Stocks ended another busy week of economic and earnings data higher as the bulls showed up and defended important support for the Nasdaq almost everyday last week. The tech-heavy Nasdaq composite successfully tested near-term support (50 DMA line) just about every day last week and the good news is that the bulls showed up and defended that important level. In fact, not only was that level defended but the fact that the Nasdaq rallied is a net positive for the broader indices.
The other scenario would have been to see the Nasdaq break below support and that would have triggered a deeper pullback/correction. Going forward, the next short-term area of support to watch is the 50 DMA line for the major indices then the longer-term 200 DMA line. Keep in mind, the bulk of earnings are behind us now and so far the reaction for the market is “OK” at best. If the market rallies over the next few weeks, that would pave the way for the indices to hit new highs.
Stocks fell hard on Monday, led lower once again by the tech sector. A slew of tech stocks fell hard on Monday causing the Nasdaq composite to test important support (50 DMA line) for the first time since June. Meanwhile, the small-cap Russell 2000 broke below its 50 DMA line which is not the end of the world – just an important area technicians like to see defended. Stocks bounced back on Tuesday after the bulls showed up and defended the 50 DMA line for the tech-heavy Nasdaq composite.
China said it is willing to talk to the US to avoid an all out trade war and that also helped lift the market. After Tuesday’s close, Apple
Thur & Fri Action:
Stocks ended mixed on Thursday as the bulls showed up and defended the 50 DMA line for the Nasdaq. Tesla
Before Friday’s open, the government said US employers added 157,000 jobs in July which missed the Street’s estimate of 190,000. The “good” news was that the past few months’ figures were revised substantially higher and that wage growth met estimates. Separately, China announced tariffs on $60 billion in US goods but the market yawned at the news.
Market Outlook: Bullish Action Continues
The bulls showed up over the past few weeks and defended important support for the major indices. On the downside, the big level of support to watch is the 50 and 200 DMA lines for the major indices and then February’s low. For now, as long as those levels hold, the longer-term uptrend remains intact. Conversely, if those levels break, look out below.
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