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Last Friday, the Standard and Poors 500 index (SPX) took a tumble, gapping down at the opening and heading lower. That spooked me, but this week’s trading recovered all of that loss, although it was a rough and choppy ride. SPX opened the week at 6272, for a weekly gain of 1.9%. Trading volume was at or below average all week.
VIX, the volatility index for the S&P 500 options, opened the week at 19.6% and steadily declined to a close of 15.2% today.
I track the movement of the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 101.4 today, up less than one point or +0.4%. Trading volume fell all week. The large players sold their high beta stocks, taking a lot of risk off the table.
The NASDAQ Composite index posted a stellar week, gaining 207 points to close at 21,450, matching its previous all-time high on 7/31. NASDAQ opened the week at 20,854, setting up a strong weekly gain of 2.9%. Surprisingly, NASDAQ’s trading volume remained below average all week.
The market has been struggling this year as various commentators have predicted the tariff negotiations will lead to recession and renewed inflation.
A few weeks ago, the report on GDP growth for the second quarter surprised economists with a reading of +3.0%, but that didn’t seem to gain any traction. Global tensions in Israel, Iran and the various terrorist groups continue to make headlines.
The latest IBD market exposure recommendations, moving down on August 1 and then reversing back higher just a week later show how the mood of market participants is swinging back and forth almost daily. The S&P 500 index made a dramatic move lower last week and yet recovered all of those losses in just one week. Market analysts are spooked by the news feeds even when they know the economic data are solid. The sum of this current form of “yellow journalism” causes the large institutional players to hit their sell buttons quickly but then they fear they may be missing the boat and they hit their buy buttons.
The essence of free market forces is the open consideration of future risk and planning hedging protection. My analysis of the economic news leads me to a moderately optimistic view of the future economy. Certainly there are uncertainties but that is nothing new. The extreme volatility of the current markets is disconcerting, and I find myself surprised that my trading positions are doing well. Take a deep breath and calm yourself. We have to find the balance between the doomsday gurus and the naivete of the rose colored glasses crowd.
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Just as I was becoming comfortable with this bullish market, the Standard and Poors 500 index (SPX) gapped open downward today and closed at 6238, down 101 points or -1.6%. SPX opened the week at 6398, for a weekly decline of 2.5%. Trading volume spiked higher on Thursday and Friday.
VIX, the volatility index for the S&P 500 options, opened the week at 15.2%, increased on Thursday and spiked up as high as 22% today, closing at 20.4%.
I track the movement of the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 100.9 today, down 1.9% today and down 3.2% for the week. That illustrates classic "risk on" behavior.
The NASDAQ Composite index closed today at 20,650, down 472 points or
2.2%. NASDAQ opened the week at 21,176, setting up a weekly loss of 2.5%. NASDAQ’s trading volume was roughly flat for the week.
Uncertainties have ebbed back and forth this year over tariff negotiations, inflation, Ukraine, and Iran/Israel. Until this week, those concerns had appeared to be easing. However, it seems like the Fed’s decision to not lower the discount rate started a temper tantrum of sorts on Wednesday and the tariff deadlines today added to those uncertainties.
As I examined the current economic data on Briefing.com, I was struck by its incongruity with the market’s behavior this week. Perhaps the market is discounting future uncertainties?
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The Standard and Poors 500 index (SPX) closed today at 6297, virtually unchanged from yesterday. SPX opened the week at 6255, for a weekly increase of 0.7%. Trading volume ran along the 50-day moving average (50 dma) all week.
VIX, the volatility index for the S&P 500 options, opened the week at 17.7% and declined, closing today at 16.4%. This VIX chart is almost identical to last week’s chart.
I track the movement of the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 102.5 today, up 0.5% today and up 1.6% for the week. This steady rise in the high beta stocks relative to a flat week with the S&P 500 stocks is a bullish signal.
The NASDAQ Composite index closed today at 20,896, up 11 points or
0.05%. NASDAQ opened the week at 20,593, setting up a weekly gain of 1.5%. NASDAQ’s trading volume ran at or below the 50 dma with the exception of Thursday.
One of the larger uncertainties worrying analysts about the US economy was tariff negotiations and the effect on inflation. That concern appears to be softening with the latest PPI reading coming in unchanged for June and up 2.3% year over year. CPI reported an increase of 0.3% for June but is only up 2.7% year over year. Those reports seemed to be calming markets this week.
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The Standard and Poors 500 index (SPX) closed today at 6389, up 25 points or 0.4%. SPX opened the week at 6305, for a weekly increase of 1.3%. Trading volume ran along the 50-day moving average (50 dma) all week.
VIX, the volatility index for the S&P 500 options, opened the week at 16.9% and declined all week, closing today at 14.9%. Volatility has been steadily declining for the entire month of July.
I track the movement of the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 103.7 today, up 0.8% today and up 0.7% for the week. The high beta stocks of the S&P 500 have been steadily rising since late May, a very bullish sign.
The NASDAQ Composite index closed today at 21,160 , up 50 points or
0.2%. NASDAQ opened the week at 20,960, setting up a weekly gain of 0.95%. NASDAQ’s trading volume ran above the 50 dma all week.
The market’s worries about tariff negotiations, inflation, Ukraine, and Iran/Israel appear to be lessening. All of the broad market indices continue to make new highs. Most bullishly, the high beta stocks of the S&P 500, SPHB, have been steadily trading higher since May.
The earnings announcement cycle began last week, but market reactions have been muted, without any significant market-moving surprises thus far. The bullish trend appears more solid each week.
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The Standard and Poors 500 index (SPX) closed today at 6260, down 21 points or -0.3%. SPX opened the week at 6259, essentially where it closed today. Trading volume was below the 50-day moving average (50 dma) and declining this week.
VIX, the volatility index for the S&P 500 options, opened the week at 17.8% and declined all week, closing today at 16.34. The markets are nervous, but we are seeing the beginning of “risk on” behavior.
I track the movement of the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 101.3 today, up 0.7% today and up 1.6% for the week. As you may see on the price chart, the high beta stocks have been steadily moving higher since early June, a strong bullish signal.
The NASDAQ Composite index closed today at 20,510, down 45 points or
-0.2%. However, NASDAQ opened the week at 20,491, setting up a small weekly gain of +0.09%. NASDAQ’s trading volume tracked roughly sideways this week, above average two days and below average three days.
News and rumors from the Israel/Iran conflict, the Ukraine/Russia war, and the back-and-forth news about tariff negotiations kept price volatility rather high. Market prices have been choppy, but generally flat to bullish this week.
The S&P 500 and NASDAQ were essentially flat this week with losses of 0.3% and 0.2%, respectively. The bullish news can be found in the high beta stocks of the S&P 500. That index, SPHB, has been steadily higher since early June.
We start the earnings announcement cycle next week and that may cause additional market volatility. Although most news on corporate earnings has been bullish so far, headlines and rumors could cause some ups and downs on a daily basis. I think the bulls are largely in charge, but uncertainty abounds and that results in nervous trigger fingers.
