As mentioned in last week’s recap this entire week was all about the word “patience” and having it disappear. Fed head Powell did the market’s bidding – rejoicing happened. All systems go for the Fed to put gasoline back into the market! New records for the S&P 500 Thursday!
“The FOMC will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the Fed said in a statement, dropping its recent buzzword about being “patient.”
“The case for somewhat more accommodative policy has strengthened,” Powell said at a news conference to discuss the rate-setting Federal Open Market Committee’s highly anticipated decision
“My initial thoughts are that the Fed did what the market thought they would do today, and offered to give them what they really want in the near future. That could be as early as July, and that could be as much as 50 basis points,” said Kevin Giddis, head of fixed-income capital markets at Raymond James.
And here comes Europe to the party!
ECB President Mario Draghi at an annual central bank conference in Sintra, Portugal Tuesday said policy makers would consider “in the coming weeks” how to adapt its policy tools “commensurate to the severity of the risk” to the economic outlook, a signal that the central bank may be willing to lower rates.
All this coming easy money about to flood the globe has gold in a tizzy!
And the ETF for gold:
Per Bespoke Thursday:
Earlier this week we published a Chart of the Day suggesting that gold (in the form of the GLD ETF) was looking strong but needed to get above the $130/share level to experience a breakout and potentially leg nicely higher. We’re seeing that break above $130 today as the yellow metal makes a new 5+ year high. Below are updated charts showing the move. You can really see in the longer-term chart (second below) how $130 has acted as stiff resistance over the last few years. A solid clearing above this level in the coming days opens up a move towards $150 in our view.
No market moving economic news.
For the week, the S&P 500 gained 2.2% and the NASDAQ 3.0%.
Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.
The week ahead…
We have been in a “bad news is good news” environment in the market for weeks – that will only intensify. The worse the news the next 5 weeks the louder the drumbeat will be for the much wanted Fed rate cut at the end of July. In fact some are already calling for 50 basis points rather than 25. And if the past decade has shown us anything, once one central bank gives easy money out – they will all follow suit.
Short term: Powell defeated the bearish double top in the S&P 500 this week – although his predecessors probably could have done it quicker! The NASDAQ is next on his target list!
The Russell 2000 has been stuck in this range for a long time – other than a few months in latter 2018 and early 2019 it has been the laggard of the major indexes.
The NYSE McClellan Oscillator is back where bulls want it.
Long term: can’t complain.
Charts of interest / Big Movers:
Facebook (FB) has entered the cryptocurrency foray with the launch of Libra!
Monday, Array BioPharma (ARRY) soared 57% after the biopharmaceutical company focused on developing cancer treatments agreed to be acquired by Pfizer in a deal valued at $11.4 billion.
Also Monday, Sotheby’s (BID) announced a deal to be acquired by BidFair U.S.A., which is owned by telecom and media entrepreneur and art collector Patrick Drahi, in a deal valued at $3.7 billion. Shares of the company skyrocketed 59%.
Thursday Slack Technologies (WORK) surged 49% to $38.62 a share on the enterprise software company’s debut on the New York Stock Exchange, significantly above its reference price of $26. Slack opted for a direct listing of its shares instead of an initial public offering.
Oracle (ORCL) rallied 8.2% after the software company reported better-than-expected earnings and an upbeat outlook.
If you like to trade reversals, there was a big one Wednesday in pot stock Tilray (TLRY).
Have a great week and we’ll see you back here Sunday!