A stock market keeps consolidating. The major US indexes are re-testing February lows trying to swallow recent news of trade wars, Facebook scandal or Tesla decline. A current market review does not differ much from the previous one – we are not facing any systematic risk – we are experiencing a buying opportunity in the healthy stocks.
The fundamental elements like earnings have been supporting an economic growth well so far and soon we will find out even more because next earnings season is approaching. The year 2018 will be accompanied by corporate tax cuts which will provide even stronger cash flows and a possibility to drag some cash back from overseas.
All of the US indices are sitting around their long-term support levels – 200 SMA! When you look at recent 2 years, markets have always bounced from this level. This is how algorithmic trading robots function. It is very likely that it will happen again this week if the levels are held. Furthermore, the general trend also supports the view.
DOW JONES INDUSTRIAL AVERAGE
UK’s index looks rather like the bear market at the moment. It will need more confidence before it starts to draw an optimistic trend.