This Week In Stocks: Choppy Action

Daily chart for the S&P 500 (SPX) on the thinkorswim platform
The stock market reached multiple new all-time highs last week, as the S&P 500 (SPX) closed 13 points higher at 2472, an increase of 0.5%.
On Monday, Congressional Republicans failed to repeal Obama’s healthcare program, which pushed the futures down in the overnight session. On Tuesday, Netflix NFLX missed Wall Street’s expectations for their earnings results, but the stock rose on news of international subscriber growth. According to Benzinga, its Price to Earnings ratio is now 211, reflecting strong optimism about the company’s future.
On Thursday, the European Central Bank left their rates unchanged and said they were ready to continue quantitative easing if conditions warrant. This led to early wide swings in the bond market with an overall move higher for the week.
In the coming week, earnings season will come into full swing and will include a full roster of companies. The two most closely watched names are Alphabet GOOGL on Monday and Amazon AMZN on Thursday, both after the close.
Also, the SPX will enter a new short-term market cycle, as shown by the blue dotted half circles at the bottom of the accompanying chart. While there may be some downside movement early in the week, we expect it to continue to chop around. The SPX will likely make a stronger move to the downside later in the week or early in the following week as intermediate downward forces take hold and risks of a correction grow. Our expectation is that the first 5% correction in a year may be just ahead.
Watch the askSlim Market Week for more a more detailed look at our short-term view.
Video link: https://youtu.be/Sxm1y6d6JJE