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The Standard and Poors 500 index (SPX) opened lower again this morning, influenced negatively by the jobs report and its possible effect on the FOMC meeting's deliberations week after next. Many market analysts are thinking the Fed may finally lower rates at the September meeting. SPX lost 21 points today, closing at 6482 for a 0.3% loss for the week. Trading volume continued to run below average this week until today's trading when volume just touched the 50 dma.
VIX, the volatility index for the S&P 500 options, opened the week at 16.7%, and declined all week to close at 15.2%. The institutional traders are moving to a tentative conclusion that the Fed will lower the discount rate at the September meeting (9/16-17). This is fueling the market’s move higher.
I track the movement of the ETF containing the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 105.3 today, up 0.4 points or +0.3%. SPHB opened the week at 102.8 and posted a gain of 2.4% for the week. Trading volume ran along the 50 dma this week, until it rose slightly above the 50 dma today.
The NASDAQ Composite index closed at 21,700, down 7 points or 0.03%. NASDAQ opened today at a new all-time high but could not hold it into the
close. NASDAQ opened the week at 21,087, up 2.9% for the week. Trading volume remained below average all week.
The overall market has slowly ground higher, pulling back every few days, but rebounding to gain a bit more ground. The gradual decline in VIX reflects that effect. However, the tariffs, political uncertainty, deportation of illegal immigrants, and the continuous noise of the professional protesters in the streets continue as background.
It is surprising that the markets are ignoring the noise and steadily moving higher. The S&P 500 stocks set a new all-time high this week. NASDAQ set a new
all-time high today but couldn’t hold it into the close. Similarly, the high beta stocks of the S&P 500 touched its previous all-time high today but pulled back slightly.
I cannot remember a time when the financial news carried so much speculation about the FOMC’s next meeting this far in advance. Normally, it appears on traders’ radar the week before the meeting.
The basic economic data remain positive, but the choppiness will likely continue until after the FOMC announcement on 9/17. Stay calm and stick to your trading rules.
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The Standard and Poors 500 index (SPX) opened lower this morning, influenced negatively by the PCE index report that may cause the Fed to leave rates unchanged at the September meeting. SPX gained 42 points today, closing at 6460 for a 0.6% gain on the day and flat for the week. Trading volume continued to run below average all week.
VIX, the volatility index for the S&P 500 options, opened the week at 15.1%, increased to a high of 16.0% today, but closed at 15.4%, effectively unchanged on the week.
I track the movement of the ETF containing the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 104.9 today, down 1.5 points or -1.4%. SPHB opened the week at 104.4 and rose 0.5% on the week. Trading volume chopped above and below the 50 dma this week.
The NASDAQ Composite index closed at 21,456, down 250 points or -1.2%. NASDAQ opened the week at 21,466, thus effectively unchanged for the week. NASDAQ’s trading volume remained below average all week.
Many traders have expressed concern about the choppiness of this market. I think we often forget that today’s market reflects a discounting of the predicted future market. Hence, the tariffs spooked the market several weeks ago; then they reversed that doomsday opinion. When Trump announced the meeting with Putin in Alaska, everyone was convinced Putin was going to offer concessions to end the war with Ukraine. But those expectations were naive. Last week’s rally was triggered by Powell’s speech at Jackson Hole, but then market analysts reviewed his remarks more carefully and reduced their enthusiasm.
The market reacted to the PCE index report this morning, up 0.2% from +0.3% last month, or +2.6% year over year. The market consensus feared that result may dissuade the FOMC from lowering rates at the September meeting. Monday’s market opening will show if further reflection calms or stokes those concerns. NASDAQ declined 1.2% this week while the S&P 500 was effectively flat (up 0.03%). Stay calm. The basic economic data remain positive, but traders are running from one side of the boat to the other.
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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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The Standard and Poors 500 index (SPX) opened higher this morning. It appeared that many of the large players believed Powell’s speech was going to hint at lower rates. And shortly after 10 am ET (the schedule for his speech in Jackson Hole), the market was off to the races. The S&P 500 index tacked on 97 points today, closing at 6467 for a 1.5% gain on the day and up 0.3% for the week. However, trading volume continued to run below average all week.
VIX, the volatility index for the S&P 500 options, opened the week at 15.7%, increased to a high of 17.2% on Thursday and then dropped to 14.2% today. Powell’s speech relieved a lot of tension in the markets.
I track the movement of the ETF containing the top 100 S&P 500 stocks ranked by beta, SPHB, to monitor the movement of high beta stocks. SPHB closed at 104.9 today, up 3.4 points or +3.3%. SPHB opened the week at 103.1 and rose 1.7% on the week. Trading volume spiked higher today as the institutional players started buying high beta stocks, anticipating the market’s continued rise.
The NASDAQ Composite index declined most of the week, but that changed today. NASDAQ closed up 396 points at 21,497, up 1.9% on the day but up only 0.6% for the week. NASDAQ’s trading volume remained below average all week but finally hit the 50 dma today.
The market has been struggling this year over a variety of concerns, including the effects of tariffs on inflation, global tensions in Israel and Iran, and the continuing war in Ukraine. The report of +3.0% GDP growth for the second quarter surprised economists several weeks ago but that didn’t seem to affect the market.
The IBD stock market exposure recommendations have been whipsawing up and down all month. First the recommended level of 80-100% declined to 60-80% on August 1, reversed back to 80-100% a week later and recently dropped back to 60-80%. But today’s market rally, triggered by Powell’s speech at Jackson Hole caused IBD to return to the 80-100% recommended stock market exposure.
Jerome Powell suggested that economic conditions “may warrant” rate cuts at the September meeting, but he was careful to issue many caveats as well. As one may gather from the current economic data, it is easy to predict positive market conditions for the immediate future. I think the current polarization of our political environment causes a significant amount of market anxiety. Today’s market rally was driven by Powell’s remarks this morning, with the Dow hitting a new all time high, the S&P 500 index rising 1.5% (very close to an all-time high) and NASDAQ rising 1.9%.
I will be watching for confirmation of today’s bullish move on Monday, but I expect to find new buying opportunities in this renewed bull market.
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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?
