Rally or Bear Trap? How to Spot the Hidden Dangers Ahead

In the coming days, crucial economic data will indicate whether the recent "relief rally" has momentum or whether another market crash is lurking.
By John Persinos ,

The four-day "Brexit Bounce" in global markets was a welcome relief, but tread carefully. We're not out of the woods yet.

Unfolding chaos in the European Union, deadly terrorist attacks, political disarray at home and abroad ... nothing seemed capable last week of spoiling the determined buying mood of investors. But that may change in the week ahead, as key economic indicators are released.

With Europe hamstrung by Britain's vote to leave the EU and China's growth slowing, the U.S. has (against all expectations) adopted the mantle of global growth engine. Below, we look at the roster of market-moving data on the docket this week. We also unveil an ingenious investment method that enables you to make big profits in bull or bear markets.

Global stock markets posted their fourth consecutive gain Friday, an exuberant finish to a week that got off to a volatile start as traders initially panicked about Britain's vote to abandon the EU. By the close on Friday, the market had nearly regained all of the ground it lost since the vote on June 23, ending the week up 3%, its largest weekly gain since November. U.S., European and British equities all finished generally higher.

And therein lies the paradox: Demand for U.S. Treasury bonds also surged last week, pushing up prices. The yield on the 10-year U.S. Treasury note fell to 1.45%, close to its record low. At the same time, investors drove up the price of gold, another haven in times of uncertainty.

This mixed mood of optimism tempered by fear could break either way this week. Boding well for the optimists is the fact that several automakers last week reported growth in sales for June. Shares of General Motors (GM) - Get Report and Ford Motor (F) - Get Report are on an upward trajectory that could continue this week if consumer-related data is positive.

Also keep an eye on the latest Baker Hughes (BHI) rig count, scheduled for release on Friday. BHI reported Friday that the number of active U.S. oil rigs rose by 11, to 341 last week, marking the fourth week of rises over the past five weeks. Another sanguine rig count would be a shot in the arm for energy markets and, by extension, the broader indexes.

On the holiday-shortened economic calendar this week:

Tuesday: Factory Orders and the Gallup U.S. Consumer Spending Measure.

Wednesday: MBA Mortgage Applications, Gallup U.S. Job Creation Index, PMI Services Index, and ISM Non-Mfg Index.

Thursday: Jobless Claims, Bloomberg Consumer Comfort Index, EIA Natural Gas Report, and EIA Petroleum Status Report.

Friday: Employment Situation, Baker Hughes Rig Count, and Consumer Credit.

Major earnings reports from sector-moving companies include those from Walgreens Boots Alliance (WBA) - Get Report (on Wednesday) and PepsiCo (PEP) - Get Report (Thursday). The average analyst estimate for earnings per share (EPS) for WBA is $1.14, compared to $1.02 in the same quarter a year ago. For PEP, the average analyst estimate is for EPS of $1.29 compared to $1.32 from the same year-ago quarter.

Walgreens Boots Alliance and PepsiCo are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells WBA or PEP? Learn more now.

The robust expectations for WBA stem from the sustained growth of health and drug expenditures, combined with WBA's increasing cost-efficiency and market dominance. For PEP, the projected decline is a consequence of stiff competition from bottled water and healthier soft drinks.

Post-Brexit anxiety is roiling global markets. If you'd rather avoid stocks altogether during this period of extraordinary volatility, I know a way you can make a guaranteed $67,548 over the next 12 months. In fact, this moneymaking technique is so successful and simple, you might want to give up "conventional" investing forever! Click here now to learn more.

John Persinos is an editorial manager and investment analyst at Investing Daily. At the time of publication, the author held no positions in the stocks mentioned.

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