China is cutting tariffs; the impeachment process has come to an end and the market is at new all-time highs.
The coronavirus is still a concern, but apparently not as much as it was less than one week ago. Progress has been made. Official emergency declarations have mobilized a stronger response. China has quickly built additional hospitals and work is underway on a treatment. Gilead (GILD) appears to be the first to offer a potential cure although its drug remdesivir has not been approved to cure any disease yet. These recent developments along with solid earnings, have been the fuel to reverse the market’s late January retreat in just a few trading sessions this month.
In the above charts, the market’s strength since October can be seen along with second half of January weakness. DJIA(NYSEARCA:DIA), S&P 500(NYSEARCA:SPY) and NASDAQ(NYSEARCA:QQQ) have remained comfortably above their respective 200-day moving averages since October. In January only DJIA actually (and briefly) closed below its even higher 50-day moving average. The market’s rebound surge in February has also reversed negative readings from Stochastic, relative strength and MACD indicators.
Momentum clearly favors the bulls and January’s negative finish remains unconfirmed as of today. As long as economic data and corporate earnings remain positive then the market is likely to continue the trend that has been in place since last October, higher. There are likely to be some dips along the way with the next possible soft patch arriving when earnings season nears its end later this month and/or in the first half of March.