A very good week for market bulls as the prior week’s selling was all reversed. Last week we asked how many times can we rally on the same Federal Reserve juice. It seems indefinitely. Jerome Powell went on ’60 Minutes’ and talked dovish – that sparked a big rally Monday and it continued all week. The only down day all week was Thursday when the progress on the U.S. – China trade deal seemed to hit a delay.
A meeting between President Donald Trump and Chinese President Xi Jinping will be delayed until at least April, Bloomberg News reported, indicating that a bilateral trade deal will not be finalized this month. The news comes after Trump told reporters in the White House on Wednesday that he was in no rush to strike a trade agreement.
For the week, the S&P 500 added 2.9% and the NASDAQ rocketed 3.8%.
There had been a massive reversal a week ago Friday in the Chinese market, but it held in pretty well this week after a big move up. This is an interesting chart to watch as all signs point to a slowdown in their economy but their central regulators are trying to juice the system as well.
Investors digested comments from Chinese Premier Li Keqiang, Beijing’s No. 2 leader after President Xi Jinping, who expressed optimism that a trade deal between China and the U.S. can be achieved that suits both parties. Li also addressed weakness in the world’s second-largest economy and pledged to maintain strong stimulus measures, such as lowering interest rates, cutting bank reserve ratios, and slashing taxes for consumers and businesses.
Here is the 5 day weekly intraday chart of the S&P 500 … not via Jill Mislinski.
The week ahead…
The Federal Reserve’s two-day meeting hits March 19-20 – nothing but cheering for markets going up and more “patience” expected.
“The Fed is on pause and we don’t expect any major change to Fed Policy next week,” Ryan Detrick, senior market strategist for LPL Financial. “But we do wonder if they will follow Europe’s lead and lower GDP expectations as the global slowdown continues.”
Short term: The S&P 500 is once again touching our trendline from below – that’s the third time since mid February.
The Russell 2000 is starting to show signs of relative weakness vs the other 2 indexes. That was a theme for almost all of 2018 although had not been the case the past few months.
The NYSE McClellan Oscillator was red all week – yet a massive rally. Interesting.
Long term: The S&P 500 made a massive reversal after looking like bears may have made a stand on the long term chart. Not so much.
Charts of interest / Big Movers:
Monday, Boeing (BA) had its worst day in nearly five months, falling 5.3%, after one of the company’s 737 Max 8 planes crashed. It fell another 6.2% Tuesday as countries across the world began grounding those jets.
It was another rough week for brick & mortar retail. Tuesday, Dick’s Sporting Goods (DKS) skidded 11% after the retailer reported a 6.3% decline in fourth-quarter sales.
Express (EXPR) sank 10% Wednesday after the fashion apparel retailer beat fourth-quarter profit expectations but missed on net sales and provided first-quarter outlook that was worse than forecasts.
Dollar General (DG) sank 7.5% after the discount retailer reported a fiscal fourth-quarter profit that missed expectations and provided a downbeat earnings and sales outlook.
Friday, Bioscrip (BIOS) sank 20% after the company announced a deal to merge with privately held Option Care Enterprises Inc.
Have a great week and we’ll see you back here Sunday!