Pre-opening Comments for Monday August 26th
U.S. equity index futures were higher this morning. S&P 500 futures were up 6 points at 8:35 AM EDT.
S&P 500 futures slipped 1 point following release of July Durable Goods Orders at 8:30 AM EDT. Consensus was a 4.0% increase versus an upwardly revised 6.9% drop in June. Actual was a 9.9% increase. Excluding transportation orders, consensus was unchanged versus a downwardly revised -0.1% decline in June. Actual was a 0.2% decline
WTI Crude Oil added $2.03 to $76.86 per barrel on increasing Middle East tensions.
Nvidia added $1.11 to $173.52 in anticipation of second quarter results to be released on Wednesday.
Regeneron added $11.46 to $1,199.12 after receiving European approval for Ordspono.
EquityClock’s stock market outlook for Monday
The abnormal rise in New Home Sales for July hints that the housing market has entered a new phase, one where looser conditions entices activity. See:
https://equityclock.com/2024/08/24/stock-market-outlook-for-august-26-2024/
The Bottom Line
Responses to Federal Reserve Chairman Powell’s Jackson Hole comments triggered significant buying in North American equity markets on Friday. According to Powell, “The time has come to adjust our restrictive monetary policy”. His comments implied that the FOMC likely will start to lower its Fed Fund Rate at its next meeting on September 18th. Key equity and sector indices broke to all-time highs on Friday following Powell’s comments including Financial SPDRs, Utility SPDRs, Industrial SPDRs and Equal Weight S&P 500 ETF. Also, Healthcare SPDRs and Utilities SPDRs extended their move to all-time highs. Canadian indices quickly followed: TSX Composite Index, S&P/TSE 60 Index, TSX Financials iShares broke to all-time highs.
Currencies moved significantly following Powell’s comments. The U.S. Dollar dropped to an eight month low. The Canadian Dollar broke above US73.58 cents reached on two previous occasions setting an intermediate uptrend. Related to the change, prices of U.S. securities valued in Canadian Dollars dropped accordingly.
Economic News This Week
Source: www.Investing.com
July Durable Goods Orders released at 8:30 AM EDT on Monday are expected to increase 4.0% versus a drop of 6.6% in June. Excluding transportation orders, July Durable Goods Orders are expected to be unchanged versus a gain of 0.5% in June.
Next estimate of annualized second quarter real GDP released at 8:30 AM EDT on Thursday is expected to show growth at 2.8% versus a gain of 1.4% in the first quarter.
July PCE Price Index released at 8:30 AM EDT on Friday is expected to increase 0.2% versus a gain of 0.1% in June.
July Personal Income released at 8:30 AM EDT on Friday is expected to increase 0.2% versus a gain of 0.2% in June. July Personal Spending is expected to increase 0.5% versus a gain of 0.3% in June.
August Michigan Consumer Sentiment released at 10:00 AM EDT on Friday is expected to increase to 67.8 from 66.4 in July.
Selected Earnings News This Week
Source: www.Investing.com
Focuses are on reports by Nvidia in the U.S. and banks in Canada
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for August 23rd 2024
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for August 23rd 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for August 23rd 2024
Green: Increase from previous day
Red: Decrease from previous day
Changes Last Week
Links offered by valued providers
Michael Campbell’s Money Talks for August 24th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
2 Best Healthcare Stocks for August 2024: David Keller
2 Best Healthcare Stocks for August 2024 – YouTube
Powell Pivots: "Time to Adjust": Schwab
Powell Pivots: "Time to Adjust" – YouTube
BoC widely expected to cut rates in September: BNN
BoC widely expected to cut rates in September – YouTube
Markets in a potentially dangerous time: Mark Leibovit
Markets in a Potentially Dangerous Time – HoweStreet
TLT Turns the Corner and Starts to Lead: Arthur Hill
TLT Turns the Corner and Starts to Lead | Art’s Charts | StockCharts.com
Fed Promised Cuts Will Not Take You to the Promised Land: Bob Hoye
Fed Promised Cuts Will Not Take You to the Promised Land – HoweStreet
Markets in a Potentially Dangerous Time: Mark Lebovit
Markets in a Potentially Dangerous Time – HoweStreet
In Reality, We’re Already in Recession: Danielle Park
In Reality, We’re Already in Recession – HoweStreet
Trading Desk Notes for August 24, 2024:Victor Adair
Trading Desk Notes for August 24, 2024 – HoweStreet
Technical Scoop from David Chapman and www.EnrichedInvesting.com for August 26th
https://enrichedinvesting.com/library/
S&P 500 Momentum Barometers
The intermediate term Barometer added 7.00 on Friday and gained 10.80 last week to 79.80. It remains Overbought. Daily trend remains up.
The long term Barometer added 2.00 on Friday and gained 3.80 last week to 77.60. It remains Overbought. Daily trend remains up.
TSX Momentum Barometers
The intermediate Barometer added 7.95 on Friday and gained 4.43 last week to 72.57. It remains Overbought. Daily uptrend resumed on Friday.
The long term Barometer added 0.88 on Friday and was unchanged last week at 75.66. It remains Overbought.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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August 26th, 2024 at 11:58 am
XLF – Interesting. It made new highs which is a piece of the puzzle supporting an upward market. As I type I’m looking at a reverse hammer but let’s see how it goes. I really was uncertain last week how this would play out. Financials have been the outperforming sector of the market for a couple of months now.
August 26th, 2024 at 9:06 pm
Bman/Van,
Thanks for your comments Sunday evening. What you say makes a lot of sense BUT the markets don’t always behave in a way that makes sense. It is possible that what you predict may happen. There is usually some kind of sell off in September to mid October. But maybe if everyone expects it then it won’t happen. LOL
A target of S&P at 3800-4400 would put a lot of fear into the market. It would be good to have some dry powder at those levels.
I believe those adjustments on the RSI were referring to the weekly charts where I was using RSI(8). Ron/BC felt that fast RSI’s worked better on the weekly charts. I posted the XLF chart mostly to show that divergences are not reliable indicators. But somehow I find they do create a bias for me.
August 26th, 2024 at 9:08 pm
Larry,
As you say, XLF did make a new high but it closed in more of a doji pattern than a reverse hammer, therefore, a sign of indecision. Financials have not been the only outperforming sector. As examples, look at gold/gold stocks, utilities and ITB/XHB.
Everyone is now waiting for NVDA earnings; probably even more important than Powell’s speech last Friday. It will be interesting to see how the market reacts to the earnings, whatever they are.
How can you ever be certain?
August 26th, 2024 at 11:24 pm
Paula
I would normally agree if there is a trend in place and the technicals are in support buy and move forward. However, as you pointed out Sept is coming which has a history of volatility. The volatility is 10x over any other month so I tend to wait until the high vol time is past before making a trade. Unless we are missing something, what I suspect is the market will double top and change the trend to downward for the next month or two before returning to move up. The only disclaimer on the move up is what happens to the economic data between now and then as if it continues to degrade, the trend may not reverse until some of those lower projections are in place.