Stocks attempt to maintain bullish momentum

Stocks cautiously attempted to maintain recent bullish momentum on Wednesday as corporate earnings early in the reporting season continued to show mostly better-than-expected results.

Stocks cautiously attempted to maintain recent bullish momentum on Wednesday as corporate earnings early in the reporting season continued to show mostly better-than-expected results. While geopolitical risks remain, market perceptions of the severity of those risks have tentatively declined. Trade war tensions between the US and China have quieted down, the political fallout between the US and Russia over recent strikes on Syria has been relatively minimal, and North Korea has begun to show a strong willingness to negotiate with South Korea, China and the U.S. On Wednesday, reports surfaced that the U.S. is looking to reach an agreement on NAFTA re-negotiations with Canada and Mexico within three weeks. Also on Wednesday, a key Federal Reserve report indicated continuing US economic growth that may already have begun to benefit from December’s US tax reform legislation, even despite stated concerns about President Trump’s intensifying tariff policies. Partly as a result of all these developments, somewhat calmer markets have tentatively begun to prevail, lifting some pressure off equities and subduing market volatility for the time being.

From a technical perspective, while significant damage was done to the S&P 500 during the early-February correction and then the subsequent plunge in mid-to-late March, the benchmark stock index has generally been on a sharp rally since early April. After both the February and March drops, the key 200-day moving average notably served as major support, helping to fuel strong rebounds in both cases. On Tuesday, the S&P 500 extended its current rebound by gapping above its 50-day moving average and further rising above the key 2700 level. Choppy price action on Wednesday tentatively extended the rally slightly further before pulling back by market close. As it currently stands, any further extension of the stock rally could meet some resistance around a key downtrend line that extends back to the January 2872 high and connects the mid-March peak at 2801. Any sustained breakout above that line, currently situated around the 2735 area, would be a significantly bullish signal that could indicate a subsequent retest of the mid-March 2800-area highs.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account