The stock market made good gains last week as investors danced to a drumbeat of better than expected earnings, as I pointed out in the latest Market Week show. The S&P 500 (SPX) rose 44 points to 3067, an increase of 1.5%.
With earnings season in full swing, companies in the S&P 500 continued to beat expectations, with 76% outperforming on earnings. Yet they continued the trend of revising guidance lower by a better than 2 to 1 ratio.
Also of note, economic data was mixed last week, with consumer confidence and manufacturing underperforming expectations while home sales, GDP, and job creation outperformed. Around the world manufacturing PMIs in China, UK, and the US were also mixed.
S&P 500 (SPX) Daily Chart
Our approach to technical analysis uses market cycles to project price action. Our analysis is that the S&P 500 is now in the rising phase of its current cycle. We see higher prices, given that the bullish momentum from the previous cycle is still in effect. Our near-term target is 3090.
Peering into the commodities sector, crude oil was down nearly 0.9% last week. Yet this was due to be much worse, as oil jumped 3.5% on Friday, after the news broke of a North Dakota oil spill and the active rig count continued to fall.
Crude Oil (/CL) Stock Daily Chart
Based on its market cycles, we believe crude oil is in the declining phase of its short-term cycle. Our target is for another dip to $54 in the coming week. Once the next cycle begins, our forecast is for crude to rise into our short term resistance zone, likely reaching $57 or better.
For a more detailed analysis of both of these charts, check out the latest episode of the askSlim Market Week show.
