Friday, October 6, 2017

Market outlook : 6 Oct 2017 - NASDAQ 100 ($NDX)

The bullish ascending triangle pattern has cleared on the NDX:

Momentum is just beginning to accelerate from its launch near centerline support.  The top of the triangle is at 6000 and the initial low in the pattern was approximately 5750.  That difference, 250 points, is the measurement, which is added to the breakout level at 6000 to establish an initial target of 6250.  Expect to see that rather quickly.  To the downside, the two key support levels will now be the breakout level and rising 20 day EMA at 6000 and 5962, respectively.  Look to those levels to hold and for buyers to re-emerge during any short-term period of selling.

Friday, August 18, 2017

Market update (18 August 2017)

According to Thompson's Reuters, 460 of the companies represented in the S&P 500 have reported earnings with almost 74% beating expectations. This is 10% above the long term average and helps explain why the market has been so strong, at least until last week when we saw some deterioration.

There's no guarantee the market will keep falling but for sure the bears now have the technical advantage.  It's quite possible the S&P could now test its 200 day moving average, currently at 2346.

Wednesday, August 16, 2017

Market update: minutes from the July FOMC meeting (16 Aug 17)

  • The minutes from the July FOMC meeting showed increasing concern among several policymakers about softer than expected inflation readings. Despite the concern about slowing inflation, most Fed officials remain in favor of announcing a balance sheet move at the upcoming policy meeting. The FOMC will kick off its next two-day meeting on September 19.

Friday, August 4, 2017

Energy stocks seen getting help from lower dollar

The dollar’s retreat this year may lead to a rebound in U.S. energy stocks, according to Jim Paulsen, Leuthold Group Inc.’s chief investment strategist. Paulsen compared the U.S. Dollar Index, which fell 9.6 percent for the year through Wednesday, with the ratio between the S&P 500 Energy Index and the S&P 500 in a report Monday. The dividend-adjusted ratio dropped last week to its lowest level since January 2004. “Energy stocks could be market leaders again for a period” as long as the dollar declines further, he wrote.

Wednesday, July 26, 2017

Market update: FOMC announcement of no rate hike (26 July 2017)

July 26, 17:  2:00 PM FOMC Rate Decision

Fed says stimulus wind down to begin 'relatively soon,' leaves rates unchanged

  • The FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25%. 
  • Regarding the central bank's $4.5 trillion balance sheet, the Fed indicated that it expects to begin the paring process "relatively soon", which has been largely interpreted as September. 
  • The CME FedWatch Tool now points to the March FOMC meeting (from December) as the most likely time for the next rate-hike announcement with an implied probability of 55.1%.

Tuesday, July 25, 2017

Market update: `New valuation range' indicated for U.S. stocks

“There are good reasons to suspect that a new valuation range may have evolved” for U.S. stocks, Jim Paulsen, Leuthold Group Inc.’s chief investment strategist, wrote in a report Monday. Paulsen highlighted an increase since the 1990s in the S&P 500 Index’s cyclically adjusted price-earnings ratio, based on average annual profit over 10 years. The shift reflects a less cyclical domestic economy, more stable inflation, a more growth-oriented stock market, a wider range of investors and the growing popularity of index funds, he wrote.

Friday, July 21, 2017

Market update: biotechs surge to new highs

Biotechnology stocks ($DJUSBT) are among the best performing stocks since the beginning of June with an approximate 16% gain over the past seven weeks. It's not unusual for biotechs to remain on a tear for an extended period of time so pullbacks should be considered for entry. The rising 20 day EMA is one such level to consider after a bout of selling as the weakness from late June into early July demonstrated.

 The group is in breakout mode again with signs pointing to higher prices ahead. However, the DJUSBT is overbought once again so consider an upcoming pullback to test the rising 20 day EMA, currently at 1876, to be a solid entry level. Price support near 1910 should also encourage buyers.