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Weekly Market Recap Dec 17, 2017

Courtesy of Blain.

Bears continue to get squashed in the infinite feedback loop that is the 2017 stock market. Relative modest moves up and down Monday thru Thursday were followed by a spike up Friday on news (now a bit over anticipatory) about a tax reform deal complete.

A last-minute expansion of the child tax credit persuaded Sen. Marco Rubio, a Florida Republican, to back the measure. Rubio on Thursday threatened to vote against the tax bill unless it included an expansion of the child tax credit.

For the week the S&P 500 gained 0.9% (essentially all of that coming Friday), and the NASDAQ 1.4%.

Another week and another ~20% move up in bitcoin.  The futures spike Monday led to a lot of volatility but by end of week we saw $19K.  Remember this went from $11K to $16K the prior week.

The big economic event, if you will, was the Federal Reserve raising its federal-funds rate by a quarter percentage point —its fourth increase in a year. Senior officials also stuck to their earlier projections of three rate increases in 2018.  In Janet Yellen’s final news conference as Fed chairwoman, she said the U.S. central bank expects the job market to remain strong, though the pace of job growth should decelerate as the Fed continues to tighten policy.

“It was pretty much a certainty that the Fed was going to do what it did. Sorry to be boring, but there were really no surprises. It was a nonevent that had been fully priced into markets,” said Eric Green, senior portfolio manager and director of research at Penn Capital Management.

In economic news, sales at U.S. retailers climbed 0.8% in November, the start of the holiday shopping season. Sales minus autos rose an even higher 1% last month, the Commerce Department said Thursday.  Internet retailers posted a whopping 2.5% increase in sales as consumers increasingly switch to online shopping.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

Awesome infographic here on the rise of bitcoin from $1K to $10K this year; obviously it’s gone ballistic since $10K.  [click to expand]

The week ahead…

Bitcoin and tax reform!

Index charts:

Short term: We are starting to get into some of this extreme stuff when an entire index (the S&P 500) is not even touching the 20 day moving average anymore…. and hasn’t for a month!  In a normal world it would be wise to say there needs to be some pullback/consolidation here just to let those moving average catch up.  But that’s not been our world this year.

The Russell 2000 did consolidate gains for a second week in a row, even touching it’s 50 day moving average.  The horror of it all…

Interestingly, the NYSE McClellan Oscillator has been pretty weak the past 10 days or so, even as indexes continue to levitate.

Long term: Unicorns and rainbows continue.

Charts of interest / Big Movers:

Overstock.com (OSTK) had a heck of a week – up 50%+.  Believe it or not this is a cryptocurrency related event!

CEO Patrick Byrne said he expects to have a deal in the next three months on selling or reorganizing the company’s retail business to focus on blockchain, the technology behind bitcoin.

Thursday, Teva Pharma (TEVA) surged 10% after announcing additional restructuring measures, including the loss of 14,000 jobs in the next two years, and the immediate suspension of dividends and cancellation of 2017 bonuses.

Valeant Pharma (VRX) sunk 11% after J.P. Morgan downgraded the stock to underweight from neutral.  Still a heck of a ride since early November with a nearly 100% gain in that time before the pullback.

Friday, Under Armour (UA) jumped 9.4% after the sports-apparel maker announced official partnership with Team Canada through 2024. The stock lost nearly half of its market value since the start of the year, however.

Have a great week and we’ll see you back here Sunday!


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