Thanks to Friday's rebound, the broad market effectively closed out last week at a break-even. The Dow actually closed ahead by 41 points, the NASDAQ was off 15 points, and the S&P 500 ended the week just a hair under (-1.06 points) the prior week's closing level.
Was it a lucky week for the bulls, or an actual glimpse of their intent? It may well be the latter, considering there was little on the economic news front – nor in the way of earnings – that would have suddenly inspired the buyers.
We'll look at all of it below.
Economic Data
It wasn't a terribly busy week in terms of economic announcements, but it was an important one…. particularly for real estate.
The good news is, home prices appear to be in the rise; they were up 4.6% in May, according to the Case-Shiller index anyway. Bear in mind they're being compared to pretty weak comparables though. New home sales also jumped in June, by about 25%, but again, that's a comparison to May's pathetic number (which not only dialed in at a multi-decade low annual rate of 300K when first announced, but was adjusted lower to 267K in the meantime).
On the industrial front, as expected, the second quarter's GDP growth slowed… to 2.4% versus the anticipated 2.5%. Durable orders were also down for June, with or without transportation.
Joblessness split the difference, with initial claims coming in under expectations of 464K, while continuing claims edged in a little above expectations of 4550K. Neither have shown any threat of rising or falling over the last few months though, which is a blessing in some ways and a curse in others. Likewise, consumer confidence is a split decision …. the Conference Board's measure fell to a multi-month low of 50.4 for July, while the University of Michigan Sentiment Index bounced a tad, to 67.8.
In retrospect, the arguments for a re-entry into a recession remain just as strong as the arguments for a full exit out of one. No wonder stocks are on hold and investors are indecisive. Now you can view/subscribe to ETFTRADR's live World economic calendar under our tools and resources.
Economic Calendar
As for the coming week, even more is in store, beginning with Monday's announcement of June's construction spending. That will be a biggie to be sure, but the fireworks don't really start until Tuesday. Here's the play list:
Tuesday: Personal incomes as well as personal spending are expected to be flat. Since this (over the long hail) will make or break the economic revival, these numbers are quite important. Factory orders, pending home sales, and auto sales will also prod the market on Tuesday.
Thursday: As always, all eyes will be looking for any hints of meaningful improvement on the jobs front; none are really expected to be found this week, however.
Friday: if you really want to get a feel for the joblessness situation, wait until Friday when the nonfarm payrolls-added number (the number of jobs created by the private sector) for July is unveiled. Experts are looking for a net addition of 82,000 jobs; stocks can't afford anything less. We'll also get the unemployment rate that day, which as of our last look is expected to edge higher now that more people are actually considering themselves back in the labor pool (after dropping out for a while). Hourly earnings and the average workweek length will round out the whole employment picture on Friday.
S&P 500
The good news is, the S&P 500 is making a pattern of higher highs and higher lows… an idea that will be clinched if the bulls can just build on Friday's intra-day turnaround early this week.
The even-better news is, Friday's late rebound was on relatively stronger volume, and occurred right as the market brushed its 20-day average (at 1090). That's the subtle hint that the buyers are just waiting for dips as entry points.
The bad news is, the S&P 500 remains under its critical 200-day moving average line (at 1114.39, green)). Until this level – which has been resistance more than once since May – is actually worked past, there's not much reason to put new money into long or bullish trades.
Even worse, even if the 200-day line is cleared, the upper 50-day Bollinger band still looms at 1130 (and falling). If the bears can't hold the line at the 200-day moving average line, this upper Bollinger band has proven to be a formidable ceiling as well in recent months.
It's all part of this week's vigil.
S&P 500 Daily Chart
NASDAQ Composite
Like last week, this week's chart of the NASDAQ looks so much like the S&P 500's that there's no real need to add a lot of discussion. We only bring it up to point out two additional ideas.
The first is, the composite is much closer to clearing its 200-day moving average line (green) than the other indices are. This is bullish in the sense that the NASDAQ tends to 'lead' the other indices, for better or worse.
The second and more important item… 2321 seems to be 'the' line in the sand for the Composite. That's the upper edge of a known horizontal resistance zone (blue, dashed), and it's also where you'll find the 100-day moving average line (gray) plus the NASDAQ's upper 50-day Bollinger band. Point being, there's a ton of resistance there, but if that ceiling can be cracked, there's little that can stop the Composite beyond there.
NASDAQ Composite Daily Chart
Earnings Calendar
Just FYI, though the overall beat/miss rate this earnings season has been in line with the norm, we did see – proportionally – a few more misses last week than the trend had suggested we would.
You may recall something similar for Q1's earnings season as well, which started out impressively, but as time went on became more and more alarming.
That's not an omen – just a fact, and something to consider as we continue to progress through earnings season (which is a little more than halfway over now). Here's what's on tap for this week.
Earnings Calendar
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