Afternoon Note
The selloff is a mix of Wall Street hissy fit trying to force the Fed to stand pat, but it’s also the realization global and domestic economies face challenges and there’s a lack of confidence about the right public and private leadership.
Everyone should have a fair amount of cash.
Key Support Points
The NASDAQ is approaching its 200-day moving average (exponential) (EMA) of 4,894.
The S&P 500 has dipped under its 200-day EMA of 2,063. It would be a good sign to close above that level, although might have to test and hold 2,040 for sustained bounce.
A Couple Positives
By Dominique Paul, Research Analyst
The NASDAQ is leading the major equity indices into negative territory. The index is being weighed down by cybersecurity stocks and semiconductors. Palo Alto Networks (PANW) and FireEye (FEYW) are both trending significantly lower with the Cybersecurity Index (HACK) despite the cybersecurity market demonstrating great potential. Micron Technology’s (MU) downgrade is negatively impacting semiconductors. It is forecasted that MU will have to decrease prices for its DRAM technology by over 20% in the coming months due to PC unit demand remaining low for the second half of 2015. Also, we had a series of economic releases that did little to lift the market.
The Department of Labor (DOL) released the weekly jobless claims report for the week ended August 15th. During the week, claims rose to 277,000 after coming in at a downwardly revised 273,000 (from 274,000) the prior week. The four week moving average increased by 5,500 to 271,500. On the other hand, continuing claims, which lag by a week, are moving lower. For the week ended August 8th, claims were 2.254 million, down 24,000 from the prior week. This did not greatly influence the four-week moving average which rose by 9,000 to 2.265 million. It appears that employers are simply not hiring at the moment, mostly due to positions needing highly qualified workers. However, perhaps it’s time for companies to begin training the candidates that have a lot of potential and have great work ethic.
The Philadelphia Fed released its business outlook survey for the month of August. The report was much stronger than expected, especially following the Empire State’s lousy manufacturing report. Philly’s general business conditions index surpassed the consensus estimate of 7.5 and settled on a reading of 8.3; July’s reading was 5.7. Shipments rose to a reading of 16.7 and the unemployment index rebounded to 5.3 from minus 0.4. Optimism also improved, at the 6-month outlook index rose to 43.1 from 41.5. Markit will be releasing a flash manufacturing purchasing managers’ index (PMI) report tomorrow. Preferably, the report will reflect some of the growth observed in the Philadelphia district.
Last but not least, the National Association of Realtors released its existing home sales report for the month of July. For the third month in a row, existing home sales are on the rise. The seasonally adjusted annual rate (SAAR) rose by 2% to 5.59 million units from a downwardly revised 5.48 million units (from 5.49 million). Homes are selling at a faster pace, as supply is at a 4.8-month current sales pace versus 5.6 in July of last year. The South (+4.1%) and the West (+3.2%) demonstrated the greatest strength.
Note: We are holding off on an afternoon Hotline idea.
Comments |
Most major averages gapped down today. And the Asian and European averages were down big. Rodman Johnson on 8/20/2015 2:27:57 PM |
Everyone should have a fair amount of cash means we should cash in some equities now or should have done that before yesterday? Aloysius Vanderbilt on 8/20/2015 4:56:52 PM |
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