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July 08, 2017

Stock Market Correction Completed!

Looking at the data presented for the past couple of weeks, it appears that the stock market correction has happened – is now over – and the rally is set to continue, with stocks set to roar higher.

The past week saw the major indexes finally make weekly gains after an encouraging June jobs report where the Labor Department said 222,000 jobs were created in the U.S. These positive gains were also boosted by a rebound in tech stocks which helped off-set falling oil prices.

For the week, the Dow Jones Industrial Average (DJIA - 21,414.34) rose 0.4%.

The S&P 500 Index (SPX - 2,425.18) ended the week up 0.1%, whilst the Nasdaq Composite (COMP - 6,153.08) bounced back to rise 0.2%.

Although the jobs report was extremely positive, wage growth – an indicator measuring inflation -- was only up 0.2 percent which somewhat tempered the stock market reaction. This wage growth data is important in determining the future decision of the Federal Reserve in raising interest rates once more this year.

Now, heading into the new week, watch for releases of some major quarterly reports – where Citigroup, Wells Fargo and JPMorgan Chase are all scheduled to report second-quarter results.

JPMorgan Chase & Co. (NYSE:JPM) should report a solid earnings report on Friday. Citigroup Inc. (NYSE:C), having shone in the Fed’s recent stress and capital tests, is also capable of presenting itself well. Wells Fargo & Co. (NYSE:WFC), with its recent scandals, is a sideline case.

Currently, earnings are expected to grow 6.2 percent; however, this figure seems to be understated and should be closer to 10 percent – and tech earnings may come to the fore again as the fundamentals are still apparent. One area to consider on Monday is “cybersecurity”, a fast growing business; by 2021, it is estimated that the market size will reach $202 billion, a 65% increase from 2016.

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Best of Trading,
Ian Harvey
Director of Stock Options Made Easy

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