It was another record setting week on Wall Street as the S&P 500 topped 2,900 and the Nasdaq topped 8,000. In the short-term, the market is very extended and way overdue to pull back. There’s an old adage on Wall Street that says, “Stocks take the stairs up and the elevator down.” Which means, on the way up, stocks rally, pause, rally again, pause, etc. On the way down, they just fall and fall hard. Clearly, the market has been ripping higher over the past few weeks and due to pull back. It would be very healthy to see the market pull back into its 50 DMA line before rallying again. Additionally, the market is clearly on the way up and entering what could easily become a climax run similar to what we saw in the late 1920’s and the late 1990’s. If that happens, we will rally sharply from here. Keep in mind, eventually, the market will top out, and then we will enter a new bear market. Stay tuned, as it is never a dull moment on Wall Street.
Monday-Wednesday Action:
Stocks rallied nicely on Monday after the US and Mexico reached a trade deal, paving the way to replace NAFTA. The major indices broke out to fresh new record highs which is bullish for this ongoing bull market. The tech heavy Nasdaq composite broke above 8,000 which is a new landmark. Stocks opened higher on Tuesday, briefly dipped into negative territory then rallied back and closed with modest gains. The small-cap Russell 2000 ended slightly lower on the day. The big news came after Treasury Secretary Mnuchin said China was not manipulating their currency. The benchmark S&P 500 briefly topped 2,900 for the first time ever. Once again, stocks rallied on Wednesday after President Trump said he wants Canada to get in on the new trade deal and the latest reading on GDP topped estimates. Before the open, the government said GDP grew by 4.2%, topping estimates for 4.1%. This is a very strong number and bodes well for both Main Street and Wall Street.
THURSDAY & FRIDAY ACTION:
