Insights

We're in the thick of earnings season in the U.S. Economy. Strong economic fundamentals are battling market signs of overvaluation. What's next in the U.S. Market? Will it rise or fall? Watch the video below for exclusive insights for your trading strategy!

S&P 500 Overview: Momentum slowing at potential resistance

• RSI showing overbought conditions
• Weakness in energy & commodities potentially bearish for broader market
• Good news mostly priced in, with risk of sentiment worsening
• Calendar less active, with fewer near-term catalysts. However, a trade deal with China (now less expected) would be viewed positively.
• No big pullback in S&P 500 all year, after 4 months of solid gains.
• Potential for a retest of 2850 or 2800.

Sector review: Strong ‘risk on’ bias

• Growth remains strong: Chips, e-commerce, media and software
• Domestic “real economy” strong: Banks, housing, transports
• Russell 2000 small caps starting to outperform
• Commodities struggle: Gold miners, energy, metals
• Global struggles as USD rises.
• Healthcare down on political risk, pricing pressure, general rotation

Economic review: US picture keeps getting better

• Deep strength in labor market seems to be pushing
• workers up the income scale. Good for consumer spending and potentially housing.
• Low inflation creating ‘Goldilocks’ conditions.
• U.S. economy seems to be undergoing major shift toward production / “new regime” in post-WWII era.
• Construction recovering, partially fueled by state & local governments.
• IT infrastructure/software spending on the rise as cloud computing spreads.

Idea to consider: Russell 2000 ETF (IWM)

• Benefits from domestic economy
• Potential to accelerate from tight Bollinger band squeeze / “golden cross”
• Starting to outperform S&P 500 and Nasdaq-100

Idea to consider: Snap (SNAP)

• Second-tier social media network compared to Facebook (FB) / Twitter (TWTR)
• Valued at $82/DUA (daily active user) vs TWTR at $229 and FB at $353
• Last 2 quarters have shown potential turnaround, user growth
• New gaming platform, other innovations, announced April 4.

Idea to consider: Progressive (PGR)

• Fast-growing insurance company with history of leading industry
• Rallied on April 16 after results. It’s now pulled back to old highs around $74 and 50-day moving average.

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