Stock Indexes Rally; What China Stocks Say About Trade Talks

Stock indexes were up more than 1% Friday afternoon, after hopeful news on the trade squabble with China cheered investors.




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Indexes traded near session highs and were on pace for a fourth consecutive gain. Significantly, indexes added some space above their 50-day moving averages.

The S&P 500 jumped 1.3% and is also penetrating higher above the 2600 price level. That was a potential resistance area, so regard the move above it an encouraging sign for the market’s rebound.

The Nasdaq composite climbed 1.2% and is above another important milestone, the 7000 level. The Dow Jones industrial average added 1.3%.

Volume swelled, not just because of the trade news but also because today is a day of options expirations. Rising stocks led decliners by a 3-1 ratio on the NYSE and by better than 13-to-5 on the Nasdaq.

China Trade Rumors

Indexes rose at the open and soon pulled back. But then they rallied after Bloomberg reported that China offered to buy more than $1 trillion in additional U.S. imports over six years.

The offer may sound too good to be realistic. But it builds on positive headlines on trade talks Thursday that boosted the stock market, even while other reports gave conflicting details.

While a deal remains far from ready, the stock market is sensing progress. U.S. indexes are poised for their fourth straight weekly advance, and Chinese stocks are rallying.

SPDR S&P China (GXC), iShares China Large-Cap ETF (FXI) and iShares MSCI China (MCHI) are up 3% to 4% this week. Those ETFs were punished as much as 30% to 35% last year as the trade war squeezed Chinese companies. The Shanghai composite plunged as much as 31.7% in 2018.

IBD 50 ETF

Leading stocks were lagging a bit. The Innovator IBD 50 ETF was up 1.1% in afternoon trading. Atlassian (TEAM) hurt the IBD 50’s performance some after shares reversed sharply lower following the company’s earnings report late Thursday.

HubSpot (HUBS) surged 4.5% in heavy volume. The enterprise software company is approaching the 162.30 buy point of a cup-without-handle base. Alarm.com (ALRM), another business software leader, rose above the 60.30 buy point of an awkward base in big volume.

Busy Trade In Netflix Shares

Netflix (NFLX) was one of the most heavily traded stocks so far Friday. Shares remained lower after the company’s sales missed expectations and the outlook disappointed. Netflix pared losses as analysts raised price targets. The stock is forming a large base as it nears potential resistance around 387.

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