S&P 500 futures are flat this morning as the White House and Congress began negotiations on round 2 coronavirus stimulus package after both sides sought a compromise. We are generally BULLISH on the stock market because we believe Congress will pass another stimulus bill and the Federal Reserve will continue propping up the market. The coronavirus breakout looks to be going down and the hopes of a vaccine will likely cause the stock market to make jumps when announced. Our current market signals are below. We are cautious with GOLD because it will most likely drop as stocks jump, but our indicators for it are still BULLISH.
|S&P 500 CONSUMER DISCRETIONARY||Strong Buy||1107.71|
|S&P 500 CONSUMER STAPLES||Strong Buy||631.38|
|S&P 500 HEALTH CARE||Strong Buy||1233.67|
|S&P 500 INDUSTRIALS||Strong Buy||608.04|
|S&P 500 INFORMATION TECHNOLOGY||Strong Buy||1879.14|
|S&P 500 MATERIALS||Strong Buy||384.72|
|S&P 500 REAL ESTATE||Strong Buy||217.37|
|S&P 500 COMMUNICATION SERVICES||Strong Buy||190.61|
|S&P 500 UTILITIES||Strong Buy||306.08|
|S&P 500 FINANCIALS||Buy||397.87|
|S&P 500 ENERGY||Strong Sell||278.27|
BULLISH Driver: Stimulus #2 – Congress is currently negotiating the next round of coronavirus aid. Congress has returned to work to craft a new budget driven by President Trump and his top economic advisers, who are being pushed by a faltering economic recovery, an upcoming deadline for the next round of federal aid for coronavirus and higher unemployment benefits.
And with no unemployment benefits for 600 weeks, Congress faces a dilemma over the fate of the $1.2 trillion stimulus package in the coming days. With 25 million Americans set to lose the $600-a-week special unemployment payment on July 31, Congress must decide whether this is a critical boost to the economy and a disincentive to people to return to work.
President Trump and Congress are facing their last chance to boost the economy before the November election.
EU leaders showed the first signs of compromise on a stimulus plan at a meeting in Brussels on Wednesday, a day after the Brexit vote. Talks in Brussels dragged on for a fourth day on Monday, with signs that leaders of the northern EU countries were willing to compromise on the European Central Bank’s $1.2 trillion stimulus plan.
BEARISH DRIVER: Coronavirus Resurgence – The Los Angeles Mayor Eric Garcetti said the city is on a “stay-at-home order” to stop the spread of the virus, according to a Los Angeles Times report. New York City has resumed plans to open the Empire State Building, the world’s largest, to allow large groups to meet and to allow outdoor entertainment venues to open with limited capacity.
The outbreak of a coronavirus pandemic, which the CDC says is under control and everyone is wearing masks. Facial masks have proven to be the most powerful weapon in the fight against the novel coronavirus. There is growing evidence that face masks help prevent transmission when infected wearers are in close contact with each other.
Market Direction – Flat/Bullish
Stocks have turned green in the first half of the year, according to the latest quarterly report from the US Treasury. In a sign of the reopening of plans for a new round of stimulus, financial markets cast doubt on the pace of economic recovery. The global economy suffered a severe slowdown in the three months to June, and it is clear that the strength of its recovery will depend on whether the authorities mitigate the ongoing pandemic wave.