U.S. stock markets have been getting a lift this week. Friday, China’s President Xi will meet with U.S. trade negotiators including Secretary Mnuchin, and the chatter is optimistic that both sides are eager to get a deal done. Also lending bullish momentum to the equity markets is the fact that Trump and Congress are reported to have reached a deal in principle going forward to avoid a second government shutdown. Lastly, MSNBC reported that in their investigation, the U.S. Senate found no evidence of any election collusion between Trump and the Russians.
If indeed all of these issues are out of the way, then it does look like the markets will have a green light for a “risk on” feel, meaning that this stock market rally should continue.
In Asia, 9 out of 12 stock markets closed higher, including the three largest markets which were up over 1%, and in Europe this morning, 10 out of 13 stock markets are trading higher, including its three largest markets. The U.S. stock market futures are also higher with the Nasdaq up moderately.
Today’s economic calendar features CPI before the stock market open and three Fed speakers, none of which are expected to be market-movers. Today also features 126 corporate earnings reports, but these do not include any bellwether stocks.
Right now, we are wanting to buy dips in the U.S. equity markets. However, we have to acknowledge that the dips may be much shallower due to bullish momentum, lower volatility, the arrival of a seasonally slower period, and the potential of fewer news headlines affecting these markets. Thus, we are back to looking for micro-dips intraday.
Since the sell-off that began in September, the S&P 500 futures rallied above 2800 in October to find resistance at 2824, then reached a high of 2818 in November and rallied up above 2800 to 2814 in December. Now, two months later, the index seems poised to reach 2800. Until it reaches the level of prior resistance at 2815-2825, we don’t have any reason to short.
Today’s Economic Calendar:
- MBA Mortgage Applications 7:00 AM ET
- Raphael Bostic Speaks 7:15 AM ET
- CPI 8:30 AM ET
- Loretta Mester Speaks 8:50 AM ET
- Atlanta Fed Business Inflation Expectations 10:00 AM ET
- EIA Petroleum Status Report 10:30 AM ET
- Patrick Harker Speaks 12:00 PM ET
- Treasury Budget 2:00 PM ET