The charts say the stock market may drift

Low-trading volumes may minimize big market moves in the days to come. But September and its volatile history are still ahead.

By Charley Blaine Aug 23, 2013 8:05PM
We're coming on to the last week of August: Trading volume in the stock market is low, the adults have gone to the beach.

But charts of the market are suggesting not everything is right.

The major averages peaked at the beginning of the month and show no signs yet of making a run at new highs.

The Dow Jones Industrial Average ($INDU) fell for a third straight week. But the Standard & Poor's 500 Index ($INX) and the Nasdaq Composite Index ($COMPX) ended with small gains.

There are parts of the economy that look sluggish: back-to-school sales, new home sales, manufacturing. The turmoil in Egypt and Syria has the oil markets on edge. Retail gasoline prices, normally falling by now, have been static. And there's worry political warfare in Washington will shut down the federal government just in time for, say, Christmas.

Interest rates have been rising as the market bets the Federal Reserve will start to taper down its bond-buying program, perhaps as early as next month. Second-quarter earnings weren't much to cheer about, except for profits from banks and financial companies,  Thomson Reuters says -- and third-quarter earnings may be mediocre as well. Banks and telecom companies may well be the leaders.
Stock markets in Indonesia, India, Brazil and other countries have pulled back because the idea the Fed would let rates rise is forcing monetary officials abroad to defend their currencies.

Bears fret September is coming, historically the worst month of the year, and that will fuel a sell-off.

Even some prominent bulls are worried. Ralph Acampora, a veteran Wall Street market analyst, had been saying last week the Dow is about to fall 15%. For perspective, that would basically wipe out the year's gains. Only a few weeks ago, he said the market was going to hit new highs.

Are things that bad? That's not clear yet.

It is true the market has pulled back. The Dow ended the week 4.1% below its Aug. 2 closing high; the S&P 500 is down 2.7%.

But those aren't huge losses. Indeed, the Dow is still up 14.6% for the year. The S&P 500 is up 16.6% and the Nasdaq is up 21%.

Moreover, the market rallied on Thursday and Friday. One result was that the S&P 500 ended the week above its 50-day moving average for the first time since Aug. 15.

The 50-day average is a key measure of investor confidence. If an index or a security can't stay above it, the odds are it will fall. The Dow is still 1.7% below its 50-day average. But the Nasdaq is 2.9% higher than its moving average.

Some momentum measures, particularly relative strength indexes, suggest the market's momentum bottomed on Wednesday. The Dow's 14-day RSI fell to as low as 25 on Wednesday; below 30 is a clear signal that it's oversold. It was at 35 on Friday.

The RSI's for the S&P 500 and Nasdaq were at 46.7 and 58.3. Both moved higher Thursday and Friday.

What all this means for the week ahead is some churn, maybe not too much. But weak reports in the week ahead could bother markets. The key reports include:
  • Consumer confidence, due out Tuesday from the Conference Board.
  • Pending home sales, due Wednesday from the National Association of Realtors.
  • A revision to second-quarter gross domestic product, due Wednesday.
  • The Chicago Purchasing Managers Index for August, due Friday.
Because it's the last week or August, and the markets will be closed for Labor Day on Sept. 2, there aren't a lot of earnings reports due. The big ones are probably:
  • Tiffany (TIF), the high-end jeweler, due Tuesday before the open.
  • Joy Global (JOY), maker of mining equipment, due Wednesday before the open.
  • Toronto Dominion Bank (TD), due Thursday before the open.
  • Salesforce.com (CRM), due after Thursday's close.

Markets for the week



Aug. 23

Aug. 16

% chg.
YTD chg.
Dow Industrials

15,010.51

15,081.47

-0.47%
14.55%
S&P 500

1,663.50

1,655.83

0.46%
16.64%
Nasdaq 

3,657.79

3,193.87

1.53%
21.14%
Russell 2000

1,038.24

1,048.40

-0.97%
22.24%
Crude oil 

$106.42

$107.29

-0.81%
15.90%
(per barrel)










U.S. Dollar Index 

81.39

81.29

0.12%
1.90%
10-yr. Treasury yield

2.82%

2.83%

-0.39%
60.48%
Gold

$1,395.80

$1,371.00

1.81%
-16.71%
(per troy ounce)






















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29Comments
Aug 24, 2013 12:27PM
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The Stock Market ... Wall Street ... Crystal Balls .... Snake Oil .... Flim-Flam ....Bull-S**t .... It's all the same, and they have no relationship to our actual economy. Corporations have bought and paid for ALL of our politicians, and these puppets do their bidding on a global scale that takes advantage of ALL third world countries, and the United States has drifted into that classification. Categories like infant mortality rate, education, and other vital indicators have the US ranked near the bottom, and well behind many countries that we once considered barbaric in nature. What people fail to realize is that when a CEO claims his/her multi-million dollar bonus, or when a hedge fund manager does the same, or when banks, oil companies, and such report outrageous profits, THAT MONEY HAS TO COME FROM SOMEWHERE, and all you have to do is look at the decline in the status of the middle class in this country to realize where. There is a documentary on Netflix entitled "We're Not Broke" which describes in detail how major corporations avoid paying even ONE DOLLAR in corporate income tax to the United States, by manipulating their books and using offshore banking that is clearly derived for tax evasion purposes .... While, "We The People" foot the bill individually, and will get thrown into jail by the IRS in a heartbeat for an infraction of the tax code. The capitalistic system that this country was founded and nursed on has been perverted by greed and corruption, to a point where it no longer is feasible for a population strained by economic stagnation. Political talking points are diversions used to divide the masses. This aggression cannot stand. Open your eyes and use your brain .... ignore the brainwashed "experts" and manipulated media, as the truth is a far cry from the joke that is being played out by the "Ruling class" !!!
Aug 24, 2013 11:50AM
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What am I gonna do, what am I gonna do....It's falling, it's falling.
Aug 24, 2013 7:41AM
Aug 24, 2013 9:06PM
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But low, sell high. It's so simple a caveman can do it. The market is up 2 years out of every 3. You have to be an absolute moron to not make money. Sorry if I offended any morons. LOL
Aug 25, 2013 12:47PM
avatar

Thank you Leslie....

