The market had a number of catalysts this week and put a positive spin on all of them.
Earnings expectations were low and that helped to create a very strong positive reaction to the report from Apple (AAPL) even though it was mostly in line. Facebook (FB) had more solid results and that helped market players forget some of its recent problem with privacy.
While earnings were helpful, the big news this week was that the Fed cemented the dovish bias that it had indicated in the last few weeks. Not only is the likelihood of any rate hike greatly reduced but Jay Powell now states that the Fed will be very patient about unwinding all the debt they have bought over the years.
Another market driver were a number of positive comments about the progress of trade with China. President Trump plans to meet with Chinese Premier Xi at some future date to try to finalize a deal. While the Trump administration warns that there is still much work to do, they are cautiously optimistic.
To top off the steady flow of good news, there was a surge in new jobs reported in January that caught many by surprise. There was also a solid ISM number and good consumer sentiment. If the Fed is worried about a slowing economy there was nothing in the data today to justify the pessimism.
The news kept stocks running higher all week, although there is some nervousness setting in as overbought conditions build and overhead resistance lurks. The worst December in a very long time led to the best January since 1987. Fear of losing dominated the action in December while the fear of being left out dominated in January.
There are still a large number of companies set to report earnings next week but with Fed meeting now over and the China negotiations on hold for a week or two, there isn't as many potential catalysts to drive the action. The big question is will market players be confident enough to keep the momentum running? With the Fed firmly on their side it is tough to bet against the bulls right now.
Have a great weekend. Enjoy the Super Bowl. I will see you on Monday.