Since the NASDAQ found the bottom around 10500 level, it bounced anemically last week. All three indices managed to produce a weekly gain last week. But the cycle indicators are not presenting a picture of a finished bottom, meaning the bounce from the support level is a mechanism of trading, rather than investors initiating new positions.
The trade war phase one deal was done, and the UK election was also done with precise victory for the Brexit party. It seems like the coast is clear for the stocks market to march higher. In our previous blog we have said that the present rally will last at least until mid January 2020. Based on the price action from last week,
Finally the index went points close to the 200-day moving average, but it had a very mild reaction, there is no forceful selling, period. The mood of the streets is “under invested”, meaning the majority missed the bulk of the rally, either the longs got out too soon, or the bears shorted too soon.
The financials were the first group to report earnings, then it followed by the semiconductor stocks. The market responded positively to both groups, except for some losers due to their company specific issues in each group. The financials and semiconductors were the laggers since early 2018, now they have turned into market leaders.
We just witnessed a furious bear market rally in 16 trading days. The DOW rallied 14% in 16 trading days but it failed to produce a weekly reversal signal in the maximum allowed time length of 3 weeks against the December low. The weekly reversal signal is needed to enable the market to continue to move up from here.
