Can the Stock Market Keep Rallying? These Two Indexes Say It Can

Discussion in 'Wall St. News' started by dealmaker, Mar 11, 2019.

  1. dealmaker


    Can the Stock Market Keep Rallying? These Two Indexes Say It Can
    By Ben Levisohn
    March 11, 2019 1:31 p.m. ET
    Illustration by Michael Haddad
    Text size

    1:16 p.m.The stock market is rallying back on Monday from itsworst loss of 2019. But is the bounce for real?

    Consider: Last week, theS&P 500dropped 2.2%, while theDow Jones Industrial Averagefell 2.2%, and theNasdaq Compositedecline 2.5%. It was the worst week of the year, as investorsfretted about weakness in the global economy.

    The decline had many expecting more downside if only because the market’s gains in 2019 looked unsustainable—the S&P 500 is up 11% this year even after last week’s drops. And there are those that won’t be comfortable until the S&P 500 finally breaks through resistance between 2,800 and 2817.

    So how will we know if the rally is real? In a note this morning, NomuraInstinet’s Frank Cappellerirecommended watching the small-capRussell 2000and theDow Jones Transportation Average, which have dropped 4.3% and 3.3% last week,significantly underperformingthe S&P 500. “If dip buying is indeed still with us, these areas should bounce,” Cappelleri writes. “If they don’t, this downturn may have further to go.”

    How that working? Quite well, actually. While the S&P 500 has gained 1.3% to 2777.37 today, the Russell 2000 has climbed 1.5% to 1,544.35. and the Dow Jones Transportation Average has risen 1.7% to 10,287.41. In response to an email earlier today, Cappelleri called it a “good start,” but wants to see the market’s strength persist through the close.

    So far so good.

    Markets Now is a quick take on what’s happening with the Dow Jones Industrial Average and other major market indexes. Don’t forget to check outthe rest of Barron’s markets coverage.

    Write toBen Levisohn
  2. So long as China's CB and the Fed are "jawboning dovishness/stimulus" every few days, the markets can keep going.... soar, even. Like the Metallica song, "Nothing Else Matters".

    Traders should have "possible moon-shot market" in mind.