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Weekly Market Recap Apr 7, 2019

Courtesy of Blain.

Another week of rallying on similar news we have been rallying on for the past 6 weeks or so now – mostly the Chinese – U.S. trade talks.

“Ninety percent of the deal is done, but the last 10% is the hardest part, it’s the trickiest part and it will require trade-offs on both sides,” said Myron Brilliant, executive vice president for international affairs at the U.S. Chamber of Commerce, adding that talks are in the “endgame stage,” according to the Financial Times.

The Chinese market had an “outside reversal” day (when the price goes both below and above the prior day’s range) to the upside very early in January 2019 – since then it’s been a heck of a ride up.

A solid jobs report Friday was helpful but realistically it wasn’t much of an offset to the disaster number the prior month.  That said with a “patient” Federal Reserve it doesn’t take much to keep bulls content right now.

A very busy week on the economic front.  Monday ISM Manufacturing came in at 55.3 vs a 2 year low of 54.2 the prior month.  That was a welcome sign considering the number was beginning to track towards 50 which is the cut off between growth or retrenchment.

Overseas in China there are 2 manufacturing gauges – one private, one public, both staged rebounds this past month.

The Caixin China manufacturing purchasing managers index, rose to 50.8 in March from 49.9 in February, rebounding to expansionary territory for the first time in four months. Gains for the private gauge came on the heels of China’s official manufacturing PMI released on Sunday, which rose to a six-month high of 50.5 in March from 49.2 in February.

March’s employment data showed that the U.S. economy added 196,000 new jobs, above consensus expectations of 177,000. The Labor Department’s official measure of unemployment held steady at 3.8%.  The government said 33,000 new jobs were created in February instead of 20,000. January’s gain was little changed at 312,000.

For the week, the S&P 500 gained 2.1% and the NASDAQ 2.7%.

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

Ray Dalio is a legend in hedge fund circles.  He has a very interesting (and long) essay on the need to reform capitalism to make it work for more people.

“I believe that all good things taken to an extreme can be self-destructive and that everything must evolve or die. This is now true for capitalism.”

The week ahead…

I guess we just keep rallying on the same China-U.S. trade deal talks.  First quarter earnings begin.

Index charts:

Short term: Improvement here as the S&P 500 finally cleared our long term trendline and didn’t immediately suffer a setback.  The NASDAQ looks very strong now as well.

The Russell 2000 finally peaked over the 200 day moving average Friday.

The NYSE McClellan Oscillator is comfortably back in the black.

Long term: Things are definitely looking up again.

Charts of interest / Big Movers:

Lyft (LYFT) had a rough Monday – down 10.2% – as traders whiplashed around following it’s IPO the prior week.

Walgreens (WBA) fell 12.8% Tuesday after the drugstore chain reported second-quarter earnings that fell short of Wall Street expectations, while cutting its full-year outlook.

Delta Airlines (DAL) rose 6% Tuesday, after the company reported its operating performance for the month of March while announcing the renewal of its 11-year credit card pact with American Express.  Before you gloss over that I don’t think most people realize how huge credit cards are to airlines nowadays.

Delta generated $3 billion in revenue from its joint credit card with American Express last year, WSJ reported, and the company secured more than a million new accounts, plus a record number in the first quarter.

Tesla (TSLA) slumped 8.2% Thursday. The company late Wednesday said it delivered about 63,000 vehicles in the first quarter, significantly fewer than analysts had expected.

Office Depot (ODP) skidded 24% after the office-supplies retailer reported preliminary first-quarter results.

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


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