New earnings projections from BoA Merrill Lynch suggests US Indices and International markets will continue higher in Q1 2020. Strategists at BAML note that fund managers are the most bullish they’ve been since 2017. Cash levels are at the lowest levels since 2013, as these managers put money to work in January.
In addition, recent publications from the International Monetary Fund expects global GDP to accelerate in 2020, though its view was slightly weaker than the one published in October. The big change for the global outlook is the agreement between the U.S. and China on a so-called phase one deal on trade. USMCA, the agreement between the US Mexico and Canada was signed as well. Economists also expect the lagged impact of interest-rate cuts from the U.S. Federal Reserve and the European Central Bank to help growth this year.
“Investors are bullish but not euphoric,” Michael Hartnett, chief investment strategist BAML.
US Indices – SPX COMPQ NDX IWM
SPY pierced overhead levels on Monday, printing a bullish engulfing candle in the process. Bears cited divergence coming into the week as a reason for price action to fail this week. Instead, bullish momentum continues to derail their efforts. MACD is bullish and above its signal line, while RSI rose to match these elevated levels on the index.
The Coronavirus hit to the market is “exaggerated.” Ray Dalio
The Nasdaq 100 Index (NDX) also broke out to new highs on Monday. Performance relative to the S&P 500 is noteworthy. Since the October reversal, NDX is beating the SPY in spectacular fashion.
“With category-defining companies at the forefront of innovation—Apple, Microsoft, Alphabet, Intel, Facebook, Amgen, Starbucks, Tesla—the Nasdaq–100 index defines today’s modern-day industrials.” – Nasdaq.com
It should therefore be no surprise that the weekly watchlists have focused on these Nasdaq-100 related companies. The top 5 from this weeks follow.
Additional trades and swing positions, FB, AAPL, AMZN, NFLX, NVDA, MSFT, and GOOGL confirm the strength in the 4-month rally.
Futures, crude and bond yields are higher. Gold is lower. USD at resistance.
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*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.
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