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.
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.
- 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.|
|U.S. Dollar Index||81.39||81.29||0.12%||1.90%|
|10-yr. Treasury yield||2.82%||2.83%||-0.39%||60.48%|
|(per troy ounce)|
|More from Top Stocks|
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.
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.
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.
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.
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!
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.
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."
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Excitement is growing about the company's new iPhone, expected this fall.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.