Uncategorized, Weekly Update

The Bulls Feel Hopeful

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Published October 18, 219


Recent breakouts in key stocks and sectors have some investors feeling that a bullish breakout is coming, after months of sideways trading.

First, the influential semiconductor sector has shown new upside strength.

Semiconductor sector has shown new upside strength

Joining a move upward by homebuilders.

Move upward by homebuilders

This week saw a breakout in the nation’s largest bank, JP Morgan, even though interest rates are at ultra-low levels. Can banks end their almost two-year long slumber?

JP Morgan breaks out

Large retailers Walmart and Target have been posting new highs.

New highs for WalmartNew highs for Target

All of which, taken together, provide optimism that a breakout above 3000 in the S&P 500 could be imminent.

Our FPResearch sector models are showing green (BUY) across the board. Perhaps those signals, after months of choppy uncertainty, will be able to deliver gains in what is often a seasonally strong period of the year. Upcoming earnings reports will likely hold the key as trade chatter settles down.

Market Update

Stocks continued consolidating just shy of new record highs as quarterly earnings reports began to tumble in. Monday brought a flat day as investors continued contemplating the prior week’s China-U.S. trade talk outcomes, which investors were told resulted in a “Phase One” deal, the details of which have yet to be fully concluded. Good earnings from large banks, particularly Dow Industrial component JP Morgan (JPM), kicked of a strong earnings-focused day Tuesday. The S&P 500 rallied +1% on the good results, joined by a strong report from Johnson&Johnson (JNJ). A mixed set of reports kept stocks in check Wednesday with Bank of America (BAC) also reporting good results while retail sales dipped and home-building permit activity expanded. The net result was a -0.2% slip in stocks. Stocks recovered that ground Thursday as investors weighed results from Netflix (NFLX) and IBM. But the most surprising news was that of a possible Brexit deal in Europe. The agreement between British Prime Minister Johnson and the European Union goes to the British Parliament for consideration. Stocks slid -0.4% Friday following a report of possible misdeeds by Boeing (BA) which dragged their stock down -7%. Earnings from Coca-Cola (KO) came in better than expected, sending that stock higher. A slack report on Chinese economic growth added further downside pressure to the day’s trading.

Stocks posted another slightly positive week with the S&P 500 still wrestling with the 3000 level. For the week, the S&P 500 (SPY) rose +0.58%. The Nasdaq 100 (QQQ) added +0.30%. Small-cap stocks (IWM) rode the strength in financials to a +1.59% gain.

Warm wishes and until next week.