Week Ahead: 10-Week Rally Continues On Wall Street

The market ended higher last week as the very strong 10-week rally continues (for now). The market remains strong as sellers remain marginalized and nowhere to be seen. The fact that the market refuses to fall is an encouraging sign and bodes well for the bulls. Stepping back, the internals remain positive, but keep in mind, most technical indicators are in overbought territory. That increases the odds a pullback will occur in the near future. Remember, until a pullback occurs, the bulls remain in clear control. For now, near term support is the 200 day moving average then the 50 day moving average. On the other hand, resistance is 2018’s high. 

Monday-Wednesday’s Action:

On Monday, stocks rallied after President Donald Trump said he would delay placing additional tariffs on China. Separately, oil prices tanked after Trump told OPEC oil prices are too high. In M&A news, Barrick Gold launched a bid to acquire Newmont Mining for a multi-billion dollar all-stock deal. Stocks were quiet on Tuesday as investors digested a slew of data. The big news came when Federal Reserve Chairman Jay Powell said the Fed sees headwinds and is ready to adopt an easy money stance if conditions worsen.

Separately, consumer sentiment beat estimates which bodes well for the economy. On the earnings front, shares of Home Depot fell after reporting earnings and Macy’s ended slightly higher after the retail giant reported. Stocks were quiet on Wednesday after investors digested the latest round of somewhat disconcerting economic data and U.S. trade representative Mr. Lighthizer said more work needs to be done regarding a US-China trade deal.

Thursday & Friday Action:

Stocks were quiet on Thursday after President Trump left the summit early without agreeing on a deal with North Korea. In other news, the Commerce Department said GDP grew by +2.6% last quarter, which beat the Street’s estimate for +2.2%. Stocks rallied on Friday as investors digested the latest round of mixed economic data. The Institute for Supply Management said U.S. manufacturing activity expanded at its slowest rate since November 2016. Meanwhile, the University of Michigan consumer sentiment index missed the Street’s forecast last month. Finally, the Atlanta Federal Reserve’s GDP Now model also showed an estimate of only +0.3% GDP growth for the first quarter of 2019.

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