U.S. stocks have been volatile over the past month, but have managed to push higher. The first week of July was very good for stocks. The tech-heavy NASDAQ and small-cap benchmarks outperformed. The Dow Jones Industrial Average added 185 points to close at 24,456, up 0.8% for the week.  The NASDAQ Composite rebounded from last week’s decline, rising 2.4% to 7,688.  By market cap, the large cap S&P 500 index gained 1.5%, while the mid cap S&P 400 index added 1.9% and the small cap Russell 2000 surged 3.1%. 

Last week a bunch of new data releases showed the U.S. economy continues to experience strong, above-average expansion. The strength of the U.S. economy has caused the Fed to raise interest rates two times so far this year. Two more rate hikes are expected. However, tariffs against Chinese goods that are taking effect this week and retaliatory measures by China could slow down this economic momentum.

Further pressure could come from the rallying dollar. Rising interest rates make the U.S. dollar more attractive. But a stronger dollar can make American exports more expensive and reduce the value of companies’ non-U.S. revenues. Tariffs and a stronger dollar could be reasons why small-caps have taken off.

However, we remain confident in the current positive trend of the market. Our bull-bear indicator (long term) is positive, indicating a potential uptrend in the longer timeframe. In the intermediate timeframe, our Quarterly Trend Indicator is positive for this quarter, and the shorter (weeks to months) time frame is also positive. Therefore, with all three indicators positive, our rating for the U.S. equity markets is positive at this time.

Want to talk about what that means? Call us today at 888-510-2360.