Home 2020 Commentary: Paul Ebeing on Wall Street, New Highs in View

Commentary: Paul Ebeing on Wall Street, New Highs in View


#WallStreet #PaulEbeling #BigTech #earnings #NFPs #employment #interest #Bulls #money #FAANGs


Last Week’s Action

As expected, the FAANGs: Facebook, Apple, Amazon, Netflix and Google stepped up as the NAS Comp leaders paused to refresh, overall the action is good.

Friday’s jobs report were as President Trump said they would be marking the 3rd largest monthly NFPs in history.

Stocks started in the Green and finished in the Green.

Technical Analysis

NASDAQAfter its 8th-session Bull run, Friday, the NAS paused but the bids held into the close. 

The FAANGs moved, they rallied the NAS on their own, even if the other leaders tested. That is is what happened.

S&P 500: The S&P 500 cracked the same January 2020 high that it hit just before its February all-time high. It is seeing that all-time high, and all of the Key indicators are Very Bullish.

What is coming…

The best start to an August for the S&P 500 since Y 2009 may well get even better, beginning this week.

The stock market’s underloved sectors are on the verge of a breakout as C-19 coronavirus cases are peaking, setting up a rebound for parts of the market hammered since the start of Y 2020.

C-19 coronavirus cases have topped 19-M globally and are 5-M in the US, as of Friday they are declining on a 7-day rolling basis to a decrease of 15,492. There is No 2nd Wave.

Expending the fall off trend to continue the stock market will start to drive higher as early as this week, with the possibility of a 20-25% rally for equity markets over the course of the next 3 wks.

The DJIA and NAS Comp marked their best starts to an August, i.e. the 1st 5 trading sessions since Y 1996, while the S&P 500 index had its best August start since Y 2009, according to Dow Jones Market Data.

The stocks worst hit from the social-distancing protocols put in place to mitigate the spread of the disease derived from the C-19 coronavirus chaos include lots of companies, including airlines, apparel retail, hotels and household appliances.

This group makes up about 25% of the overall market in terms of market cap, compared with 75% of market value of the mega-cap tech-related companies that gained market value, at the expense of other broad-market issues.

Many professionals have already made the call that a rotation out of tech and into other areas of the market, such as industrials, consumer discretionary, financials, and energy, will happen soon.

Notably, signs that a rotation may already be at hand were present in Friday’s trade with the small-capitalization Russell 2000 index +1.59%, a group of stocks more sensitive to the vagaries of the economy boasting a weekly gainer of more than 5%.

Plus, the Dow Jones Transportation Average DJT, which tracks the performance of 20 large US airlines, truckers, railroads and shipper–was also up more than 5% on the week.

Since Y 1920, every stock market decline of 35% saw a symmetric price recovery.  Meaning the faster the markets fall, the faster the markets recover, and the ratio is 2.5X.  Given the speed of the Y 2020 fall, this tells me that the major US indexes will mark new highs before the end of the Summer.

Have a healthy week, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.