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Ugly Week Could Turn to Pretty Finish in Record Stock Territory

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May 15, 2015

Stocks have been all over the board this week yet the S&P 500 (SPX) notched a fresh record closing high on Thursday. Early indicators suggest it could try to push deeper into uncharted territory, a few licks from the 2125.92 all-time high hit a few weeks back. SPX broke out of its recent range to the upside but it may take a few solid closes above 2120 before we can talk about a new upside range with any seriousness. Stay tuned.

FIGURE 1: NEW PUSH HIGHER?

The S&P 500 (SPX) has fresh record-high territory in its sights after a choppy week of winning and losing sessions. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Tired of Cheering Bad News? Bond-market weakness remains a stock-market driver but stability for bonds over the past two sessions has so far translated into mild stock gains. The Street’s collective opinion (if there is one) believes the Federal Reserve can hold off on hiking interest rates for now considering slowing retail sales and low-inflation readings. At some point, the Street must come to terms with the risk of weak economic data, no longer shrugging it off as simply a free pass for the Fed to sit tight on policy. Consider this latest round of earnings, too. Revenue disappointed across several sectors. And when revenue figures do beat, investors reward the company’s stock. Late Thursday, Nordstrom (JWN)—one of the last of the major retailers to report in what’s been a soggy quarter—said total Q1 revenue rose to $3.22 billion from $2.93 billion, better than the Street consensus. Comparable sales rose 4.4%, beating the 3.3% Retail Metrics consensus. Nordstrom kept its profit outlook for the year of $3.65 to $3.80 a share.

Europe’s In No Hurry Either. U.S. stock markets could find some support from a second day of gains in Europe. Equity bulls there were inspired by a renewed commitment from European Central Bank chief Mario Draghi. Draghi pledged whatever stimulus efforts it will take to revive economic growth. The ECB in March launched a 1.1 trillion-euro bond-buying program aimed at beating deflation risk. In response to the latest remarks, the euro dropped back below $1.14.

Hey, China: Is Orange the New Black? Netflix (NFLX) shares are poised to hit record territory, clearing $600 for the first time ever in pre-market action as financial news reports say the streaming media and original content company is in talks with Chinese online broadcasting companies about bringing its content there. Executives at Chinese companies are reportedly leaking the announcement of “early stage” discussions. We do know that Netflix execs have recently expressed plans for an aggressive global push as subscriber growth slows in the U.S.

Good trading,
JJ
@TDAJJKinahan

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