Market Direction Week of August 6, 2018©

Market Direction:BULLISH alert issued 2/15/2018 

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Last Week Review: The S&P 500 rose on the week as the acceleration of earnings growth in the second quarter improved investor sentiment. July's jobs report was also released last week, showing that the economy added 157,000 jobs, and the unemployment rate dropped to 3.9% from 4.0%. While July's job gains did not meet expectations of 190,000, it's the trend in job growth that is more important, and through 2018, job gains have averaged 215,000 per month. In addition, the unemployment rate remains near cyclical lows, and wages are rising at a solid pace, reflecting the ongoing health of the labor market and the economy.

After President Trump and EU President Jean-Claude Juncker met last week and agreed to postpone tariffs on European car imports, this week European car exporters again expressed concern that Trump may change his mind. Leaders of the largest car exporters discussed those concerns at a meeting in Switzerland this week and said they may have to appeal to the WTO (World Trade Organization), which itself has reportedly been sent into disarray over Trump’s challenges to its authority to govern international trade.

On Wednesday (8/1) President Trump vowed to increase tariffs on $200B in Chinese goods that were supposed to be 10%, to 25%. China hit back saying “blackmail” wouldn’t work and that the actions of the United States will only hinder trade. The 10% tariff was proposed back in mid-July but regardless of the level, they still need to go through a public comment period (scheduled to end on 9/5) before going into effect. Trade representatives of both countries are reportedly negotiating behind closed doors, in an attempt to strike a new deal before that time.

How the market finished last week, the S&P 500 up 0.8%, the Nasdaq up 1.0%, and the Dow flat 0.0%.

This Week: Q2 earnings are winding down this week. With 403 companies (81%) of the S&P 500 reporting, so far, it has been a very strong quarter.

Few economic reports and a waning earnings season will likely draw more attention to geopolitical issues as next week’s market drivers.

As expected, the SPX pulled back to the long-term trend this week, before resuming its uptrend. Based on the technicals caution is warranted if the new uptrend gets too steep, and that could be problematic as the dip buyers come back into the picture.

The near-term trend over the past 2 days has become more bullish, the fact that the indicators show wide disagreement and the SPX is again moving above the long-term trend line, makes determining a direction for next week very difficult. The economic calendar is light and earnings season is winding down, so it is likely that the markets will be driven mostly by geopolitics. As a result, the overall outlook for next week could be volatile. Be prepared for more intraday swings and keep your eyes on the news.

Economic Calendar: JOLTS (8/7), Consumer Credit (8/7), PPI (8/9), Wholesale Inventories (8/9) CPI (8/10) 

Some of the major earnings announcements on deck: WB, KORS, VNOM, FANG, WP.

$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we may issue advising a change in the current market direction. Stay tuned and follow us. If you have a testimonial or comment of how this website has helped you we would like to know, email us. Share with a friend. Cha-ching.

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