'A Subdued Market': Stock Market Update For The Week Ahead

The Last Week In A Nutshell

What Happened: “This is a subdued market. We have recovered from the shock, but there have been a lot of sectors not really participating that much on the upside,” said ARK Invest CEO and CIO Catherine Wood.

Remember This: “2020 is a year that is setting many records, some good and some bad, and now we have the best 100-day rally ever,” said LPL Financial Chief Market Strategist Ryan Detrick.

“The real catch to this though is that previous big rallies usually saw continued strength, so don’t bet against this bull market just yet.”

Pictured: Profile chart of the S&P 500 E-mini Futures

Technical: Broad-market equity indices digested prior advances, evidenced by the non-separation of value.

Recapping Last Week’s Action: Monday's higher open on pandemic relief efforts coming from the White House was erased on a liquidation to Friday’s range. Buyers later responded, establishing a V-bottom before resolving the contract-adjusted all-time-high overnight. After investors shrugged off news of simmering geopolitical tensions, Tuesday’s U.S. session gave back all advances, liquidating enough to repair the poor structure below $3,330.

Alongside news of resilient fuel demand, relative strength shifted to the Nasdaq Wednesday, with equity indices squeezing shorts and erasing the low-volume area left behind Tuesday’s liquidation. Thursday’s overnight activity caught up to Wednesday’s divergent delta, drifting lower alongside uninspiring political news. During the U.S. session, the S&P managed to pop higher, to and through the resting liquidity at the $3,375 area, before testing lower and closing in-range, neutral. The session’s narrative carried forward with Friday ending the week in-balance and range.

In light of dull participation, the risks of a pullback have increased. Buyers lack the conviction to follow-through and sellers are beginning to step up on the liquidations that get rid of those weak buyers. The Russell 2000 closed the week off lower after coming to the $1,600 supply area. The Nasdaq, despite regaining relative strength, failed to make a new high, balancing out into the week's end.

To see a positive change in tone, there needs to be separation of value beyond the all-time-high. Until then, the potential exists for a fast-moving correction of the poor structure left behind by the emotional, momentum-driven participants.

Scroll to bottom of this story to view non-profile charts.

Key Events: NY Fed Manufacturing; NAHB Housing Market Index; Building Permits; Housing Starts; Initial Claims; Philly Fed Business Index; Leading Index; PMI; Existing Home Sales.

Fundamental: Senate leaves until September without coronavirus relief deal.

• Coronavirus vaccine won’t become widely available to Americans until 2021.
• U.S. retail sales slow in July; obstacles mount for nascent economic recovery.
• Judge rejects a General Motors Company GM case against Fiat Chrysler Automobiles N.V. FCAU.
• "Fortnite" maker sues Apple Inc AAPL, Alphabet Inc GOOGL.
• United States petroleum inventories show a gradual rebalancing.
• Economy not enjoying a V-shape recovery, but is instead on the verge of a W-shape.
• Trump’s executive orders to shore up the economy will not be sufficient.
• ARK Invest CEO and CIO recaps recovery, reasons for an optimistic perspective.
• JOLTS shows far fewer jobs added in than the department's NFP report.
• Market avoids the Great Recession’s calamities, but economy struggling.
• Credit quality worsened again as the effects of the pandemic continued to weigh.
• Trading volumes remain elevated, even as volatility returns to more normal levels.
• Post-election regime should stimulate growth through capital-friendly policies.
• New York’s statewide positive test rate has remained at 1% for two months.
• The budget deal changes the way financial markets look at the eurozone.
• Producer prices rose by the most since October 2018, following June decline.
• Weak revenue environment will lead to fiscal austerity and higher leverage.
• American Express Company AXP in talks with Kabbage over acquisition.
• Amazon Inc AMZN relaunches Twitch Prime as Prime Gaming.
• Tesla Inc TSLA announces 5-for-1 stock split on Aug. 31.
• Saudi Aramco sees a recovery in global oil demand, justifying export prices.
• COVID-19 will accelerate supply chain shifts in a more fragmented trade system.
• General Motors Company GM CFO jumps ship to join startup Stripe.
• Johnson & Johnson JNJ to produce 1 billion vaccines by next year.
• Court reverses antitrust ruling against Qualcomm Inc QCOM.
• Facebook Inc FB curbs ads by U.S. news publishers with political ties.
• Occidental Petroleum Corporation OXY to cut debt before boosting output.
• Boeing Co BA 737 MAX cancellations rise, deliveries drop as crisis drags on.
• U.S.-China trade deal in fine shape, White House’s Kudlow says.
• Gold has had its worst day in 7 years, but investors remain bullish.
• The U.S. already is feeling the impacts of ending unemployment benefits.
• Goldman Sachs Group Inc GS, Barclays PLC BCS bid for GM’s credit card business.
• Microsoft Inc MSFT dual-screen Android phone to arrive September 10.
• Airbnb plans to confidentially file for an IPO in August.
• U.S. energy bankruptcy surge continues on credit, oil-price squeeze.
• Fed moves too far from mandate, fine-tuning poses increased risks.
• Amazon Inc AMZN eyes Sears, J.C. Penney stores for fulfillment.
• One-third of American renters expected to miss their August payment.
• More than a third of Americans wouldn’t take a free and approved COVID-19 vaccine.
• How COVID-19 and stabilization policies affect spending, employment.
• COVID-19’s impact on commercial jet fuel demand is significant and uneven.
• Coronavirus shutdowns reduce consumption, shift energy costs to individuals.
• U.K.’s faster-than-expected recovery prompts BOE to lower impairments forecast.
• Intercontinental Exchange Inc’s ICE Ellie Mae acquisition is credit negative.
• U.S. loan to Eastman Kodak Co KODK won’t proceed if allegations remain.
• Shares of major airlines rose on increases in the U.S. TSA screening numbers.
• Federal Reserve announces post-stress test capital ratios for large banks.
• Sentiment: 30.3% Bullish, 27.8% Neutral, 42.1% Bearish as of Aug. 12.

Product Snapshot

S&P 500 E-mini Futures (ES) | SPDR S&P 500 ETF Trust SPY

Nasdaq-100 E-mini Futures (NQ) | PowerShares QQQ Trust QQQ

Russell 2000 E-mini Futures (RTY) | iShares Russell 2000 Index IWM

Gold Futures (GC) | SPDR Gold Trust GLD

Crude Oil (CL) | United States Oil Fund LP USO | Invesco DB Oil Fund DBO | United States 12 Month Oil Fund USL

Treasury Bonds (ZB) | iShares 20+ Year Treasury Bond TLT

Cover photo by Emiliano Arano from Pexels.