These are good times for the equity market, which saw the S&P 500, Russell 2000, Nasdaq Composite, and S&P Midcap 400 close at new record highs on Friday. The good times are expected to keep rolling at today's open, too.
Currently, the S&P futures are up 11 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 36 points and the Dow Jones Industrial Average futures are up 141 points.
The positive bias is rooted in carryover momentum and some seemingly constructive headlines pertaining to trade matters. In particular:
- There are reports that the U.S. and Mexico are very close to striking a bilateral deal on NAFTA, which could incite Canada to get a deal worked out with the U.S.; and
- China's yuan strengthened to a four-week high against the dollar. While the U.S. and China remain at odds over trade issues, the strengthening yuan is seen by some market participants as an encouraging sign that China isn't deliberately weakening its currency to mitigate the impact of a trade war.
There isn't much corporate news moving the dial.
Tesla's (TSLA) decision to remain a public company is getting most of the attention on an otherwise slow news day. This week, however, will produce a good bit of earnings news out of the retail sector, including reports from the likes of Best Buy (BBY), Tiffany & Co. (TIF), Express (EXPR), American Eagle Outfitters (AEO), Abercrombie & Fitch (ANF), Dollar General (DG), and Dollar Tree Stores (DLTR).
The U.S. economic calendar is devoid of any meaningful reports today and the UK market is closed for a summer bank holiday.
Trading volume, therefore, could be on the lighter side of things, as it has been for a good chunk of what has been an otherwise strong summer for the equity market.
Sell in May and go away? That trading axiom hasn't panned out in 2018. In fact, it has been panned this year by the bulls.
Since the end of April, the S&P 500 is up 8.6%.
The fear of missing out on further gains is another supportive element underpinning the futures market this morning. It is easy to understand why considering how resilient the stock market has been in the face of any negative developments.