Here are the main highlights for the week ending 24th September 2017:
Little changes in Fed’s guidance:
The Fed announced no change in the interest rates, but another hike is likely before 2018 begins. There’re rumors that it's planning for three increments in 2018 and two in 2019. The Fed also plans to reduce its balance sheet of multi-trillion dollar debts next month. It’ll start by clearing $10 billion. And then increase the same amount every quarter until it reaches $50 billion.
Trump sanctions against North Korea:
President Trump blessed for actions against anyone associated with North Korea. His plans include putting pressure North Korea's funding for the nuclear weapons program. Trump also urged United Nation members to take a hard stance against the enemy in the assembly. North Korea retaliated by threatening to plant a hydrogen bomb in the Pacific Ocean.
Stocks stayed steady after the news about the Fed’s interest hike and North Korea saga this week. Market indices were a bit higher for the week. Many reached new highs at the start, but some pulled back on Friday. See table below for the summary of their performance.
Small-cap and micro-cap indices like IWM and IWC are the leaders for the week. Coming close third is mid-cap MDY. All three are far ahead than the big-cap indices such as DIA (Dow Jones), SPY (S&P 500) and QQQ (Nasdaq). The worst performer for the week is QQQ with a weekly return of -1.19%. One can tell that there is a rotation in leadership amongst the market indices. See if IWM, IWC and MDY can continue their price run-up next week.
Overall, QQQ is still the leading index in 2017. DIA and SPY are behind by almost half the return of QQQ. MDY, IWM and IWC are the laggards. But watch for their run. They might pull of a high double-digit returns soon.
Based on the daily charts above, it shows that most of them remain in uptrend or consolidating its gains, after bottoming in mid-August. And they're within 2% of their 52-week high.
However QQQ and SPY are exception. They're still digesting after 9-10 days of uptrend in early July. Prices broke out from the base formations but their attempt failed. Now they've returned to their previous bases. See if QQQ and SPY can rest and bounce above the support level at 144 and 248 respectively.
IWM is touching the old high of 144. See if it'll rest and digest for the next several days or break above the resistance level to higher grounds.
MDY is nearing its old high above 325. See if it'll rest and digest for the next several days or break above the resistance level to higher grounds too.
DIA and IWC continue to climb higher to all time highs. However, be prepared for them to digest their gains for several days or weeks. Else, they'll remain in their uptrend and reach price exhaustion and decline.
Financials (XLF), energy (XLE) , materials (XLB) and industrial (XLI) are the best performing sector ETFs. Their returns range from 0.86% to 2.86% for the week. In the daily charts, all four showed strong climbs since bottoming in mid-August. See if they rest and digest for the next several days or break above the resistance level to higher grounds too.
Technology (XLK) is treading carefully as it creeped up. It continue to display higher highs and higher lows. That's a positive sign. See if it continues in this price behaviour or breakout to record new high.
Healthcare (XLV), utilities (XLU), consumer staples (XLP) and consumers discreet (XLY) are the worst performing sector ETFs. Their returns range from -0.10% to -2.78% for the week. In the daily charts, all four plunged hard since mid-Sept. Only XLY showed some price resilience; it didn't display steep slide like the other three. See if they'd stop dropping lower and move sideways to rest in the next several days.
MY STOCK PORTFOLIO
Here's my current stock portfolio. AVX, OLED, POWI, RNG, SYX and VRNS declined for the week. It's likely that they are digesting the profits made in the last few days and weeks. There's no need to be alarmed as it's natural for them to consolidate after price uptrend. Also, most of them will be visiting their old price highs. See if they can find support on those regions and make price reversals over the next few days.
GENC and APPF continue to defy all odds and press higher. It seemed like there is no turning back. As a precautionary measure, be prepared for price consolidation next week or the week after.
Overall, all these stocks exhibit long-term uptrend.
WEEKLY STOCK PICKS
Here are the stock picks for the week. They've been chosen as they have good fundamentals such as positive earnings and revenues, zero debt/equity ratios and near their all-time highs.
Fed’s declaration of tight monetary policy is a positive sign. Investors like you can expect :