Goldilocks Economy Keeps the Bull Market Rolling
Despite the set-backs encountered by the Trump Administration the stock market keeps moving ahead. This became apparent with the GOP failure to reform healthcare legislation last Friday, and the subsequent pullback by the S&P 500 slightly below the resistance line of 2,325 on Monday (as discussed yesterday), and then the bounce experienced shortly after.
So the Goldilocks Effect, encompassing the economy, interest rates and earnings, which are all in good condition (and should remain that way for the remainder of the year), has managed to overcome the gridlock coming out of the Washington gridlock.
Therefore, the response of stock market participants becomes apparent with the focus pointed in a meaningful direction – the Goldilocks economy, not based on actions of the Trump administration – healthcare legislation, taxes, regulations, spending on infrastructure, etc...
Best of Trading,
Director of Stock Options Made Easy
The Dow to Surge -- Be Prepared
The Dow Jones Industrial Average (DJIA) finished in the red for an eighth straight trading day -- its longest losing streak since August 2011 – but historically, the situation could prove beneficial to the alert trader.
The major cause of this continued downward momentum seems to stem from President Donald Trump's legislative disaster Friday, after the healthcare bill to repeal and replace Obamacare was pulled due to a gridlock, with telecom and financial stocks bearing the brunt of the selling pressure.
However, relief could be on the horizon, as based on history the DJIA has historically outperformed following a seven-session losing streak -- with the most notable returns occurring at the three-month mark. The Dow, when this occurred, has averaged a post-streak three-month gain of 2.7% and has seen an increase in volatility over the near term.
Buy the Dip
March 22, 2017
The Dow Jones Industrial Average (DJIA) dropped to triple digits for its worst daily percentage loss since Sept. 13, amid a disastrous day for bank stocks. One of the worst hit areas was financial shares which slid on worries that President Donald Trump's tax reform and deregulation efforts will be delayed.
Also, the Nasdaq Composite (COMP) was even worse off than the Dow -- falling the most since Sept. 9, despite touching a record intraday high of 5,928.06 in early trading.
As well, the Russell 2000 Index (RUT) dropped into negative year-to-date territory, and the S&P 500 Index (SPX) logged its biggest loss since Oct. 11.
And adding fuel to the pull-back, Fed officials attracted attention, with Kansas City Fed President Esther George saying she currently sees an opportunity to remove some stimulus measures.
stocks have taken a hit with a loss of 1.5% on Monday -- down 5.2% on the year -- one of the worst performing groups.