Last week was a bullish week on Wall Street as investors sent stocks higher after the "data" pretty much took a June rate hike off the table. The Fed believes that the economic weakness was 'transitory' in Q1 2015 which is their way of saying they believe the economy will improve in the second half of the year. April's jobs report was slightly higher than expected which helped support that thesis. History shows us that some of the market's strongest performers occur from big gaps up on earnings and some of the weakest stocks continue falling after gapping down after reporting numbers. That is why we want to separate the strong names from the weak names each earnings season. So far, the big winners from earnings season include: Amazon.com (AMZN), Netflix (NFLX), Hasbro (HAS), Domino’s Pizza (DPZ), Skechers (SKX), Dunkin (Donuts) Brands Group (DNKN), Microsoft Corp (MSFT), O’Reilly Automotive (ORLY), and YUM Brands (YUM), Skywest (SKYW), Web.com (WWWW), Equinix (EQIX), Styngenta (SYT), Nutri System (NTRI), Brink's Co (BCO), Teradyne Inc (TER), Skyworks Solutions (SWKS), GoPro (GPRO), Estee Lauder (EL), Abiomed Inc (ABMD), Golar LNG ($GLNR), Energizer Holdings (ENR), RetailMeNot, Inc (SALE), Herbalife (HLF), BlueBird Bio (BLUE), HubSpot Inc ($HUBS), Alibaba Group (BABA), Qorvo Inc ($QRVO), Visteon Copr (VC), Norwegian Cruise Line Holdings (NCLH), Activision Blizzard Inc (ATVI), Stamps.com (STMP), Imperva Inc (IMPV), Tableau Systems (DATA), AOL Inc (AOL), Universal Display Corp (OLED), and CyberArk Software (CYBR).
On the downside: Monster Beverage Corp (MNST), Cerner Corp (CERN), Sprouts Farmers Market (SFM), Priceline.com (PCLN), Whole Foods Market (WFM), Keurig Green Mountain (GMCR), Kate Spade ($KATE), Lannett Co (LCI), Nu Skin (NUS), Terra Nitrogen (TNH), Tumi Holdings (TUMI), Noodles & Company (NDLS), Qualys (QLYS), Groupon Inc (GRPN), News Corporation (NWSA), Vitamin Shoppe Inc, (VSI), Fossil Inc (FOSL), Frontier Communication (FTR), TriNet Group ($TNET), Zulily Inc (ZU), Weight Watchers (WTW), Walter Energy Inc. (WLT), Skullcandy (SKUL) Twitter (TWTR), Yelp (YELP), LinkedIn (LNKD), Constant Contact (CTCT), Accuray (ARAY), Cooper Tire & Rubber (CTB), Abaxis (ABAX), Texas Instruments (TXN), Buffalo Wild Wings (BWLD), Baidu Inc. (BIDU), Stratasys (SSYS), Harman (HAR), Nokia (NOK), Travelers (TRV), 3M (MMM), Chipotle (CMG), Pulte Group ($PHM), Biogen Inc (BIIB), Generac Holdings (GNRC), First Solar (FSLR), and American Express (AXP), just to name a few.
Monday-Wednesday's Action: Stocks Start Off Weak But Close Week Higher
U.S. stocks opened higher on Monday as investors continued to digest the latest round of economic and earnings data. Overseas, Japan's Nikkei and UK's FTSE stock markets were closed for holidays. Economic data was light - U.S. factory orders rose by 2.1% in March, matching estimates. Stocks fell on Tuesday after the latest round of economic data suggested Q1 GDP might actually have been negative. The first reading of Q1 GDP was up 0.2% but the report is subject to a few more revisions before the final number is released. The US dollar fell hard on Tuesdayand Crude Oil topped $60/barrel, hitting a fresh high for the year after The U.S. trade deficit came in at $51.4 billion, topping estimates and was the largest reading since 2008 as imports surged. Imports surged largely because the US dollar has increased sharply in recent months. A separate report showed that April's non-manufacturing ISM jumped to a five-month high, coming in at 57.8, beating estimates for 56.3 and March's reading of 56.5. Overseas, the drama involving the Grexit (Greece exiting the Eurozone) spiked after the Financial Times reported that the International Monetary Fund may cut a funding lifeline to Greece unless its European partners accept more debt writedowns. Finally, the Australian Central Bank cut interest rates for the second time this year to help spur their economy.
Stocks fell hard on Wednesday after Janet Yellen said, "equity valuations are generally quite high." Later in the day, Atlanta Federal Reserve bank president Dennis Lockhart said he expects economic growth to pick up but needs more evidence, particularly from consumer spending. Before the open, ADP, the country's largest private payrolls company, said private employers added 169k new jobs in April, missing estimates for a gain of 205k. A separate report showed that u nit labor costs for the first quarter jumped by 5% but productivity fell -1.9%, slightly higher than the Street's estimate for -1.8%.
Thursday-Friday’s Action: April Jobs Report Hits The Mark
Stocks rallied on Thursday after bonds snapped a long losing streak and rallied as rates fell after a big rally. The US dollar rallied as well which sent Crude oil, gold and other commodities lower. Economic data was relatively quiet as investors waited for Friday's jobs report. Weekly jobless claims rose by 3k to a seasonally adjusted 265k, which hovered near a 15-year low. Stocks soared on Friday after the government said U.S. employers added 223k new jobs in April, beating estimates for a 220k while the unemployment rate slid to 5.4% (the lowest since before the financial crisis). This report was in-line with the Fed's view and investors sent stocks higher after the number was released.
Market Outlook: The Central Bank Put Is Alive And Well
Remember, in bull markets surprises happen to the upside. This has been our primary thesis since the end of 2012. We would be remiss not to note that this very strong bull market is aging (celebrated its 6th anniversary in March 2015) and the last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007). To be clear, the central bank put is very strong and until material damage occurs, the stock market deserves the longer-term bullish benefit of the doubt. As always, keep your losses small and never argue with the tape. If you want exact entry and exit points in leading stocks, get a professional watchlist with annotated charts, and always know the strongest stocks of the year, consider joining FindLeadingStocks.com.