The week that was…
Three mild down days were bookmarked by 2 mild positive days as we had another week where the indexes mostly stalled. The big event of the week was Friday’s employment data (subject to revision in the months ahead) which was a bit below expectations at 151,000 jobs created. In the perverse world of stock investing however that was “good” as it meant no urgency for the Federal Reserve to move to hike rates. Hence the premarket gap up Friday. Ah “Goldilocks”.
“It wasn’t strong enough to force the Fed to raise interest rates in September, but it also wasn’t weak enough to raise concern about the U.S. economy or dampen the outlook for corporate earnings.” said Colin Cieszynski, chief market strategist at CMC Markets.
It is also worth noting the ISM Manufacturing index fell below 50 (49.4) which signals contraction – keep an eye on this if it stays there as there was some worry about a manufacturing recession early in the year (ex automotive) but we’ve seen some bounce back the past few months. One month does not mark a new turn in the situation so the report a month from now will be of high interest.
Did we mention it a slow August? The WSJ reports it was the 4th smallest range for an August since 1928!
Here is a nice 5 day “intraday” chart of the S&P 500 via Doug Short.
Who knew?: We’ve all heard of house flipping but did you know credit card flipping was a thing?
Indeed, as credit-card reward programs have grown more generous, online forums and bloggers have become fonts of ingenious ways to exploit them for free travel or cash. To accrue sign-up bonuses, for example, some credit-card churners end up cycling through dozens of credit cards.
Banks, hotels and airlines don’t necessarily condone such strategies. But the online buzz among churners and other points-obsessed customers has become a roar that’s also reached card offers’ broader intended audience: affluent people who travel frequently.
The week ahead…
We are going from an economic heavy week of reports to those that are less important. Plus it’s a holiday shortened week. The ISM Non Manufacturing report is the main one of to watch. Technically we remain on watch to see if the NYSE McClellan Oscillator can get back in the green, and if the S&P 500 exits this “wedge” in either direction – up or down. Angst over a Federal Reserve hike in September should subdue with the jobs report (although anyone who really watches these things knows the Fed doesn’t like to do things before an election). The European Central Bank meets on September 8th.
Short term: We are waiting to see which way this wedge in the S&P 500 resolves – up or down. The wedge is getting pretty wide at this point. The S&P 500 has also closed below (or on) the 20 day moving average much of the past week amd a half; a loss of some short term momentum. The NASDAQ popped back above summer 2015 highs on Friday’s rally.
This is about as close to positive the NYSE McClellan Oscillator has been in quite a while. It’s long stay below 0 has not hurt the market certainly but the major indexes have gone almost nowhere since it went red.
Long term: Bulls remain in total control.
Charts of interest:
Oil had a failed breakout in the past few weeks. Again.
Tesla Motors (TSLA) had a rough week with the rocket disaster, and disclosure it needs to raise cash.
Tesla revealed in an SEC filing this week that it will need funds reasonably soon owing to a $422 million drain on its cash from investors converting debt securities, to be paid out in the third quarter. This adds to the financial strain the Palo Alto, California-based maker of electric autos already faced to quickly complete its $2.6 billion merger with SolarCity …
Alibaba (BABA) broke out nicely this week from a high tight flag.
After an extended foray below the 10 day moving average, Twilio (TWLO) regained some momentum Friday; this on the heels of a pretty ugly session Thursday when it tried to break out and closed near lows. A head spinner for sure.
Lululemon (LULU) slumped almost 11% after the yoga-gear maker late Thursday provided a tepid forecast for the current quarter.
Have a great Labor Day and see you next Sunday.