Market Direction Week of August 21, 2016

Market Direction: BULLISH alert issued 6/2/2016

Last Week Review: The Dow Jones Industrial Average, S&P 500, and the NASDAQ reached all-time highs on Monday. However, these major indexes ended the week flat. The Federal Reserve (Fed) released its July meeting minutes on Wednesday, but the market's reaction to the report was muted as committee members gave little additional detail about when they plan to raise rates next. The committee left the door open for a September or December rate hike, but the minutes showed that members have mixed views on the employment and inflation trends, along with the impact Brexit will have, indicating that they will raise rates at a very slow pace.

How the market finished last week, the S&P 500 flat 0.0%, the Nasdaq up 0.1%, and the Dow down 0.1%.

This Week: All 3 major indices hit record highs again on Monday (8/15) but with earnings season mostly over and 4 weeks until the next FOMC meeting, the uptrend appears to be running out of steam.

Most of the changes this week were in a negative direction again. While equity markets hit record highs again on Monday, the new resistance around 2190 looks like it could remain for a while. Given the warnings signs that are showing up in the indicators, the consensus outlook for next week is more volatility.

A somewhat mixed week ahead, where arguably the biggest event comes in the form of a speech rather than an economic data point. The Jackson Hole Symposium has played host to a number of major monetary policy announcements, with Yellen’s two predecessors, Bernanke and Greenspan, using the meeting as a platform to announce major shifts in policy. On the data front, a batch of PMI surveys early in the week will no doubt spark significant interest and volatility, overshadowing the GDP revisions later in the week. 

Economic Calendar: PMI Manufacturing Index Flash (8/24), Durable Goods Orders (8/25), GDP (8/26), International Trade in Goods (8/26)

Some of the major earnings announcements on deck: NDSN, TOL, DG, MDT, ULTA.

 

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