While it was the first losing week in 8 for the major averages, bulls should continue to be happy as such minor losses after significant rallies are just part of a consolidation period. Tuesday was the only positive day for the week but again we are talking about a very low volatility environment, where “down days” are often in the spirit of -0.15%. That said the weakness in the Russell 2000 was interesting this past week.
While these type of quotes – now incessant it seems – should worry you, it hasn’t matter to the market….
“There is no reason for stocks to go down substantially at this point, as earnings growth is robust and global economy is improving. The path of least resistance is higher,” said Steve Chiavarone, portfolio manager at Federated Global Allocation Fund.
“I don’t really see how this bull market gets derailed,” said Maris Ogg, president at Tower Bridge Advisors.
News flow was really quiet outside of some tussling over tax reform.
The mega capitalization glamour stocks – especially in technology….
….are hiding it but we are seeing some weakness in interesting areas – biotechs, transports, etc.
Here is the 5 day weekly “intraday” chart of the S&P 500 .. via Jill Mislinski.
The one year rally since Trump was elected, and the DJIA rally since then has been the best since 1945!
The DJIA has advanced 28.50% since Nov. 8, 2016. (as of Wednesday’s close) That represents its best performance after a White House contest since 1945, when the blue-chip gauge was up 29.83% in a year following the election of Franklin D. Roosevelt. The average 12-month gain following Election Day is 6.04%. The gains have been primarily concentrated within two sectors: technology stocks, up 42.2% over the past 12 months, and financials, up 37.5%. Trump has taken full credit for the equities rally, offering this assessment this week: “The reason our stock market is so successful is because of me.”
The week ahead…
Retail sales Wednesday (expected 0.1% growth!) is the only economic report of significant note. A lot of Fed heads are slated to speak – people still expect a December rate hike. Some big retailers such as Walmart (WMT), Target (TGT), and Home Depot (HD) will report earnings.
Short term: Strength continued in the 2 major large cap indexes….
But the Russell 2000 took a dip.
The NYSE McClellan Oscillator continues to show weakness, so we remain cautious short term (i.e. raise cash) for those of the trading bent. That worked out for those holding small cap type issues even as the major indexes hold firm.
Long term: Unicorns and rainbows continue.
Charts of interest / Big Movers:
On Monday, shares of Sprint (S) fell 12% after the company, along with T-Mobile, announced on Saturday that merger talks had ended.
Qualcomm (QCOM) jumped Monday after Broadcom announced an unsolicited proposal to buy the rival chip maker. The deal is valued at $130 billion including debt.
Michael Kors (KORS) surged 15% after the luxury fashion company’s reported profit and revenue that beat forecasts and lifted its 2018 guidance.
On Thursday, Roku (ROKU) soared 55%. The video-streaming company in its first earnings report as a public company late Wednesday, posting profit and revenue that both beat forecasts.
Sage Therapeutics (SAGE) surged 54% after the company said its postpartum-depression therapy has positive results in two late-stage clinical trials.
Have a great week and we’ll see you back here Sunday!