Market Recap Sep 2, 2015

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Volatility continues to reign and is a symptom of an unhealthy market, despite the exhilaration of the up days. The S&P 500 gained 1.83% and the NASDAQ 2.46% as indexes gapped up sharply at the open, sold off some around noon, recovered thru 3 PM then rallied sharply in the last hour. China’s market will be closed Thursday and Friday for holidays so maybe that will help U.S. markets calm down.

On the economic front, July’s factory orders rose 0.4%, below consensus expectations for a 0.9% increase. The second-straight month of increases was driven by strong demand for auto sales. The ADP report missed expectations slightly, showing creation of 190,000 private jobs versus expectations of 200,000.

Fun fact: Analysis by Bespoke found that following declines of more than 1% on the first trading day of September, the S&P averaged a loss of 2.21% for the rest of the month, with positive returns just 40% of the time.

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Market Recap Sep 1, 2015

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Indexes began the fourth quarter not unlike how they ended the third quarter. A lot of volatility and a big swoon. The S&P 500 plunged 2.96% and the NASDAQ 2.98%. Two sets of key Chinese data disappointed investors, leading to another major gap down at the open. The official manufacturing purchasing managers’ index (PMI) edged down to 49.7 in August from 50 in July, while the final Markit manufacturing PMI came in at 47.3 in August, the lowest reading since March 2009. Any reading below 50 signals contraction.

This is a big week for U.S. economic data with both ISM reports (manufacturing and non manufacturing) and the employment data Friday. The first one of the three was poor. The August ISM manufacturing index fell to 51.1 from 52.7 the prior month for its weakest read in over two years.

We had mentioned since the beginning of last week when we had a huge swoon there would be a big bounce; that was expected as so many technical indicators were at extreme oversold conditions. We also said it wasn’t the bounce the mattered but what happened after the bounce. With the action both yesterday and today, that action is obviously not positive. If you are a person without a timeline of 3+ years minimum there should be high levels of cash in your portfolio until we see conditions improve.

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Market Recap Aug 31, 2015

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As we exited last week we said the easy bounce that was predictable based on rarely seen oversold conditions was now in the rear view mirror and now it gets complicated. The nature of the action in the next 4-10 days will tell us a lot about the intermediate term. Today was not such a good day to that end. The S&P 500 fell 0.84% and the NASDAQ 1.07%. We had a very atypical month for what had become a complacent market that was not even used to a 5% correction, not to mention a very normal 10% variety.

Both the Dow and S&P had five days of gains or losses of more than 2% in August, making it the most volatile month in nearly four years. The major averages posted August losses of more than 6% each, their worst month in at least three years.

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Market Recap Aug 28, 2015

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After all the volatility this week it was ironic to finish on a day much more typical of a lazy August. The S&P 500 gained 0.06% and the NASDAQ 0.32%. The “easy trade” (buy the massive gap down Monday on rarely seen oversold conditions, sell after a big bounce) is over and it gets difficult from here as there has been some damage done to both the indexes and many individual charts. Others – like Netflix – if you closed your eyes for a week and just looked at the close a week ago and today you’d never know what happened.

The Nasdaq Composite ended up 2.6% for the week, recovering more than a 8.79% plunge, in its biggest intra-week reversal on record. The S&P 500 eked out a gain of about 1 point on the day, holding a 0.91% gain for the week. The index recovered from a 5.27% for its biggest intra-week reversal since the week of Sept. 19, 2008, when Lehman Brothers went bankrupt.

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Market Recap Aug 27, 2015

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After Tuesday’s failed rally we’ve now had a powerful but totally unsurprising 2 day rally. Hopefully you did not panic Monday or Tuesday as we said in the next week we’d see a significant bounce and often the biggest moves up happen during corrections. Now comes the less predictable part. The S&P 500 gained 2.43% and NASDAQ 2.45% as both roared out of the gate in big gap ups, sold off in the 2 PM hour but roared back in the last hour. In economic news, the second estimate of second-quarter GDP came in at 3.7%, topping the first read of an annualized 2.3%. July pending home sales rose 0.5%, holding steady from an upwardly revised June reading of a 0.5% increase.

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