When last I published My Gut Feeling, the market was in the midst of a corrective phase, highlighted by selling of growth stocks and purchasing of value stocks, specifically the dividend oriented utility companies. Then the Passover and Holy Week Holidays crept in, my daughter had surgery and I went silent for several days (note: the market was closed on Friday). As to my daughter, her surgery was successful and she is recuperating at home. Thanks to all for your well wishes and concerns.
Market Begin Rebound During Holiday Week
Let’s recap what happened over the last several trading days.
Mon April 14 – the market attempted a Monday morning rally which was met once again with selling, especially in the tech and biotech sector. Buyers stepped in at around the 1,815 level on the S&P 500 (SPX) and rallied the market to a positive close right before the first Seder. For the most part, Monday’s trading was a carbon copy of the prior Friday’s action.
Tue. April 15 – once again a positive open was repelled. However, this time it got real nasty. There was a palpable feeling of panic in the market after an early nearly ¾% rally turned into a ¾% loss. It was also a day when the brazen bears were taking victory laps and touting that a bear market had begun. CNBC had just highlighted Sam Stovall’s prediction that a 10 – 20% correction was setting up. You knew that the opposite was then likely to occur. Then, on cue, once again, buyers appeared at 1,815 on the SPX and rallied the market to a positive close, just below the morning highs. It marked the third time in three consecutive sessions that a low was made at or near 1,815.
Wed. April 16 – the Federal Reserve told us what we already knew, that is everyone but the bears; that the recent slowdown in the economy was related to the excessive winter weather. The SPX rallied over 1%. More importantly, tech and growth stocks were back in favor as the NASDAQ 100 (NDX) rallied about 1.32%. The bears were crumbling like matzoh.
Thur April 17 – a quiet, but positive session ahead of the long holiday weekend.
Mon Apr 21 / Tues Apr 22 – the market rally continued with the SPX advancing about 8 points each day. A strong earnings report from Netflix (NFLX) helped to continue the reemergence of growth stocks as market leaders.
All told, as we enter today’s session, the S&P 500 has strung together a six day winning streak advancing about 3.5%. The NDX rose 4.12% over the same period. As it now stands, the SPX is 1% away from its all-time high. The damage is still apparent to the tech sector as the NDX is still 4% below its recent high.
Earnings Season Heats Up
All the above occurred during the early part of earnings season. Between last week and this week, the most economically important companies will have reported results. So far, 74% of the 118 S&P 500 companies that have reported earnings did so better than expected. All told, another blow to the bears’ case,
So after it appeared that the end was near two weeks ago, once again we endured just another correction, in a string of corrections, in the midst of a secular bull market.
Today’s earnings calendar marks, in my opinion, the climax of earnings season as Apple (AAPL), Boeing (BA), Dow Chemical (DOW), Proctor & Gamble (PG), Biogen Idec (BIIB), Delta Airlines (DAL), Norfolk Southern (NSC), and Qualcomm (QCOM) are all on the docket. That will keep me rather busy.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, BA and DAL — although positions can change at any time.
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Read Scott’s intra-day thoughts and comments on Scutify
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