| Fundamental | Actual | Immediate Outlook | |
|---|---|---|---|
| Fixed-income: 10-yr Treas. | 5.0 | 1.98 | heading higher |
| Equities: S&P 500 | 2000 | 1502 | heading higher |
| Equities: Dow Jones | 16,000 | 13,881 | heading higher |
Stocks headed sharply lower last week on higher volume. Even so, there are reasons to believe the odds continue to favor further increases.
Market Outlook: Stocks moved sharply lower on Wednesday and Thursday. Of the key indexes, the best relative performer was the Dow with a decline of 0.7%. The worst were the NASDAQ and Russell 2000; each fell by roughly 2%.
Trading volume was strongly negative on both Wednesday and Thursday. This indicates institutions were selling stocks. All key indexes fell below their 10-day averages—a negative development. However, all remain above their 50-day averages—a positive sign. The 10-day average remains above the 50-day average for all key indexes. This suggests the market’s momentum remains positive.
My technical guru, Joe Barto, says there is key technical support at 1495-1500 on the S&P 500. If this support level fails, the odds favor further declines. With positive momentum and the market holding at a key support level, odds continue to favor further increases in stock prices.
Longer-term interest rates have paused with the 10-year Treasury near 2%. As with the stock market, the momentum is upward. Odds continue to favor further increases in long-term rates in the period ahead.
Learn more about Commercial Corp Finance or read past reports.
