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Weekly Stock Gain on Track, Made Possible By Wednesday’s Fed Cheer

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November 20, 2015

Green screens flashed for major stock averages early Friday, keeping the main benchmarks on track to log a seventh weekly gain out of the past eight. That includes a possible 2% gain for the benchmark S&P 500 (SPX) this week. Friday’s light earnings line-up, including more retail names, will likely continue to drive individual stock trading, and monthly options expiration could induce extra volume.

Chartists are eyeing the 2075 line as near-term support for SPX, with the big threshold of 2100 setting up as the next upside target (figure 1). Energy shares have been broader market drivers this week; traders continue to monitor crude prices, with many wondering if $40 a barrel can hold?

Of course, the bulk of this week’s advance was logged on Wednesday. That’s when Wall Street bulls embraced Federal Reserve meeting minutes that indicated (again!) a December interest rate hike is in the works—a potential move that’s largely considered a sign of Fed confidence in the U.S. economy amid global uncertainty.

In fact, other central banks are tilting in a different direction, developments that are likely to keep upside pressure on the U.S. dollar. The European Central Bank’s (ECB) Mario Draghi said Friday that they’re prepared to deploy a full range of stimulus measures as needed to plump up too-low inflation, according to the financial press. That sparked chatter in financial markets that ECB action—which could include further reduction to the already negative deposit rate and expansion of a bond-purchase program—could come as soon as that group’s December meeting.

SPX stock chart

FIGURE 1: TRYING FOR SEVEN OF EIGHT. The S&P 500 (SPX), charted here on the new-look thinkorswim® platform, is on track for a weekly gain, which would be its seventh weekly win in the past eight weeks. Data source: Standard & Poor’s. For illustrative purposes only. Past performance does not guarantee future results.

Abercrombie & Fitch Gains. The teenage clothing retailer Abercrombie & Fitch (ANF) posted a higher quarterly profit versus the year-ago comparable, which boosted shares some 20% in early action.

Different Scene for Gap. Shares in Gap (GPS) flashed a down day after the clothing retailer late Thursday cut its profit guidance for the year as quarterly sales fell more than expected.

Foul on Foot Locker? Shoe and apparel retailer Foot Locker (FL) beat the Street’ profit and sales estimates, but shares were choppy.

Good Trading,

JJ

@TDAJJKinahan

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