Although the Nasdaq 100 index (represented by the QQQ ETF) closed lower by 0.39%, it still seemed to continue its upward trend. The index's lowest price for the day was incrementally higher than the lowest prices of the past several days, creating a clear upward trend in the price action.
The chart below displays how the upward trend in prices for the fourth quarter of 2019 has appeared to continue without any kind of pause at the end of the year. Chart watchers recognize that this is a bit unusual all by itself, but for the trend to continue unabated right into the year for the first two weeks shows just how bullish investors are right now. Investors appear to be anticipating excellent results to be reported from companies over the next few weeks of earnings season.
Will Housing Demand Decline in 2020?
The interest rate on the 10-year Treasury note (TNX) had dropped by half during 2019 but had then rebounded from its lows and begun an upward trend. The chart below shows how this upward trend appears to have made a pause. This may be influenced by the market's general expectation that the Fed will hold its interest rate target steady for the entire year in 2020.
However, the pause in the upward trend also implies that demand for mortgages has tapered off. Is that because rising interest rates pushed them to be less affordable? Or is it because demand for mortgages (and the homes being purchased with them) has tapered off? Considering that mortgage rates remain in a historically low range, it is likely to be declining demand.
Netflix Poised for Upward Trend as Earnings Approach
Over the past two years, shares of Netflix, Inc. (NFLX) have had significant fluctuation between the highs and lows. Since October, the shares have begun an upward trend that may be strong enough to continue to new highs and even move above $400 per share.
The company has managed to confound critics by holding on to subscribers despite two significant increases in subscription price. It seems as though it is a good bet that the company can continue its trend after earnings next week.
The Bottom Line
After the Nasdaq 100 hit new all-time highs on Monday, Tuesday's trading brought a mild consolidation of prices closing slightly lower across large-cap indexes. Interest rates also closed slightly lower, as measured by the movement of the 10-year Treasury note, signaling that a softening of demand for mortgages may be in store for the year ahead. Meanwhile, Netflix stock appears to be poised for growth after earnings next week.
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