Technical Picture for the Stock Market Improves Even as Valuations Become More Stretched

Equities rally on Trump headlines, straying further from fundamentals

Highlights

• Equities rally on Trump headlines, straying further from fundamentals

• Europe piles on defense commitments at the NATO summit

• The dollar weakness signals recession pressures mounting

• There is nothing “solid” about today’s job market

Key Take Aways

• Stocks Rally But Fundamentals Lag: As President Trump moves from “win” to “win” (the Middle East and now NATO), the stock market is following suit. While this cannot exactly be described as a fundamentally-based rally (see more below), the technical picture has improved considerably as the gaps get filled with ease and the cumulative daily A-D lines for both the NYSE all-issue composite and the S&P 500 are making fresh all-time highs — supporting the notion of a spring-summer rally remaining intact.