The S&P 500 and the Nasdaq weakened last trading week while the Dow Jones advanced 0.1%. Wall Street’s three main indexes continue to trade near record highs, and technically looking, there is still no sign of the correction.
The current bull market broke records for the longest-lasting period, and disappointing economic data, like weaker-than-expected jobless claims, continue to be dismissed. Some analysts warn of an ‘epic’ bubble amid fears that stimulus flow has created extreme overvaluation.
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Bank of America announced that there is irrational exuberance on Wall Street and warned its clients that a correction could happen. On the other side, some investors believe that the recovery from the pandemic could add extra impetus to stock markets.
Increasing vaccinations will help the economy recover, but lots of analysts agree that all positive expectations are already included in the price of many stocks. They even say that stock bubbles are inflated to bursting point, and the current situation will be recorded as one of the great bubbles of financial history.
“Central bankers knew their policies were feeding a stock market bubble with the side effect of fuelling inequality between already-wealthy shareholders and those who could not take part in the equity boom. The concern I have is they have created a massive asset bubble and price distortion,” said Sven Henrich, founder of market analysts NorthmanTrader.
The US Federal Reserve considers risks of business failures “remain considerable” and announced that it would support the economy as long as the pandemic keeps taking its toll on economic progress. Details of a possible $1.9 trillion package are still being worked out, and investors are waiting for any news related to a stimulus package in the US.
S&P 500 down -0.7% on a weekly basis
For the week, S&P 500 (SPX) weakened by 0.7% and closed at 3,906 points.
As long the price is above this trend line and 3,800 points, the S&P 500 index remains in a bull market, and there is no indication of the trend reversal. If the price jumps above 4,000 points, it would be a “buy “signal for the S&P 500, and the next target could be around 4,100 points.
DJIA up 0.1% on a weekly basis
The Dow Jones Industrial Average (DJIA) advanced 0.1% for the week and closed at 31,494 points.
Dow Jones continues to trade near record highs, but if the price falls below 31,000 points, it would be a firm “sell” signal, and the next target could be around 30,500 points.
Nasdaq Composite down -1.6% on a weekly basis
The Nasdaq Composite (COMP) has lost 1.6% on a weekly basis and closed at 13,874 points.
If the price jumps again above 14,000 points, it would be a confirmation of the bullish trend, but if the price falls below 13,000 points, it would be a strong “sell” signal, and we have the open way to 12,500 points.
The S&P 500 and the Nasdaq weakened last trading week while the Dow Jones advanced 0.1%. Wall Street’s three main indexes continue to trade near record highs, and technically looking, there is still no sign of the correction. The current bull market broke records for the longest-lasting period ever, and Bank of America warned that there is irrational exuberance on Wall Street.