S&P 500; US Indexes Fundamental Forecast – March 30, 2017

U.S. stocks finished mixed on Wednesday amid concerns over the start of Brexit negotiations, the lack of fresh economic data and worries over President Trump’s ability to fulfill several of his campaign promises including tax reform and increased infrastructure spending.

In the cash market, the benchmark S&P 500 Index settled 2.56 higher, up 0.11% at 2361.13. The tech-based NASDAQ Composite closed at 5898.22, up 23.08 or +0.39%. Finally, the blue chip Dow Jones Industrial Average settled at 20659.32, down 42.18 or -0.20%.

The S&P 500 received a boost from higher oil prices. Crude rallied because of a better-than-expected inventories report from the U.S. Energy Information Administration, supply disruptions in Libya and optimism over OPEC’s plan to extend its program to limit output. The energy sector rose 1.2 percent.

Forecast

I think today is a critical day for the stock market. The week started with the market under pressure due to the failure of President Trump to pass healthcare reform. However, stocks were able to bounce back on Tuesday with the release of better-than-expected consumer confidence data.

If stock investors are able to shrug off the start of Brexit negotiations, worries over the French election and Trump’s slow start then I think we can mount a strong recovery rally today. This week’s price action and recovery suggests that investors may be willing to give Trump the first 100 days as expected when he first took office.

Furthermore, I think investors may realize that it takes time to make changes in Washington. After all, it took Obama eleven months to get his healthcare plan turned into law. Trump’s first attempt took place after only sixty-five days in office.

Additionally, the Fed keeps talking about raising rates because the economy is heating up. This is what will ultimately support stock prices.

If you look back, investors started to buy stocks on election night in November. Trump didn’t take office until January 22. So the market may be way ahead of itself. If investors are nervous about Trump’s ability to run the government then they have nobody to blame but themselves because they are the ones that turned into speculators and bid up stocks.

If this market is going to rally then it’s going to need help from technical traders. Look for a strong upside bias to develop today if the June E-mini S&P 500 Index can overcome 2361.75.