Wednesday saw a Q3 GDP beat (1.9% vs 1.6% expected) and the Fed cutting rates a third time on the year, by a quarter percent (just as expected).  Chairman Powell did indicate a “pause in easing” lay ahead but went on to say the FOMC would need to see “really significant” inflation indications to raise rates anytime in the foreseeable future.  (Two Fed voters did dissent, believing rates should have been left unchanged.) 

After a flat to mildly down morning, the Fed decision resulted in a rally.  This left the SPY and DIA up about 0.3% and the QQQ up about half a percent on the day.  All three indices managed to bounce up off support during the day.  The QQQ printed a Bullish Harami, while the IWM printed what could be a Bearish Hanging Man signal.  The SPY and DIA did not print a signal on Thursday.

On the downside, Chile canceled the APEC meeting where President Trump was to meet President Xi.  As of now, there is no announced backup plan for signing the partial Trade Deal with China.  Worse than that, Bloomberg reports this morning that “Chinese officials” have told Western visitors they will never budge on the major issues and they doubt any Long-Term Trade Deal is even possible with President Trump in place.  Further, they urged Westerners to take word back to the U.S. that without additional tariff rollbacks by the US, more substantial negotiations beyond the partial “resuming 2017 grain purchase levels in return for no new tariffs” deal are not going to result in anything.

After the close, both AAPL, FB and KLAC all reported significant beats and saw corresponding rallies in post-market trading Wednesday.  Meanwhile APA, CF and LNC all reported misses.  It is also worth noting that TWTR announced it will no longer accept political ads, which may (or not) be a drag on their revenue since we are going into an election year.  This is in direct contrast to FB’s announcement from earlier this week.

Overnight, Asian markets were mixed.  In Europe, markets are red across the board with the exception of the FTSE (which is soaring on the hope of the UK Election changing the Brexit deadlock).  As of 7:30 am, U.S. futures were mixed but flat.

The Thursday economic calendar is limited to lesser inflation reports and Jobless Claims (both at 8:30 am).   However, earnings are still going full speed with MO, AMT, ADM, BWA, BMY, CHD, CI, CLX, DD, EL, EXC, HBI, HFC, IP, KHC, MAC, MPC, PH, and WAB among those reporting before the bell today.

Earnings remain generally strong, with a few notable exceptions. Between this, the happiness with the Fed action, and the current trend, the bulls definitely have the upper hand.  However, be cautious as there are many earnings still to go and likely more twists and turns in the Trade War saga.

Ed

Swing-Trade Trade ideas for your consideration. Long – PM, PNR, PCAR, ARE, TSCO, NEE, INTC, APH, INFO, TSM, PPG, KHC. Trade smart, take profits along the way and trade your plan. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.

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