The stocks rose on a week while successfully tested their short-term supports. The important events of last week have come with the market’s expectations and thus, a current market review suggests a bullish sentiment in the near future.
- The US economy added 157,000 jobs and the unemployment rate fell to 3.9% from 4.0%.
- The Federal Reserve kept a short-term interest rate unchanged, the inflation keeps going within a target of 2% and monetary policy is slowly being reduced.
- 80% of companies have already released their earnings this season, while most of them have beaten the expectations.
Rising earnings, satisfactory unemployment rate, and comfortable FED view combined to provide a healthy surround for a stock market to rise in trend. The major US indices are moving in the anticipated direction developing new trend channels since the last correction in February.
S&P 500
Standard & Poor’s 500 indexes successfully re-tested a strong support depicted by blue dashed line. It is expected to head towards the channel’s resistance (brown upper line). Not sure if this week or the week after, the price may likely to hit 2875 level which is the historical high reached in January. This will be a crucial point when many profit takers will take the chance. Watch out for increased volatility.
(click on the chart for a larger view)
NASDAQ COMPOSITE
A top performing index had experienced some disappointment when Facebook dropped the biggest drop in history. This led to increasing volatility dragging Nasdaq to 50 SMA, however, even though it is a FANG stock and has a huge exposure with the index, it managed to shake it off and rise back above the 20 EMA. The price is likely going to increase towards the edge of the trend channel.
(click on the chart for a larger view)
DOW JONES INDUSTRIAL AVERAGE
Dow has broken its short-term support (blue dashed line) suggesting the fact that it has been continuously ignoring trend line supports. The index bounces only from the moving averages. It has tested 20 EMA on Thursday and is positioning for the increase at the moment.
(click on the chart for a larger view)
FTSE 100
FTSE has broken one month long trendy walk when it dropped down landing on the support level. The index managed to jump back on Friday. The retail groups unexpectedly surged and thus traders have re-acquired the optimism among UK stocks. FTSE 100 is also expected to go up in near future.
(click on the chart for a larger view)
A current economic environment suggests a bullish trend in the market. Investing in a right mixture of equities should still be the most profitable way in the present conditions of the stock market. A trade war is slowly unfolding, which will cause increased volatility in the future that will have a certain impact on the specific industries. The interest rates are also expected to rise at a moderate tempo and thus, a mixture of stocks and bonds is recommended.
Stay disciplined and focused on the big picture!
This post is only an opinion of a contributor. It serves for informative and educational purposes only. The article is not an investment recommendation. Trading any financial instrument involves risk and thus, you should consult every financial decision with your financial advisor. Read our full disclaimer!
