The bulls gapped markets higher perhaps on a huge earnings beat by MS. Regardless of the reason, after that gap markets traded sideways in a tight range until late afternoon. Sometime after 3pm the bulls took over again and drove prices higher right into the close. The SPY closed up 0.81%, the DIA up 0.89%, and the QQQ up 0.96%. As you’d expect, the VXX fell 2.42% again to 13.29. T2122 jumped higher well into overbought territory at 93.97.
Among the market news for the day was Bloomberg report a panel that seems to contradict the reports from Wednesday’s signing coverage of Phase One of the China Trade Deal. The consensus from the Chief Economists from all the major US banks is that the trade deal would not have a strong impact on the US economy, at least in 2020. They've concluded that growth will slow to 1.8%-1.9% this year (well below the 2.5% touted during the signing ceremony and in the Administration's post-signing interviews Wed.). Time will tell, but economists seem skeptical.
On the cheerier side, DataTrek Research reported that US pickup truck sales (an indicator of small business activity) ended 2019 on a high note. Those sales ended the year 2.3% higher than in 2018. The other news was that GOOG has now joined AAPL and MSFT in the “More Than $1 Trillion Market Cap” club. The Fed keeps saying their mass Repo purchases are not stimulus, but the market sure keeps treating them that way.
Friday’s major economic news includes Dec. Building Permits and Dec. Housing Starts (both at 8:30 am), Dec. Industrial Production (9:15 am), JOLTS and Univ. of Michigan Consumer Sentiment (both at 10 am) and a few Fed speakers throughout the day. Major earnings before the open include CFG, FAST, KSU, MTB, RF, SLB, and STT. There were also CNBC reports that BA will need to take another massive charge related to their 737 Max debacle. So watch that one for gapping as well.
Overnight, Asian markets were green across the board. In Europe, the same is true as the rest of the world follows our lead from Thursday. As of 7:45 am, once again U.S. futures are pointing to a gap higher of between a quarter and a third of a percent.
The bulls continue their incredible run with new all-time highs seeming to come daily. Over-extension, earnings and headline risk over a 3-day weekend are all very real issues at this point. However, markets can remain overbought longer than bears can hold out while being too early. So, consider caution and/or hedges on Friday, but don’t bet against the trend. Look for long opportunities near support but don’t chase. Keep taking profits on a regular basis, moving your stops to protect yourself, and wait for the trade to come to you.
Sorry, but no Swing Trade Ideas on a Friday before a 3-day weekend. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. The stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
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