Market Direction Week of August 28, 2016

Market Direction: BULLISH alert issued 6/2/2016

Last Week Review: U.S. stock indexes fell short on an attempt to reach new all-time highs as investors became more cautious prior to a speech given by the Federal Reserve chair, Janet Yellen, at the committee's annual Economic Policy Symposium at Jackson Hole. While Yellen's prepared comments were aligned with the market's expectations, other committee members made the case that it would raise rates quicker than current market expectations. These mixed comments sent the market through an episode of volatility that ultimately pushed stocks lower to end the week as investors reconciled all that took place in Jackson Hole.

How the market finished last week, the S&P 500 down 0.7%, the Nasdaq down 0.4%, and the Dow down 0.8%.

This Week: With no clear guidance from the Fed on interest rates and a lack of any breakout catalysts, equity markets are likely to remain in consolidation mode.

Since the indicators seemed to be right on target last week, with so many of them still showing warning signs, the outlook for next week remains the same.

It is a relatively quiet week, with most of the excitement concentrated at the end when US non-farm payrolls are published. Corporate data is very sparse, with little heavyweight company news for investors to contend with. We do have PMIs from China, the UK and the US (plus some revisions to previous PMIs in the eurozone), which will provide key direction for FX markets.

Markets have avoided any major sell-offs in August thus far, helped along by accommodative monetary policy from central banks. The following week has more central bank news, so the coming week may not be the most volatile. 

 Economic Calendar: Consumer Confidence (8/30), Chicago PMI (8/31), ISM Mfg Index (9/1), Employment Report (9/2)

Some of the major earnings announcements on deck: PANW, CTRP, FIVE, LULU, AMBA.

 

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