Monday, February 10, 2014
Financial Markets Recap for Last Week:
· After a string of two consecutive weekly declines, stocks were able to launch a sharp rally on Thursday and Friday leaving the major market indices higher for the week.
· Monday’s decline was the worst one day drop in more than seven months for the S&P 500. On Wednesday, the index hit its lowest point since mid-October before the market was able to rally higher.
· Even though a number of economic reports were released during the week it was the jobless claims number on Thursday along with the mixed employment report on Friday that jolted the stock market higher.
· Earnings and revenue reports from companies that have already reported (well over 1000) have had a solid percentage of reports that have beat estimates. If this trend continues it could be one of the better quarters in the past two and a half years for companies beating quarterly earnings and revenue estimates.
· The yield on the ten year U.S. Treasury note remained just below 2.70%.
· Gold has been working on building a base since November that gold bulls hope will lead to higher prices. The gold bears remain adamant that lower prices are still in the cards.
Financial Markets Health and Outlook:
· Numerous companies are scheduled to report earnings and outlooks this week before the level of reports drops off in the following weeks.
· After the recent decline followed by Thursday and Friday’s up moves, the stock market action is beginning to resemble periodic pullbacks and rallies of last year. The stock market had three similar events in June, August and October of last year in which selling hit stocks in rapid fashion, but support was found at the 150 day moving average line and quickly sent prices higher. Support this time was also found at the 150 day moving average line. That support led to last week’s two day rally.
· The stock market decline as measured by the S&P 500 was just over 6% from the January 15 high to the February 5 low.
· If the stock market is to move higher significant resistance (above current levels) needs to be broken. A successful break of that resistance could move the stock market back toward previous highs. Failure to break through resistance will likely mean a retest of the recent lows. _____________________________________________________________________________________________________
Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results. _____________________________________________________________________________________________________________