Goldilocks Drives S&P 500 to New Highs

"Hey Jerome, enough with the rate hikes."

If the longest bull market in history had a patron saint, it would be Goldilocks.

This Wednesday marked the 3,453rd session in the uptrend that began on March 9, 2009. That outlasted the earlier run between late 1990 and early 2000.

While improving economics and earnings have been key ingredients in the rally, a combination of low interest rates and benign inflation have provided a key helping hand. Those conditions are often nicknamed “Goldilocks” after the fabled girl in the story with the Three Bears. The economy isn’t too hot, or too cold, but just right.

Goldilocks gave stocks another shot in the arm today when U.S. Federal Reserve Chair Jerome Powell gave a milquetoast address at Jackson Hole. We’re not sure if he was watching this Monday’s Market Action webinar, which said most of the bullish news was priced into the U.S. dollar. But, it had the expected effect. Now the greenback is crumbling, and assets that benefit from that kind of move are rising.

First, commodities are spiking: Oil, gold, silver and copper. That’s lifting the Thomson Reuters CRB Index ($TRCCRBTR) 1.1 percent, its biggest one-day gain since June 22.

Next, tech and growth stocks — especially members of the Nasdaq-100 — often do well in this kind of environment. The sector also got a boost from Autodesk’s (ADSK) strong earnings. The software company beat estimates across the board and won praise from analysts for getting customers into stickier subscription-based revenue streams.

Splunk (SPLK), a smaller data-mining firm, knocked it out of the park as well.

Did you miss our special report on cloud-computing
stocks like SPLK? Click here for access.

By the way, don’t forget earnings season has passed and some noteworthy companies made some interesting moves. (Click here for Market Insights’ earnings recaps.) And while this isn’t a recommendation and everyone needs to do their own research, here are some we’ve had on out list:

  • Alphabet (GOOGL): Gapped up on strong results in late July and has now pulled back to retrace that entire move.
  • Expedia (EXPE): Also spiked in late July and is now trying to rebound from 50-day moving average after retracing the entire rally.
  • Facebook (FB): The social-media giant had a terrible quarter, but has held its ground in the 170s. That’s a potential support zone from the summer of 2017. Can a mega-cap company like FB stay down forever when the Nasdaq is flirting with new highs?
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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.