Stocks advanced to record high encouraged by the dovish testimony from Fed Chair, Jerome Powell in front of House Financial Service Committee. The possibility of a 0.5% rate cut at the Fed's July 30-31 meeting has been greatly increased by his comment. For the week, S&P 500 index closed at 3013 up 0.78%, Dow Jones Industrial Average gained 1.52% and technology laden NASDAQ composite index increased 1.01% for the week.
S&P 500 index has broken the psychological barrier of 3000 and reached the record high at 3013. On the daily chart (not shown), the index broke the bull flag pattern (a continuation candle stick pattern) and gapped up to reach the new high. I looks like the index will continue to advance higher on a short term basis. However in the weekly chart, the index is 5.7% above its 28 week exponential moving average. Remember the index was 10%, 4,8% and 5.9 % above its 28 week EMA before the respective sell-off in January 2018, October 2018 and May 2019. This rally is fueled by expectation of a rate cut and we may see a shake up once the rate cut is realized at end of July. The so call " Buy the Rumor, Sell the News" may apply in this case.
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| Weekly chart of S&P 500 index |
S&P 500 index has broken the psychological barrier of 3000 and reached the record high at 3013. On the daily chart (not shown), the index broke the bull flag pattern (a continuation candle stick pattern) and gapped up to reach the new high. I looks like the index will continue to advance higher on a short term basis. However in the weekly chart, the index is 5.7% above its 28 week exponential moving average. Remember the index was 10%, 4,8% and 5.9 % above its 28 week EMA before the respective sell-off in January 2018, October 2018 and May 2019. This rally is fueled by expectation of a rate cut and we may see a shake up once the rate cut is realized at end of July. The so call " Buy the Rumor, Sell the News" may apply in this case.
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