What is the current stock market direction?
Vote BULLISH (Up) or BEARISH (Down) in the upper right side bar, the current stock market direction weekly closing numbers. Leave a comment. Now for the news…
The economy
There is weakness in the futures market this morning. That will translate into a lower start for the stock market, yet one can't necessarily take for granted that it will translate into a lower close for the stock market.
That's due in part to the fact that the futures indication is only an opening indication, but it's also due to the well-known fact that this stock market has generally greeted any weakness as a buying opportunity, particularly in the mega-cap stocks which did their thing yet again yesterday.
Now, the narrow breadth on this latest leg up to new record highs, and the eye-opening realization that the S&P 500 climbed 55% in roughly five months, are enough to lead to a reasonable conclusion that the stock market is due for a pullback.
A pullback at this juncture is by no means a "pain trade." The pain trade is higher simply because there is a lot of chatter about the narrow breadth, the huge move in a short period of time, the ongoing struggles of the real economy, and the understanding that it is not uncommon to see the market retreat after establishing a new record high.
That was all in yesterday's mix before the market opened, and, well, the Nasdaq Composite gained 1.1%, the S&P 500 gained 0.3%, and the Dow Jones Industrial Average gained 0.2%, bolstered by gains in none other than Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), Facebook (FB), and a few other mega-cap stars.
Those stocks are all indicated lower this morning, with the exception of Apple, which is trading 0.6% higher.
Currently, the S&P 500 futures are down 11 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 10 points and are trading less than 0.1% below fair value, and the Dow Jones Industrial Average futures are down 85 points and are trading 0.3% below fair value.
The easy explanation for the weakness is just what we described above. Many market participants are expecting a retreat of some kind at this juncture.
Otherwise, there are some connect-the-dot explanations for the weakness that point to concerns about flash August Composite PMI readings for the eurozone, Germany, and France showing a deceleration from July, the Trump administration not acknowledging plans put forth by Chinese officials yesterday to have trade talks "in coming days," and House Speaker Pelosi pooh-poohing the notion of working toward a compromise on a skinny coronavirus relief bill at this time.
Perhaps the best sign that there is some rally exhaustion is that the futures market has buckled a bit this morning in spite of the encouraging news from Pfizer (PFE) and BioNTech (BNTX) that they think their COVID-19 vaccine candidate could be ready for regulatory review as early as October.
Not that long ago, such news would be a hydraulic lift for the futures market. Today, it looks almost as if it is inconsequential.
In turn, there was better than expected earnings news from Deere (DE) and Foot Locker (FL). Those stocks are indicated 3.1% and 4.8% higher, but then again, those stocks are not named Microsoft, Amazon.com, Alphabet, or Facebook, all of which are indicated lower.
At this moment, then, the cast for a soft open has been set, but don't discount the potential for another pain trade in the event the mega-cap stocks pivot to being a source of safety as opposed to a source of funds
$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, write us. Share with a friend.The market direction weekly closing numbers for the indexes this week compared to the initial BULLISH recommendation closing numbers:
Stock Market Closing Numbers
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compared to Recommendation Numbers
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5/21/2020
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8/21/2020
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Difference
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24,474.12
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27,930.33
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3,456.21
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9,284.88
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11,311.80
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2,026.92
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2,948.51
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3,397.16
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448.65 | |
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