Market Overview

The Bulls May Return—At Least Temporarily

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The stock market was lower last week as the Republican Party failed to come together and pass new healthcare legislation. The S&P 500 was down 1.2 percent on Tuesday, dropping 29 points from its previous close of $2,373 to $2,344. This was its first one percent drop since the election. Investors are showing some angst, as they had relentlessly bid up stocks for months on President Trump’s agenda. Now the fears are other programs will run into the same difficulty.

Meanwhile, financial stocks, which have been market leaders, deteriorated considerably, with the Financial Select Sector SPDR Fund (NYSE: XLF) falling 3.5 percent from $24.40 to $23.54. We also noted, recently that other groups were suffering the same fate; notably material stocks and airlines. The question is; from where will then next market leadership come? We’re starting to doubt there will be enough to move the market to new highs anytime soon.

Stocks look to start the week to start to the downside, as heavy selling came in Sunday night over the Healthcare vote fiasco. Our work shows the stock market will likely gain strength towards the end of the week, as the S&P 500 begins enters a new technical rising phase. Check out our cycle chart which shows our projection, suggestive that the stock market will at least attempt a bounce later in the week. The key is signal will come as it either moves through or fails at short-term resistance.

The US Dollar Index continued its recent downward move last week, moving from 100.3 to 99.77, which pushed up the price of Gold and other commodities. However, that may change this week as our work suggests Dollar will soon make a low.

Watch the askSlim Market Week for a review on what happened in the markets this week and my short-term view for the coming week.

Posted-In: contributorOpinion Markets General

 

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