what’s Gonna Pop the Market Bubble?

Following market movement this past week was backbreaking work, though come the end of the week, it can been said that the market got a helpful boost from support levels, succeeding, if only half-heartedly, in bouncing back from oversold levels. For the second Friday in a row, we saw a rally in the last hour of trading, which slightly offset market stress factors. The disappointment though, was rooted in the fact that bulls hadn’t succeeded in executing a stronger rebound from the market’s oversold levels.

The bull rally celebrated its 8th anniversary this past Thursday, though the celebration was reserved. When considering that stock valuations have becoming increasingly more inflated with political tensions on the rise, investors have little choice but to hold their breaths and ask the inevitable question, “Where’s the real correction?” In other words, “Will the needed price correction be forthcoming this year, or can the market push off the inevitable until 2018 – or even 2019?!” Another concern is whether the Trump administration will manage to translate its bountiful promises into deed or whether investors’ inflated expectations will just prove themselves a lot of hot air.

This is the time at which every investor needs to remember that boosting the value of one’s stock portfolio is one thing, but preserving capital is equally as important.

The stock market last week recorded only its third week of losses this year, the S&P 500 falling lightly by 0.31% on the week. The gains from the beginning of the quarter still come to over 6%. Crude dominated headlines last week, plummeting nearly 9%, the commodity’s losses on the year growing to over 12%. Crude nosedived beneath the psychologically key $50 barrel level, closing the week at $48.49, Wednesday’s weekly reserve report designated as the source of blame, having registered a particularly negative reading.

At the same time, investors on Friday drew encouragement from February’s employment report which featured 235 thousand new U.S. hires, with the unemployment rate dropping to 4.7%. Not surprisingly, the Trump administration was quick to give itself credit for the numbers despite having inherited the positive job market momentum from its predecessor, the Obama administration. To spice things up, during the course of his election campaign, Trump had proclaimed that the U.S. Bureau of Labor Statistics employment data was “phony” and unreliable.

Wall Street, though, is less concerned about political consistency, but is rather more results-focused. The newest employment figures were surprisingly strong, suppressing any fear that the market is headed towards a recession. In tandem, in the event the tax cut doesn’t surface this year, it could pop the bubble like an overinflated balloon. Jamie Dimon, CEO of J.P. Morgan, and a vocal Trump supporter, has already remarked that he believes the tax cut won’t happen until next year.

Another potential price correction catalyst is the congressional effort to annul and replace the universal federal health insurance program now in place, “Obamacare.” Republicans have put forth a new program that was rejected on the political spectrum far and wide. Most political commentators wrote off the program before it was even laid out. That being the case, it could be said that continued political wrangling is likely to delay tax reform and other market friendly promises that were part and parcel of the Trump campaign, the likes of his infrastructure spending initiative.

Over the last 8 years, the big irony in the stock market was that it’s been trading up despite the very mediocre and restrained recovery. The recovery from the Great Recession that struck in the years 2008-9, push come to shove, was the slowest economic recovery since 1930. Even with that notwithstanding, were we to look at movement, it’s apparent that the market is exceptionally optimistic – and that’s because of one simple reason, a very low interest rate and a Fed that’s been supportive of the market.

The central bank, indeed, will command most of the attention this week. On the background of the most recent and strong employment report, the Fed is expected to announce a rate hike this coming week on Wednesday, March 15th. All-in-all, we can say that the Fed’s done a horrible job with its economic forecasts, time in and time out – and for quite some time! They were off by a long shot when it came to projecting the impending Great Recession in 2008, and ever since, they’ve consistently erred with their forecasts. As of now, the Fed has adopted the idea of faster-paced growth, and it seems like market players are agreeing with that tack. That’s the reason for the lack of any real, palpable fear regarding the approaching projected hike. In the event we continue to see a certain measure of concern about the economic growth pace and the Fed is stuck on tightening monetary policy, that could cause significant problems for our market’s ongoing uptrend.

On a technical basis, after a number of days of declines, indexes are at oversold levels and are ready for a rebound. It’s always important to remember that markets that are strong, as has been the case with our market ever since 2017 kicked off, don’t splinter at their forks in just a single day! It’s reasonable to assume that solid support will surface; there are players who are ready to buy in and as soon as a correction materializes. What’s driving them? Optimism about the market’s incredible success and consistency ever since Election Day – and now they think the market will be lifted even higher! And until now, every time they voted with their wallets, the market’s rewarded them with new highs within a very short amount of time.