I grew up poor, early in life..

Hard work got us here today..

The kids are doing pretty good in their own right..

I hope some of that was our own doing.

We are proud of them..

 

But now I'm going to go spend some of their possible inheritances.

We always get a kick out of telling them that.

Aug 25, 2013 12:40PM
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All this money talk makes me want to go to a Casino....

And take them down for the big bucks...

Usually doesn't happen that way, so if I win $50-200, I'll be happy.

Had enough coffee sitting out here on the deck.

It's a beautiful day, nice weekend and it was a great week.

Got all my work caught up...And now I'm bored.

 

Let's go double down on that 11 or spin a Black 28.

Have a nice a nice Sunday....Ciao.

 

Aug 24, 2013 7:47AM
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Charley... you know damn well we haven't had an economy in over 5 years now. You take the primary attributes of both parties-- Dem: spend tons of money while relying on administrators to account for it (who don't) and Rep: cheat, whine, cry foul and hoard, then say- every man for himself. What we have here is the end of a very lucrative cycle that finishes poorly. The Stock Markets are fully detached from Main Street but the QE run-up is fully obligated for repayment BY Main Street. Shift that debt to where it went, cut bait, restore a currency for Main Street and flush DC of financiers lobbies and groups. Wall Street is NOT a country, bulldoze, repave and rebuild sans financiers.
Aug 25, 2013 2:30PM
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Volatile times.Especially when you have race baiters like Der Ober Fuhrer Sharpton,Jackson making loads of money fanning the flames of hatred and lots of ignorant youth  committing acts of murder and gang violence indiscriminately on whites just for "being  t'here.Next the Govt institutes Martial Law.Resist the hate the biggest prejudice is class money If there is a civil war innocents of all races will lose  Teach your kids stay away from the thugs ****ers We are all in this together We need to stop the circle of violence before it is too late.....
Aug 25, 2013 12:30PM
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We can take corrections have before...But some are gut wrenching.

 

Case in point: When you are older and don't think you can recover.

When you are about to retire and run to cash then lose twice.

I don't mind 5-8%, but when you get in the range of 12-15% or more, it pisses me off.

 

I/we want to leave maybe a trust to our kids, that will keep on paying for years as a ROTH.

Some are excited or amazed, others are skeptical...?

I don't have total buy in yet, not even from wife...

Her point is what does it matter, we are dead..

I find Greed takes over, even with the best of intentions. 

Aug 24, 2013 12:12PM
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Interesting article. Hardly portentous except for the doom and gloom Wackos who have inherent mental problems.accepting any form of progress and prefer to wallow in a cesspool of self pity and envy. Same bunch expressed same crap for the month of May.
Aug 25, 2013 7:25PM
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The number ONE reason the Ruling Elite created a Fiat Based Money System was to insure they could Spend and Print their WAY to Prosperity for decades on end. And that's exactly what they have done. Each decade that goes by, we move far closer to having to pay the Piper. This issue of Soaring Debt didn't just happen. Some folks act as if it has. It hasn't. Reagan Triple the National Debt, Bush doubled the National Debt, and by the time Obama leaves office, he would have at least, doubled the Debt. This robbing Peter to Pay Paul works only as long as we had new places to hide the debt issues, that is about to end. Payback will be a you know what.

I don't give a flipping rip what the charts say. Whenever the markets run this hard for this long, you don't need no stinking chart to tell you stocks could pull back and hard. Corporate CEOs have benefited greatly from this massive Bull run. The rest of working poor and Middle-class in America, not so much. It's not that often we have a change at the FED, so of course, that will have an effect, regardless of whom it is. China and Japan are in the same sinking boat as America, so don't expect them to attempt any derailment of our economy, they are just too attached. Just as any hardcore drug addict or alcoholic, either you die or get off the bad habits. That's what the Global Economy is facing. We have the technology to change things for the better, too bad we don't also have the willpower.



Aug 25, 2013 9:12PM
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bad article go away in may made me thousands you seem to me off
Aug 25, 2013 6:55PM
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Dow at 15,568 was too high for an anemic economy that needs $85 billion a month in free debt and housing mortgages to even stay at less then 2% growth. The Dow should correct by 10-15% by the time we get the Fed's news on Sept 17-18 and the Congress goes into deadlock over  the budget and debt ceiling.  That would put the Down at 14,011 and if we get any bad economic news like continued decline of home and retail sales and we'll be on our way back to Dow 13.233. Happy Holidays!

Aug 23, 2013 11:17PM
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Active....You shouldn't write riddles, after I have been hitting the "Reserve Stuff."

 

Believe it or not, I'm considering going to about 80-85% cash, or putting Stops on 85-90%..

Exception: 60-70% of Brokerage Accounts....Don't want the tax headaches.

And we have "one" very large position there, that will show a loss. For the year.

Aug 23, 2013 11:25PM
avatar

If all the above fail....POINT FINGER at the other guy.

 

Or to be Politically correct, roll your eyes his direction.

Worked for me in the "big meetings."

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