S&P had one of the best weeks in the stock markets closing at 2.9% for the week. This is the best week so far since early October, this is ager numerous weeks of key resistance level where it failed a number of times. S&P 500 is now only 4 percent less from the old historic closing on September 20th, 2018.
Here are some of the observations this week.
Europe has outperformed the U.S. this month. There are some hopes for a bottom in the recent poor economic data.
Bond yields continue to drop, remaining near the lows of the year. The new-high list this week was littered with interest-rate sensitive stocks that rally when rates remain low.
Traders increasingly believe global central banks have their backs.
Quadruple witching (quarterly expiration of index options and futures, and stock options and futures) has added a lot of volumes this week and likely contributed to the upside rally. But the question is whether the expiration exhausts near term demand. The S&P 500 tends to be lower in the week after quadruple witching.
With the CBOE Volatility Index at 12, its lowest level since October, strategies are driven by volatility would likely add to stock exposure.
The key to a further rally: positive comments on global growth. The two key names next week are Micron and Federal Express, which are both scheduled to report earnings. Both had big drops last quarter and saw lower earnings estimates on concerns over China and (for Micron) increasing competition.