This week in April is typically erratic but maintains a slight bullish bias.
The market has had many chances to sell off over the last several weeks and each dip was bought. The coming week has no events on the calendar that could provide a headline bad enough to knock the market significantly lower. However, it is the headlines you do not expect that cause the most damage.
The market, with the exception of the Nasdaq has had a negative bias over the last couple of weeks. With lawmakers home for the Easter recess, there should not be any material headlines out of Washington. This is a holiday shortened week with the market closed for Good Friday. Volume is normally very low.
Thursday at the open should be the high point as the majority of the major banks report earnings before the open. That should provide a burst of volatility and then the market will go dormant as traders leave early for the holiday weekend.
With nothing on the schedule to roil the markets we should have a good opportunity for some minor gains.
Unfortunately, the following two weeks could be rocky. The days immediately following April 15th tend to be negative as money is taken out of the market to pay the tax bill. That means week three could be choppy. The last week of the month is going to be a headline tsunami. When lawmakers go back to work on the 24th, they will have four days to pass a funding bill and raise the debt ceiling in order to avoid a government shutdown. The battle lines have already been drawn but the headlines were sparse ahead of the Easter recess. Lawmakers did not want to provide any additional information for constituents to complain about in their town hall meetings. The gloves will come off when they go back to work.
With the potential for a government shutdown, the market is going to be walking on eggshells until the issue is resolved. One false step and it could be a long drop.
The S&P is holding just over support at 2,350 and under resistance at 2,370. This range has restricted movement for the last 8 days. With volume expected to be low, we could have a challenge in breaking out to higher levels even if the bias is positive.
The Dow has a similar pattern with support at 20,600 and resistance at 20,750. The Dow is the weakest big cap index but there is secondary support at 20,500 if we were to get a headline drop.
The Nasdaq indexes remain the most bullish with the potential for a breakout at any time. However, the FAANG stocks have been weak the last several days suggesting their leadership position may be fading. Apple is rumored to be having problems with phone production dates and Google is fighting its own battles. Amazon was on fire early in the week but faded the last three days. Netflix has been sinking for the last week.
Despite those individual declines, the Nasdaq remains only a few points away from a new high.
The small cap stocks in the S&P-600 are holding just over support at 820. They have quit declining temporarily and this would be a good place for a rebound to begin. A break below 820 could go into free fall with all that white space on the chart.
The S&P futures opened positive on Sunday evening and are holding at +3.50 but there is a lot of darkness before morning. I have minimum expectations for gains this week but I do expect a positive bias. It is the following two weeks that worry me.
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