August 2, 2015
Weekly Market Outlook
By Keith Schneider
After the big selloff in the last days of June over the Greek crisis (remember that?) causing most global stock indexes to close down 2-3% or more, US stocks recouped their losses in July with the exception of the Dow Industrials (DIA) which was barely able to regain its composure. It is now hovering just below the 200 day moving average in a distribution phase. The Russell 2000 (IWM) the smaller to mid-cap stock index tested support and bounced at the 200 day moving average which coincided with the highs of the 2014 trading range. Bonds rallied sharply after Yellen seemed confident that it’s about the right time to raise rates. It seems Mr. Market thinks otherwise and believes that economic conditions are not strong enough to support Yellen’s call.
This constant back and forth sideways market action is consistent with what Goldman Sachs observes as the speeding up of the economic cycles and that negative or positive data points that don’t last very long, all a consequence of massive intervention by central banks.
On a similar vein, it turns out that short selling could be bad for your health as Chinese authorities are on the hunt for the evil doers that allegedly popped the Chinese stock market bubble. If those short sellers are lucky they might be sent to a re-education camp to learn the new rules of capitalism.
August is typically a lousy month for the US equity markets except last year when it roared, up over 5%. The situation in Greece, which is scheduled for a late August debt payment is bound to cause a re-run of the old drama creating some turbulence.
The overall market breath is very narrow with the NASDQ 100 (QQQ) leading the pack up over 5% for the month. Even this index, led by a handful of stocks such as NFLX, AMZN, FB, GOOG and SBUX could barely put in a real accumulation day. The jury is out for what it portends as several data points to some more weakness but there are exceptions as the transportation and Utilities (laggards) sectors bounced nicely.
P.S. For those interested, our trading service the NASDQ ALL Stars trades a basket of leading stocks based on our proprietary TSI ( trend strength indicator) and is up +19 % YTD, here is the link:
https://marketgauge.com/allstars/
Every week you'll gain actionable insight with:
