Stocks Pull Back, But Still Up For The Week

Stocks pulled back yesterday, but still remain solidly ahead for the week.

Optimism continues over the next round of trade talks scheduled for September.

Same goes for another rate cut when the Fed meets in September as well.

While nobody is expecting a deal to be announced when the U.S. and China meet next month, there is hope some progress can be made and an actionable cooling of tensions can follow.

But hopes are high for another rate cut on September 18th and expectations are growing that it could be 50 basis points this time.

Whether it's a quarter point or a half point (if at all), we'll know in four weeks.

In the meantime, today's FOMC Minutes from last month's meeting may shed some light on how the Fed is leaning.

Either way, if we do get a rate cut next month, that's very bullish for the economy and very bullish for the market.

If stocks pull back a little bit more before they takeoff again, I'm unconcerned as support is nearby. There's a common gap left on the S&P chart from Monday's higher open. A pullback to 2,893.63 fills that gap and should be considered the first area of support. There's another gap just below there from Friday's higher open at 2,856.67. That would be the next area of support. Those are only 0.24% and 1.53% lower from here.

Those gaps don't necessarily have to be filled, even though common gaps typically are.

But if we did pull back to those areas, I'd be a buyer of those dips.

Because it looks like there's a lot more upside to go.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

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