Stocks after Last Week’s Rally

Last week was a great week for stock markets. Building momentum on unexpected data, the tables have shifted after a downward trend that seemed like it was going on forever. I wrote my opinion of what we’re going to see this week in the stock markets in my Market Monday column over on the anyoption blog.

To summarize things, I’m expecting to see an upward trend throughout Monday, Tuesday, and possibly Wednesday. However, I think we’re going to end the week off with a downward movement. Today, I dug into the numbers associated with the rally last week, and explaining why I expect to see what I expect to see this week. So, let’s get right to it.

What We Saw Last Week
Monday was a big day for all 3 blue chip indices in the United States, giving way to the momentum we would see carried out throughout the week. Here’s what the numbers looked like…

Dow Jones Industrial Average – The Dow Jones Industrial Average showed impressive gains Monday; rising from 16,399.67 to 16,614.81 by Tuesday’s open.

S&P 500 – Starting the day at 1,904.01, the S&P 500 had risen to 1,941.28 by the open of trading on Tuesday.

NASDAQ – Following the same trend, the NASDAQ had a great Monday as well. It started off at 4,316.07 and was at 4,419.48 by Tuesday’s open.

As more positive earnings reports were released, and surprisingly positive news came out surrounding the Eurozone economy and Chinese manufacturing data, the rise in stock values continued throughout the week. By the end of the day on Friday the Dow Jones Industrial Average, S&P 500, and NASDAQ had risen to 16,803.97, 1,964.53, and 4,483.18 respectively.
What We Should See This week

In the Market Monday with Josh post mentioned above, I predicted that we would continue seeing movement on the upward level Monday, Tuesday, and possibly Wednesday; as investors continue to celebrate great earnings reports and decent data from the Eurozone and China. However, I also predicted that toward the end of the week, we’d start to see downward trends as the Federal Reserve solidifies its exit from the market (the end of stimulus known as quantitative easing). Monday’s performance reflected just that; so, this prediction seems to be coming true so far. Here’s what we saw Monday…

Dow Jones Industrial Average – While we did see slight gains in the Dow as momentum from good news last week continues, it’s obvious that the momentum is indeed slowing. Monday, the Dow Jones Industrial Average started the day off at 16,796.10 and after a series of ups and downs throughout the day, ended at 16,817.94.

NASDAQ – After a rocky beginning that brought the NASDAQ down to 4,451.53 by 10:05 am, the index was able to recover slowly throughout the day and ended with a gain of 2.22 points at 4,485.93.

S&P 500 – The S&P 500 was the only index that didn’t finish the day strong Monday. After a series of ups and downs it seemed like the S&P 500 just couldn’t keep the upward momentum going. It closed the day off at 1,961.63, a slight loss of 2.95 points.

The slowing momentum in growth in the Dow Jones Industrial Average and NASDAQ as well as the negative gains posted by the S&P 500 Monday show that investors are definitely starting to think about the end of quantitative easing. It also shows that while positive data did come out of the Eurozone, they’re not completely convinced that the threat the single currency zone may become to the global economy is gone. Only time will tell how the market will react throughout the week; however, I’m personally convinced that we’ll start seeing losses among all 3 blue chip indices Wednesday or Thursday. Thanks for reading; I’ll see you next week!

Article Author - Written by Joshua Rodriguez from CNA Finance for anyoption.com