$DIA, $SPY, $QQQ, $RUTX, $VXX
FLASH: US stocks saw a Key reversal, triggered by positive-sounding trade rhetoric and short-covering action
Early Friday, the trade uncertainty prompted broad-based selling in equities and general efforts to de-risk.
The S&P 500 also fell below its 50-Day MA (2862), Key support. Selling abated soon after the conclusion of the current round of trade negotiations in Washington.
Treasury Secretary Steven Mnuchin described the talks as “constructive,” and China’s Vice Premier Liu He said they went “fairly well.” And the positive comments triggered a Key reversal and short covering in the indexes.
The US is also reportedly giving China up to 4 more weeks to reach a deal, which helped provide some clarity on a timeline and improve optimism about the prospects for a deal.
President Trump said that talks will continue in the future, and that tariffs may or may not be removed depending on the outcome of these discussions.
The rally caught investors off guard, and the S&P 500 was able to close above its 50-Day MA, its Key support and a Very Bullish indicator, the market is oversold.
Last week global equities have seen outflows of $20.5-B, as “trade deal trauma” pushed more money into bonds, Bank of America Merrill Lynch said Friday, the latest sign of how global trade tensions have caution lights flashing in roiling financial markets.
“Risk pullback since May 1st highs follows strong rally, initiated by less-dovish PBoC/Fed, accelerated by trade trauma this week,” the bank’s strategists said, referring to central bank policies of the People’s Bank of China and Federal Reserve.
The cash leaving stocks in the week to 8 May was the 3rd biggest outflow YTD, the bank said, and came as President Trump ratcheted up the 10 month trade dispute between the world’s 2 largest economies.
Investors, seeking shelter from the trade dispute, kept pumping money into bonds, which saw inflows of $7.3-B, making it the 18th week running of inflows.
Friday, the major US stock market indexes finished at: DJIA +114.01 at 25942.37, NAS Comp +6.35 at 7916.92, S&P 500 +10.68 at 2881.40
Volume: Trade on the NYSE came in at 864-M/shares exchanged.
- NAS Comp +19.3% YTD
- Russell 2000 +16.6% YTD
- S&P 500 +14.9% YTD
- DJIA +11.2% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish for at week ended 10 May 2019.
Have a terrific weekend