An excerpt from our Weekly Market Update dated 04/04/2021.
The S&P 500 gained 1.14% this week with Thursday's close at 4,019.87.
The big story this week was not only the S&P 500 finally eclipsing the 4,000 level, but also the mountain of outstanding economic data that was revealed.
There's often an "aha!" moment in the world of stocks, or a time where the price action we've seen over the trailing time period becomes sensible, and this week provided numerous "ahas!" to justify why the S&P 500 has gained nearly 30% since November of 2020.
On Tuesday we saw consumer confidence blow past estimates and rise to its highest level since the pandemic began (click here).
On Wednesday we saw Chicago PMI blow past estimates to reach its highest reading since the summer of 2018 (click here).
On Thursday we saw ISM Manufacturing Index blow past estimates to reach its highest level in 37 years (click here)!
And on Friday we saw a blowout jobs report with the economy adding 916,000 jobs in March, nearly 300,000 more than consensus economist forecasts (click here).
For months we've been writing about market participants pricing in their expectations for a future economic bonanza via roaring stock prices. The economic data is meeting those expectations, which is probably why the month of March's downturn didn't materialize into a "correction". And not to be outdone, President Biden set the stage for a $2 trillion infrastructure plan over the coming months (click here).
So the economy is revving its engine and there's evidence that suggests there's still another gear left in front of us.
Internally, the technology sector got back to its winning ways this week. The S&P 500 Technology sector (SPT) gained 2.12%. Naturally, the traditional market cap weighted S&P 500 outpaced its equal weight S&P 500 counterpart. SPT still accounts for roughly 30% of the S&P 500, so it's imperative this sector continues to find its way to the north.
For the week ahead, it's a fairly pivotal trading week for the S&P 500. On one hand, prices just scored a "touchdown", they're at all-time highs, and there are no known levels of "resistance" left on the chart. Strength should beget strength here and we'd like to see the S&P 500 sprint toward the ~4,100 region.
Steve & Rick
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