The S&P 500 got a big boost last week from the French election results, Trump tax plan and better-than expected earnings. The key break-out was from the downtrend channel line and now keeps the key support at 2380. The S&P 500 held that support on Friday buoyed by the earnings results from big tech names. The internal breadth was positive with the NYSE Advance/Decline line set a series of new highs during the week. If we break out the previous high of 2400.98 made on the 1st of March this year, the uptrend continues to be intact. The current resistance for S&P 500 remains at 2394.75, followed by another at 2400.98. The major averages broke out of the overhead resistance and I continue to reiterate my bullish bias about which I mentioned in my April 17th newsletter.
Source: Thomson Reuters
The Trump tax plan was received by open arms by the Wall-Street but given the increase in government deficits and interest rates, achieving congressional support would be a challenge.
Last week we also had the GDP numbers, which rose at 0.7% (at annual rate). The huge inventory subtraction shaved off 0.9 percentage points of the GDP growth and government expenditure shaving off another 0.30 percentage points. The personal income outlay report which came out this week, showed the real personal income increased 2.4% for the month March 2017 (y/y) and the personal consumption expenditure (ex-food and energy) about 1.6%. There is a Fed policy meeting this week, but nobody expects a change. Then there will be April employment report this week, which arrives on Friday.
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