Among the companies reporting this week, we’ll find: DG, ORCL, GES, and TIF. The earnings report of the database giant, Oracle (ORCL), will be especially important for investors, especially given the fact that they’re looking for hints as to the general robustness of the tech sector. Oracle’s strong growth cloud services, couple with the company’s strong balance sheet and improved profit margins have translated into strong stock movement, its stock rising 11.4% year to date. Investors will carefully assess the firm’s operating results in order to see whether the company’s cloud service growth will remain tenable into the future.

This week’s economic figures will include, among others, the results of the Fed’s 2-day meeting, which starts off on Tuesday. On Wednesday, be primed for the Consumer Price Index, retail chain sales and the real estate index. On Thursday, it’s housing starts and weekly unemployment claims. Then on Friday, be on the lookout for the Consumer Confidence Index, the Leading Indicators Index and the active crude rig report.

IndexLastDaily changeR2R1PPS1S2
DJX20,9030.21%Up     
SPX2,3730.33%Up238.86238.28237.43236.85236.00
Nasdaq5,8620.39%Up132.05131.72131.27130.94130.49

Weekly Summary: The Dow Jones recorded a slight drop of 0.36%, joined by the S&P 500 which fell 0.31%. The NASDAQ succeeded in salvaging light gains of 0.28%. The Russell 2000 fell 1.94%, crude seeing the bottom taken out from under it, plunging 8.86%.

Have a great trading week!

Economic Calendar

 

DAYTIME (EST)EventForecastImpact
Tuesday8:30PPI0.1%High
Wednesday8:30CPI0.1%High
Wednesday8:30Retail Sales0.1%High
Wednesday8:30Empire Manufacturing14.5Medium
Wednesday10:00Business Inventories0.3%Medium
Wednesday10:00NAHB Housing Market Index65Medium
Wednesday15:30Crude InventoriesLow
Wednesday14:00FOMC Rate Decision0.875%High
Thursday8:30Housing Starts1260KHigh
Thursday8:30Initial Claims242KHigh
Thursday8:30Philadelphia Fed25.0Medium
Thursday10:00
JOLTS – Job Openings
Medium
Friday9:15Industrial Production0.2%Medium
Friday10:00Leading Indicators0.5%Medium
Friday10:00Mich Sentiment96.8High


Earning Calendar

 

SymbolCompanyAM/PMDay
YYYY Inc.AMTuesday
ORCLOracle CorporationPMTuesday
FTITechnipFMC plcPMTuesday
JBLJabil Circuit, Inc.PMWednesday
WSMWilliams-Sonoma, Inc.PMWednesday
DGDollar General CorporationAMThursday
ADBEAdobe Systems IncorporatedPMThursday
ALRAlere Inc.AMFriday
TIFTiffany & Co.AMFriday

  

13.3.2017

Today’s Picks – Day Trading!

SymbolBreakoutBreakdownMomentumMomentum
BANC$21.15 CMCMPAY
SHOP$64.36 RHWTW
ZBH$120.41 INCYTD
ADP$105.00   
IGT $22.95  
ENDP $10.39  
     
     
     
     
     
     
     

 

New York Strategy Swing

#DateStockLong\

Short

StatuesData CloseProfit\

Loss

11.2.2017AKAOLongClose16.2.2017+11.29%
22.2.2017DATALongClose6.2.2017+13.09%
37.2.2017GNCShortClose9.2.2017+3.26%
49.2.2017PGLongClose13.2.2017-0.63%
59.2.2017ATILongClose14.2.2017+2.42%
613.2.2017STXLongClose16.2.2017+1.26%
714.2.2017CXWLongClose23.2.2017+4.53%
815.2.2017ZENLongClose23.2.2017+1.60%
921.2.2017AALongClose23.2.2017-1.17%
1022.2.2017SCORShortClose24.2.2017+0.78%
1123.2.2017NTAPLongClose8.3.2017+2.95%
1227.2.2017DATALongClose1.3.2017-2.14%
136.3.2017LBTYKLongOpen +2.06%
148.3.2017FTNTLongClose9.3.2017+0.37%
15      
16      

 Today’s Picks – Swing “New-York Strategy

No.1 –    ARNC

Company Name
Arconic 
Entry Point27
Stop Area26.20
1st Target27.70
Swing Target30.69
Avg. Volume5.44M
SectorBasic Materials | Aluminum
Earning Date
Risk RateNormal
Risk\Reward Ratio4.61:1