPY) closely tracks the performance of the S&P 500. SPY had a low of $284.82 on October 3, and closed this past Friday at $317.34, having gained 11.4% since that low. The daily chart shows that the S&P 500 A/D line overcame its downtrend (line 1) on October 10. That day, I noted to my clients that the daily market trend turned positive (line 2).

The S&P 500 A/D line has only spent one day since October 10th below its Exponential Moving Average (EMA), and that was on December 3 (line 3). On that day, the SPY dropped below its starc- band and reached its monthly pivot support, as I discussed last week. The A/D line made another new high on Friday, which reinforces the positive trend.

While the major indices have had impressive gains, many stocks have done even better. Apple Inc. (AAPL) was the most overbought Dow stock in last month’s review.

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