State of the Stock Market for the Week Ending April 19, 2014 (Solid Week For Bulls in the Stock Market 4-12-14)
It was a great week for stocks as we closed out Thursday mixed, but overall it was a solid week for bulls. The Dow and the Nasdaq were up 2.4% for the week, while the S&P 500 managed to eke out a 2.7% gain. The S&P 500 gain came despite some big weakness in the financial sector. There were some great numbers, as well as not-so-great numbers, so we will see how the financials play out in the days ahead.
Earnings season continues to be mixed, which is good and bad. It means that the so-called “recovery” might not be the same recovery we all hoped for, and it means that maybe it does not have the resilience that drives an economy higher. This has been a concern for years of economists, who thought that all of the Fed spending might not work as well as they thought it would.
Well, with the stock market at or at least near all-time highs, something seems to have worked for the time being. Janet Yellen has been a low-key and calming force since she took over from Ben Bernanke, but she will likely face some big challenges soon. We have an extended market that could correct sometime soon, and just seeing the recent volatility has bulls worried.
Economic numbers continue to support this bull run, so we bulls have to sit back and enjoy the ride. Housing, consumer confidence numbers, and manufacturing are looking good, so as long as that continues, we are still seeing an improving U.S. economy. This is ultimately bullish for the stock market, hence the solid week for bulls, which is another plus as we head toward the later part of April and eventually summer.
One other worry that is appearing is the sudden launch of frothy initial public offerings (IPOs). The most recent this week was a Chinese Internet company called Weibo (WB). They call it the “Twitter” of China, but it went public here in the US. Wall Street is certainly creative at financing everything, but it is a bit 1999-ish to be rolling out Chinese Twitter-ish IPOs five years into a bull market. We all know how 1999-2000 played out, so let’s hope we are not on the same track right now.
The one difference from the Internet stock boom of the late 1990s, however, is that many of these new names actually make money. The tech boom of 14 years ago was driven by madness with no earnings anywhere in sight. Seeing Chinese Internet companies go public right now is a cautionary development, but the bullish camp is not very concerned. As long as we can get back to the recent all-time highs in the S&P 500, then it means the bullish game continues. Stay tuned!
Like what The Gorilla has to say? Try Gorilla Trades’ nightly email, free for 30 days, for exclusive insights on tomorrow’s potentially explosive top stock market picks!