Stock Market Expectations for
The Week Ahead!

It’s possible the stock market is not ‘late cycle’
but rather just recharging
!

What trades will Stock Options Made Easy consider for the week ahead!

by Ian Harvey
December 08, 2019

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Past Week…..

Stock market expectations were thrown into chaos as the first week of December went for a wild ride on Wall Street, with the Dow making triple-digit moves on four separate occasions.

Ahead of the December 15 deadline for the U.S. to add tariffs on more Chinese goods, markets reacted violently in both directions.

Stocks took a hit early in the week after President Donald Trump suggested he may wait until after the 2020 election to pursue a trade deal. But rising oil prices, upbeat trade comments from China, and a blowout November jobs report turned things around later in the week.

The Dow Jones Industrial Average (DJI) was down by 0.1% for the week.

The S&P 500 Index (SPX) scored a win ending the week up 0.1%.

And the Nasdaq Composite (IXIC) was down at 0.1% for the week.

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Stock Market Expectations for the Week Ahead…..

Stock market expectations will be controlled by the reactions of traders in the lead up to the Dec. 15 deadline for tariffs.

As of Friday, the White House did not appear any closer to striking a deal with China, though officials say talks are going fine. Back in August, Trump said if there is no deal, Dec. 15 is the date for a new wave of tariffs on $156 billion in Chinese goods, including cell phones, toys and lap top computers.

China removed some tariffs from U.S. agricultural products Friday, and administration officials have been talking about discussions going fine.

Stock market expectations will also be effected by the Fed moves on Wednesday. At the moment it appears that the Fed has moved to the sidelines saying it is monitoring economic data before deciding its next move. Friday’s strong November jobs report, with 266,000 jobs added, reinforces the Fed’s decision to move to neutral for now.

Stock market expectations for earnings still continue to need attention by traders; these include reports from AutoZone (AZO), Five Below (FIVE), Salesforce.com and RH (RH).

Stock Market Calendar for the Week Ahead.....

Monday

  • no economic reports

Tuesday

  • FOMC begins two-day meeting
  • 6:00 a.m. NFIB
  • 8:30 am. Productivity and costs

Wednesday

  • 8:30 a.m. CPI
  • 10:00 a.m. QSS
  • 2:00 p.m. Federal budget
  • 2:00 p.m. FOMC statement
  • 2:30 p.m. Fed Chairman Jerome Powell briefs media

Thursday

  • 8:30 a.m. Initial claims
  • 8:30 a.m. PPI

Friday

  • 8:30 a.m. Retail sales
  • 8:30 a.m. Import prices
  • 10:00 a.m. Business inventories

 

Stock Market Expectations for Earnings

Monday

  • Thor Industries, MongoDB, Chewy, Stitch Fix

Tuesday

  • AutoZone, Ollie’s Bargain Outlet

Wednesday

  • lululemon

Thursday

  • Costco, Adobe, Broadcom, Ciena, Oracle
Besides some of those companies mentioned above, which will be part of our considerations for members of “Earnings Predictions;” there are several that will be recommended to other members - of “Armchair Traders,”  “Cut-to-the-Chase” and “Mentorship.”

Find out our "Earnings Predictions" thoughts here!

Action to Take Based on the Stock Market Expectations…..

Stock market expectations see the market on a “re-charge;” even though the economic expansion surpasses a decade to become the longest ever and the S&P 500 has delivered a compounded return of nearly 18% a year since March 2009; the market may not be really in a “late cycle.” In other words, “a glass-above-half-full” scenario - if the market isn’t detecting signs of a recession, it tends to find a way to stay supported or work its way higher.

Several signals suggest that there is a re-charging occurring.....

  • Friday’s unexpectedly strong November job gain above 200,000 suggests that we are not at “full employment” even this deep into an expansion.
  • The market itself has stalled and retrenched several times along the way, keeping risk appetites tethered and purging or preventing excesses.
  • Corporate-credit conditions are sturdy.
  • Consumers are in good shape as households have simply not loaded up on debt this cycle.
  • The housing market, a drag on growth for years after the crash, has now perked up and is feeding off supply-demand dynamics that are more typical of an early-cycle environment.

Moving into 2020 there may be a need to consider international stocks, as they could outperform the U.S. market, something that has only happened twice since 2010. And as we know, U.S. equities have been the best place to invest during the past 10 years, but that dominance could shift in 2020. This move may be attributed to attractive valuations and a potential trough in global economic growth as world central banks take up more stimulative measures.

So.....

Bear-in-mind, that stocks could fall as much as 10% if the United States and China are unable to reach a trade deal by a Dec. 15 tariff deadline, but consider health-care stocks, which  are poised to rally regardless of what happens.

To stay up-with stock market expectations, get more overall investment insights, earnings predictions for the week ahead, and profitable trades provided to members in real time, join us at Stock Options Made Easy today!


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


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