The stock market settled lower on this options expiration Friday's session, as traders and investors leaned thoughtfully following many negative corporate news headlines and lukewarm Chinese numbers.
The broad S&P 500 index opened flat, fell as much as 0.7% in intraday trading, and closed lower by posting 0.4%, just like the small-cap Russell 2000 index showing -0.4%.
Enormous losses in Boeing stock with -25.06, or 6.8% and Johnson & Johnson with -8.47, or -6.2% weighed on the DJI Average, which posted -1.0% loss, while instability in technology sector cut the Nasdaq Composite index by -0.8%.
For the week The S&P 500 index propelled +0.5% this week, as the very first full week of corporate earnings report numbers for the third quarter of 2019 was commonly viewed as more suitable than expected. The broad benchmark stock market index outpaced the Nasdaq Composite index posting +0.4%, although it fell behind the small-cap Russell 2000, which had a nice +1.6% gain.
Beginning with the good news, 7 of the 11 S&P 500 market sectors ended in positive territory: With health care sector print +2.0%, next to the real estate sector with +1.8%, and financials sector respectable +1.6% improving the most. The DJI Average with +2.1% also stood out as well.
The bad news was a big pain that has stormed down on cloud software equities. Cannabis equities have gotten grilled. Beyond Meat has been slaughtered. Why? The answer is very much open for deliberation; however, one response that needs to be included in any debate pot is that the market sentiment about these equities got very optimistic.
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Technical Analysis and Outlook
Well, the moderately weak Mean Res $3008 held-up very well on Thursday session. We will wait for the market to confirm ending its retracement to Mean Sup $2966 with a Trade Selector Signal 'BARC' symbol for long re-entry. On the upside will we encounter the used-up Key Res $3008 along with Key Res $3016 and awaited Inner Index Rally $3040 completion.
The most significant Eurozone and Asia-Pacific stock markets finished higher with the correcting sentiment. The United Kingdom was an important exception as Brexit doubt continued to weigh on equities there, notwithstanding the iffy deal. The German stock market drove the gains in Eurozone after the ZEW Economic Sentiment Index was much more robust than anticipated.
Japanese equities were compelling on signs of United States-China trade war development. Japan's economy is profoundly reliant on international trade, and China is Japan's biggest trading partner. Yet Chinese stocks in Shanghai reversed into negative territory after China's real GDP growth was published that showed its slowest pace in more than thirty years.
Pray tell, why do I hold the stock market to be too optimistic? Simply because the returns in 2019 have been signified in large part on what the equity market believes in the coming six months.
We will disregard the fact that the six-month marker has been shifting and moving target in thanks to Fed monetary policies, yet the most apparent sign of optimism that things should be much better in the next six months from the present moment is that the broader S&P 500 index has climbed 20% in 2019 on zero earnings growth.
That will not happen unless market players are optimistic that growth hopes are going to increase considerably. Bear in mind; the stock market is a future-oriented entity.
It's lowering and discounting a more favorable environment for earnings as well as economic growth, aided in part by the stamina of central bank low-interest rates, the shift to more relaxed comparisons, as well as the optimism that the United States and China will work out a trade dispute.
I know what you are thinking. If this bull stock market is furthermore in its optimistic staging, that it means there is yet another leg higher that might challenge the Rockettes precision dance leg kick LOL.
Well, now, that does not mean everyone should go out and wager the house in the market. Nothing is assured or guaranteed, and one can not dismiss the likelihood either that something might happen first to drive the stock market back into a scene of uncertainty or pessimism.
Nonetheless, traders and investors need to be prepared for any event. That is why I have recommended to partially or all long S&P 500 index trades to be dumped in the $3008 and $3040 area - it's always advised and recommended to have a diversified trading or investment portfolio.
Risk thresholds and time horizons perform a critical part in determining the correction factors in that investment portfolio between and within major asset classes (Got gold?). I can not point every reader of this site rightly in that regard, mainly because I'm trading and dealing with by and large what Trade Selector Signal telling me so when it comes to the market's view.
Regular readers of this site will remember from my past market commentary posts that I have said numerous times this is not a time to go with speculative frenzy and that an increase in volatility signified a feeling that the 'Easy Money' has been produced in this bull stock market.
The biggest lie story ever narrated by fake news media is 'Higher the risk, the higher the reward' - hogwash. Mainstream media's fake news and white shoe boys made gazillions with this lie. The one percent never risk their precious money, simply because it is plain dumb.
Their fake media is a fish hook with this propaganda and swindle you out of your hard-earned money. It's a scam, don't put all your hard-earned money in the stock markets. Do not make me say 'I've told you so.'
It may take many more moons to get there - or perhaps not, yet there isn't more immeasurable time than the 'Now' to review your trading or investment portfolios to prepare if they are balanced suitably to your liking and will hold up soundly in a more challenging stock market return environment.