Street Analysts See Strong Rally Into Year’s End

Street Analysts See Strong Rally Into Year’s End

Street Analysts See Strong Rally Into Year’s End

$DIA, $SPY, $QQQ, $RUTX, $VXX

  • Stocks bounced and held after pulling back Wednesday and Thursday
  • The CBOE Volatility Index (VIX) fell 14.3% Friday, retreating from its highest marks since February.

Friday, Morgan Stanley strategists, whose warning about a “rolling Bear market” seemed to pay off this week after high growth stocks led a slide in equities. While under-performance in growth shares may continue, stocks may rally before year-end amid cheaper valuations, a supportive earnings season and more favorable seasonality, analysts led by Andrew Sheets wrote in a note.

“There is a plausible ‘year-end rally’ story here,” though the bank is not positioning for it just yet, they said. “Earnings season may give some respite from the very ‘macro’ story-lines of Fed policy, trade tensions and poor market liquidity.”

US saw the 1st pullback week since March as rising rates and worries over trade and the economy converged, driving a sudden unwinding in some of Wall Street’s most crowded trades.

This year is on track to record the highest frequency of unusually large moves since the global financial crisis, according to Morgan Stanley.

The Fed is not likely to come to the rescue for now, the bank said, even though President Trump is very critical of Chairman Powell and the FOMC, saying rates are moving up “too fast”.

Pressure on profit margins is building, but this may not show up yet in the Q-3 numbers. Morgan Stanley remains long on value Vs growth, and long on Europe Vs emerging-market equities.

Friday, the major US stock market indexes finished at: DJIA +287.16 at 25339.99, NAS Comp +167.83 at 7497.08, S&P 500 +38.76 at 2766.97

Volume: Trade on the NYSE came in at 961-M/shares exchanged.

  • NAS Comp +8.6% YTD
  • S&P 500 +3.5% YTD
  • DJIA +2.5% YTD
  • Russell 2000 +0.7% YTD

HeffX-LTN’s US Major Stock Market Indexes Technical Analysis for Week Ended 12 October 2018

Date Symbol Price Technical Analysis Support Resistance
12 October 2018 QQQ 173.71 Bearish (-0.28) 169.68 174.85
12 October 2018 DIA 252.21 Neutral (0.08) 251.60 253.61
12 October 2018 SPY 275.76 Bearish (-0.37) 273.90 279.26

Have a terrific weekend

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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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