Stock Market Outlook: What Will Become of the Rally?

The S&P 500 (NYSEARCA: SPY) surged higher by 2.14% as the stock market perceived Federal Reserve Chairman Powell’s statement as dovish, which opens the door for potential interest rate cuts later this year.

One day after producing an oversold cluster signal, the NASDAQ Composite vaulted higher by 2.65% today.

The Dow Jones Industrial Average (NYSEARCA: DIA) and Russell 2000 (NYSEARCA: IWM) each eclipsed 2% upside moves as well.

Despite the across-the-board rally, all four major U.S. stock market indices continue to have bearish intermediate postures and will need a couple more positive sessions before reverting back to bullish.

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All four major U.S. stock market indices continue to have “3 Red Arrows” signals. The Russell 2000 is the only major index with a “death cross” on the 10-40 week moving average crossover system.

Government bonds finally cooled off today as the market switched to a “risk-on” mentality; junk bonds rallied strongly.

The U.S. Dollar and VIX both fell today as market participants were more willing to embrace riskier assets again.

Get market insights, stock trading ideas, and educational instruction over at the Market Scholars website.

Mid-Week Stock Market Video – June 4, 2019

Some additional insights from today’s stock market outlook video:

  • Somewhat surprisingly, crude oil wasn’t able to gain much ground today and closed with its third straight oversold cluster signal; gold maintained its lofty levels from the previous day’s rally
  • Most foreign stock markets also rallied today; Australia has a bullish posture and is closing in on 3-month highs and Israel bounced higher by over 2% after producing an oversold cluster signal yesterday
  • With today’s rally, 5 out of the 11 U.S. sectors now have bullish intermediate postures according to the Market Forecast indicator; the most recent Sector Selector shows resilience in the Technology sector, which was up over 3% today
  • Our trade application example featured buying shares of Jack In The Box (JACK) using a one-cancels-other trade order to take advantage of a recent trend reversal

Twitter:  @BrandonVanZee and @Market_Scholars 

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.