Summary:
- The S&P 500 gained 1.4% last week, closing a few points below its all-time high.
- This occurred despite a devastating hurricane in Texas as well as another provocation from North Korea.
- One factor contributing to the move higher is the start of a new intermediate market cycle.
The stock market moved higher last week, as the S&P 500 (SPX) gained 33 points to 2476, just a few points below its all-time high.
On Monday, the market chopped around despite the devastating damage caused by Hurricane Harvey to the city of Houston. It took Kim Jong Un firing a ballistic missile over Japan to get the S&P 500 futures to trade to 2421. Yet by the end of the next day, the S&P 500 had recovered the entire move lower.
This was due in part to a new effort by the Trump administration to promote its forthcoming tax reform plan. As well, Apple (NASDAQ:AAPL) led the NASDAQ higher after announcing that it would host a product launch event to unveil the iPhone 8 on September 12.
Equities traded higher throughout the week, as the administration continued its promotion activities. On Wednesday, the government announced that US gross domestic product grew at an annualized rate of 3% in the second quarter. Even after missing analyst estimates for job creation on Friday, equities traded until the end of day when traders took some profits.
This concludes the SPX’s intermediate cycle that I have been talking about for the last few months. Once a market cycle ends, the underlying asset tends to move higher, which is what we saw this week. However, I do not see a dramatic move higher.
The accompanying chart shows my projection for the next few weeks: a move lower to resistance before moving higher again, perhaps to new all-time highs. The blue-dotted half circles at the bottom of the chart illustrate the short-term cycle patterns.
For more a more detailed look at cycle analysis for a broader selection of futures, watch the askSlim Market Week every Friday afternoon. Slim will be on vacation next week but will return to produce the 15th of September show.