Next week we will have earnings report from the mega techs and of course the Presidential election is just around the corner. The reaction to the earnings report could be muted since the election outcome is so close by. The mega techs will continue to grow, but the intense scrutiny from Congress could create short term pressure.
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,
Last week all three indices had a mild selloff, which touched the previous breakout line but quickly closed above the breakout line. Despite the scary new development about the pending trade war phase one deal, the price action has been resilient. It’s impossible to predict what the December 15th White House tariff decision would be, but the price action predicts that the most likely outcome is no additional tariff to be put on December 15th, everyone will have a merry Christmas.
On the last day of July the Fed announced an interest rate cut by 25 basis points citing the reasons of “implications of global developments for the economic outlook as well as muted inflation pressures”. Less than 24 hours later, President Trump announced 10% tariffs against Chinese imports of $300 billion.
The S&P 500 cash index closed above the highly watched 200-day moving average for the last four trading days. The equities market is acting everything is fine, the FED is backing off from tight money policy, the trade war is going to be resolved and the growth engine will be back on again.
