I’ll start this week with the last week few because, sometimes markets need to be investigated like a crime scene.
What I uncovered was the massive January 4th rally started long before the payroll numbers or the Powell comments. The initial catalyst began with an overnight move by the Peoples Bank of China. They eased their monetary system by slashing the required reserves. That was seen as a major benefit to the Chinese economy and, by extension, the global economy. A look at the overnight charts suggests that the China move may have given about a 350-point boost to the Dow futures by Monday morning. Then came the blowout payroll numbers (we discussed in last email) but not nearly to the scale of the China move.
The following January 7th stocks opened mixed that kept the U.S. market in the same indecisive mode. However, bids began to cancel, and, in the first thirty minutes of trading, stocks moved steadily lower.
At around 10:00 a.m., there were some upbeat rumors about the mid-level trade talks between the U.S. and China. That brought in buyers and in a matter of a few minutes, stocks were back in black (as Bon Scott would say) and the rally resumed in earnest until the close.
Tuesday, the global markets meandered through an upward leaning consolidation day, popping higher based on rumors that even put a bid under the European markets. However, it began to fade and slipped into mild negative territory about an hour after the opening bell in New York.
Wednesday the bulls regrouped rather quickly and, by mid-morning, averages were back into plus territory and would never look back. The markets got a bit of a boost on a late morning story from the Washington Post that the President would not invoke emergency powers in his Tuesday night speech. That seemed to inspire some faint hope of compromise and stocks went on to rally. By Friday we had finished the calmest week in a while, up 2%.
Going into tomorrow is anxiety over China trade and increasing blowback from the government shut down. Keep in mind Peyton markets can, “climb a wall of worry.” Problems however for next week are quantifiable as we go into the bulk of earning season. So, hold on to your hat because volatility will be high.
Also look for an unexposed China slowdown.
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Established under The Palmer Holding Group Ltd., a company grounded on two generations of integrity, accountability and citizenship.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source. This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship.
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