The market rallied nicely last week after fears eased regarding the global economic slowdown. As a quick refresher, the market tanked 20% in Q4 2018 because the market was concerned that the global economy was slowing down and, at the time, the Fed was hawkish. Right after that decline, the Fed did a 180 and changed its stance and moved back into the easy money camp and now we are starting to see signs of stronger-than-expected economic activity. So the two big concerns that have weighed on the market have largely disappeared and that is why the major indices have ripped higher since the Dec 24, 2018 low. In other news, the US-China trade tensions eased considerably, and it now looks like we are very close to a deal on that front. Looking forward, the market will likely shift its attention to earnings over the next few weeks. The market is extended in the short-term and once again due to pullback. To be clear, until we see any substantial selling, the market deserves the bullish benefit of the doubt. 

Monday-Wednesday’s Action:

Stocks rallied sharply on Monday after positive manufacturing data from the U.S. and China was released. Overnight, China’s manufacturing index rose to a 6-month high and hit 50.5, beating February’s reading for 49.2. That was also above the boom/bust level of 50, which signals expansion. A few hours later, the U.S. ISM manufacturing index also expanded which confirmed China’s reading and eased concerns regarding the global economic slowdown. Bonds fell hard on the news (yields rose) which was a net positive for the financial stocks. Stocks were mixed on Tuesday as investors digested Monday’s strong rally. Shares of Walgreens Boots Alliance fell after the company reported a lousy quarter. Stocks were quiet on Wednesday after weaker than expected numbers were released. China reported a weaker than expected service report and in the US, ADP said private employers added only +129,000 new jobs in March, missing estimates for 173,000.

Thursday & Friday Action:

The market ended mixed on Thursday ahead of Friday’s payrolls report. President Trump said if a trade deal with China happens it will happen in the next four weeks. Before Friday’s open, the government said US employers added 196,000 new jobs last month, beating the Street’s estimate for 175,000.

Market Outlook: Bullish Tailwind Continues

The market remains very strong after the Federal Reserve reversed its stance and moved back into the easy money camp. Near-term resistance is 2018’s high while near-term support is March 2019’s low, then the 200 and 50 DMA lines, and then 2018’s low. As always, keep your losses small and never argue with the tape.