Market Cycles Point Towards A Down Week For Stocks

Summary:

·       The S&P 500 moved higher last week, rising by 0.9%.

·       Uncertainty in Europe ticked up, as Angela Merkel’s attempt to form a coalition government in Germany hit an impasse.

·       Chinese stocks dropped by 3% on Thursday as the market became increasingly concerned with the country’s debt and inflated asset values.

The stock market moved higher last week, with the S&P 500 (SPX) moving up 24 points to 2602.

On Monday, German Chancellor Angela Merkel’s attempt to form a coalition government broke down, as the pro-business Free Democratic Party pulled out of coalition talks, which was followed by a brief pullback in equity futures. This increases political uncertainty in Europe, as Germany has been a source of stability for the last decade.

On Tuesday, Goldman Sachs announced that it was bullish on stocks in Europe and the US, which pushed markets higher. On Wednesday, the Federal Open Markets Committee released its most recent meeting minutes, which indicated a concern with inflation as well as a potential stock market reversal that could hurt the overall economy.

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