Stocks Perched Near Record Highs: Week In Review – Sunday, Oct. 15

 

The market was relatively quiet last week as earnings season officially began. The major indices remain perched below record highs as the bulls continue to dominate the landscape. The fact that there remains virtually no selling is a net positive for the bulls.

In the short-term, the market is extended to the upside and a light pullback would do wonders to restore the health of this very strong (and very long) bull market. Meanwhile, the intermediate and long-term outlook remains extremely bullish (for now). Eventually, that will change but until it does, weakness should be bought, not sold.

 

A Closer Look at What Happened Last Week

Mon-Wed Action:

 

Stocks fell on Monday as the Nasdaq snapped a 9-day winning streak. Wall Street paused ahead of earnings season. Looking forward, analysts expect S&P 500 earnings are expected to grow by 4% on a year-over-year basis, according to data from S&P Capital IQ. In Q1 and Q2 2017, earnings grew +15.5% and +10.8%, respectively.

Stocks were relatively quiet on Tuesday as investors waited for earnings season to begin.

Stocks were quiet on Wednesday after BlackRock (BLK) and Delta (DAL) reported earnings.The FOMC released the minutes of its latest meeting and basically said they will raise rates again in December.

Thur & Fri Action:

Stocks opened higher but closed lower on Thursday as investors digested the latest round of earnings from JP Morgan (JPM) and Citigroup (C). Separately, Bitcoin surged to a fresh record high above $5,300 which is a classic sign of a big bubble. IMF Managing Director Christine Lagarde told CNBC “I think that we are about to see massive disruptions from cryptocurrencies.”

Lagarde, also didn’t rule out the IMF developing its own digital currency. Turning back to earnings, CNBC reported that historically, this earnings season has been the best one for investors. Using hedge fund analytics tool Kensho, CNBC found the S&P 500 posts a gain of 2.3 percent on average 30 days after third-quarter earnings season begins, trading positive 79 percent of the time. Stocks were quiet on Friday after Bank of America (BAC) and Wells Fargo (WFC) were some of the big companies that reported earnings.