This was a constructive week on Wall Street, stocks opened lower but closed higher for most of the popular indices. A subtle, yet important, sign of strength is to see a market open lower but close higher in any given period. All things being equal, the longer the period, the stronger the ramification for the market. So, the fact that the major indices opened lower last week, which was shortened holiday week, but closed higher on a weekly basis, is a bullish sign. Separately, if you look at a monthly chart, it is on track to do close to the same thing as next week will be the last week of February.
Stepping back, the action is very constructive as buyers quickly showed up and are doing their best to quell the big drop we saw earlier in the month. As long as February’s lows hold, the bulls remain in control of this market.
A CLOSER LOOK AT WHAT HAPPENED LAST WEEK…
MON-WED ACTION:
Stocks were closed on Monday in observance of the President’s Day holiday. On Tuesday, stocks fell hard after Wal-Mart ($WMT) gapped down after reporting earnings. The Dow lost 254 points as Wal-Mart suffered its worst day since 1988. Investors were spooked because the yield on the benchmark 10-year U.S. note hit the highest level since 2014. Separately, the yield jumped on the shorter-term two-year note to the highest level in 9 years.
On Wednesday, stocks opened higher but closed lower after sellers showed up in the last hour of the day and aggressively sold stocks. At 2 pm EST, the Fed released the minutes of its latest meeting which showed policymakers are ready to raise rates a few more times in 2018. Initially, stocks rallied after the minutes were released but closed lower as sellers showed up before the close.
THUR & FRI ACTION:
Stocks rallied sharply on Thursday as the yield fell on the 10-year note. In corporate news, Chesapeake Energy (CHK) jumped nearly 20% after reporting earnings while shares of Roku (ROKU ) plunged nearly 20% after they released earnings. Separately, shares of Netflix (NFLX) and Amazon.com (AMZN) hit fresh record highs.
