MONDAY
The indices were unable to make a break higher Friday even though some stocks jumped upside, e.g. BA. Chips were a drag, pure and simple. Other groups were up, but not enough to offset the negatives and boost a new break higher.
Thus, the stock indices enter next week with SP500, DJ30, NASDAQ, SP400 in good patterns but still looking for the next break higher.
Now if trade is truly an issue, and it is to a certain extent, there may be some positives to start the week. China and the US met and it is reported that China agrees to boost US export purchases to "substantially reduce" the trade gap.
Perhaps this 'deal' will boost stocks. Perhaps there is still a lot of weekend ahead. There is also the chip stocks. Can the market rally without them? Yes, but it is not as easy. Good patterns remain in many areas and we will see if they can continue breaking higher.
In the end it comes down to leaders and whether they can make good on good patterns. More will have to make the moves to push SP500, DJ30, NASDAQ, SP400 higher out of their bases. It is May, it is already hot outside, and the market has to deal with the time of year issue (sell in May and go away . . .). For now, if the stocks make the moves, we will play the stocks.
Source: Investment House