Bulls Own the Post July 4th Stock Market Action

Bulls Own the Post July 4th Stock Market Action

Bulls Own the Post July 4th Stock Market Action


A casualties of the tariff dust up has been the power of corporate profits to energize stocks. Now another earnings season is here, and we are still hearing from pundits that investors obsessing over trade.

It has been The Story of the equities markets in Y 2018.

US companies are posting the best results in over 10 years, and the S&P 500 has derived almost no real-time benefit.

More frustration played out in Q-2, when the Key index climbed 2.9% even as profits increased 7X as fast.

The market adage is, “Don’t worry about about the past, pay attention to the future.”

Going by the numbers, we expect it will be another big win in the earnings department.

S&P 500 companies are expected to say income rose 20% from a year ago, only slightly less than Q-1, which saw the fastest growth in 7 years. So, we can expect the final numbers to be just as good.

For months Bulls have pinned their hopes on analyst projections that say S&P 500 profits will rise roughly 13% a year through Y 2020. Comments that reinforce those goals have the potential to shake stocks out of their consolidation (neutral) mode.

The Big Q: Are investors really stressing about the Trump Trade Policy?

The Big A: Maybe not.

The S&P 500 has spent the last 2+ months trading sideways as geopolitical tensions rose, a stronger USD hurt companies’ margins and slowing growth in emerging markets undermined the case for a synchronized global recovery.

But, get this, none of that has kept market analysts from increasing their EPS estimates for Q-2 something they normally do not do this close to reporting season.

On average, Wall Street firms have lowered forecasts by around 3% in 3 months heading into the earnings season. It has not translated into equity prices.

This quarter we will be paying close attention to management guidance and commentary for any deterioration in outlooks driven by uncertainty around growth or trade, which could halt the CAPEX recovery and stall confidence.

Thursday, the major US stock market indexes finished at: DJIA +181.92 at 24356.74, NAS Comp +83.75 at 7586.45, S&P 500 +23.39 at 2736.35

Volume: Trade on the NYSE came in at 810-M/shares exchanged

  • NAS Comp +9.9% YTD
  • Russell 2000 +9.2% YTD
  • S&P 500 +2.4% YTD
  • DJIA -1.4% YTD

HefX-LTN’s Major US Stock Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
5 July 2018 QQQ 172.95 Bullish (0.39) 172.45 174.41
5 July 2018 DIA 243.56 Neutral (-0.23) 242.20 245.78
5 July 2018 SPY 273.63 Neutral (0.06) 272.74 277.79

Stay tuned

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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