A rough Monday sunk chances for a positive week on the indexes as the choppy action continues. As we mentioned in last week’s recap while some technical indicators improved, solid markets show lower volatility than what we are currently seeing. This week will be interesting because there is usually a positive bias Thanksgiving week as many professional traders are off for the week! Not much news worthy this week – some fears around oil, Brexit, China trade, etc etc – mostly technical conditions continue to be weak.
Macro headwinds, including trade tensions, rising interest rates, a stronger dollar, and slowing growth abroad have also helped to trigger a pivot towards negative sentiment in the market. “This is where peak earnings growth comes in,” Essaye said, arguing that the stock market has been supported this year by two pillars: strong economic growth and strong earnings growth. “The market knows that earnings growth has peaked, and so earnings growth can’t be a reason any longer to ignore the macro picture,” he said.