Stock Market Outlook for August 30, 2010
Upcoming Events for Today:
- The Personal Income and Consumption figures for July will be released at 8:30am. Market expects personal income to reveal a 0.2% increase versus no change (0%) previous. Personal spending is expected to reveal an increase of 0.3% versus an increase of 0.1% previous.
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,150.65 | 1.65% | 10,093.17 | 10,637.52 |
| Dow Jones Transportation Average (^DJT) | 4,184.90 | 2.23% | 4,120.95 | 4,475.35 |
| S&P 500 (^GSPC) | 1,064.59 | 1.66% | 1,060.06 | 1,121.55 |
| S&P/TSE Composite (^GSPTSE) | 11,879.72 | 1.94% | 11,546.18 | 11,804.48 |
| NASDAQ Composite (^IXIC) | 2,153.63 | 1.65% | 2,147.51 | 2,291.08 |
| Austrian Traded Index (^ATX) | 2,413.73 | 0.61% | 2,355.68 | 2,526.58 |
| French CAC 40 (^FCHI) | 3,507.44 | 0.93% | 3,484.54 | 3,743.03 |
| German DAX (^GDAXI) | 5,951.17 | 0.65% | 5,950.67 | 6,303.99 |
| UK FTSE 100 (^FTSE) | 5,201.60 | 0.89% | 5,155.60 | 5,375.22 |
| Swiss Market Index (^SSMI) | 6,183.10 | 0.84% | 6,137.79 | 6,361.73 |
| Brazilian IBOVESPA (^BVSP) | 65,585.00 | 2.69% | 64,376.10 | 68,035.31 |
| Mexico’s IPC (^MXX) | 31,755.35 | 1.72% | 31,610.67 | 32,846.49 |
| Amsterdam Exchange Index (^AEX) | 317.04 | 0.90% | 315.82 | 337.87 |
| Shanghai – SSE Composite Index (000001.ss) | 2,610.74 | 0.28% | 2,533.78 | 2,664.32 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 3,007.44 | -0.36% | 2,993.05 | 3,047.55 |
| China HANG SENG INDEX (^HSI) | 20,597.35 | -0.07% | 20,438.18 | 21,555.52 |
| Korea KOSPI Composite Index (^KS11) | 1,729.56 | -0.01% | 1,732.82 | 1,784.09 |
| Tokyo NIKKEI 225 (^N225) | 8,991.06 | 0.95% | 9,010.71 | 9,652.87 |
The last couple of trading days in August are upon us and investors are expected to squeeze in their last summer vacation time in the coming week prior to the Labor Day long weekend. But with significant economic news on tap again this week with the employment figures due out on Friday, don’t expect the week to be quiet. Friday saw major indexes make a sharp turn upward following a better than expected GDP revision and comments from the Fed that gave indications that they have the tools to fight further economic erosion. However, Friday’s news and data showed definitively that further catalysts are required to jump start the economy.
Still doubt lingers regarding growth prospects, leading to never-ending circle of non-commitment from economic participants. Markets are at an interesting juncture. Indices still remain at or near oversold levels and a rebound was certainly being sought to correct this imbalance that has plagued markets for some weeks now. In addition to this technical condition, we are now at month-end, which is known to customarily give somewhat of a boost to equities entering the new month. This as investment managers ”window dress” portfolios and reallocate positions for the month ahead.
The boost of optimism that the market caught a glimpse of during Friday’s session could carry over to the start of this week, assuming we can dodge any overly negative economic results for the next few days. But don’t let this optimism go to your head as September is notorious for showing steep declines in market values as the third quarter closes out. Mid-term election years, such as this, are no different with steep declines seen into October. It’s not that the economy is not recovering, but rather that the enthusiastic growth prospects have dried up and investors are left with uncertainty over the coming elections, as well as the state of housing and the return of stronger levels of employment. Investors crave growth, but with year-over-year dramatic growth prospects coming off of the economic downturn becoming unsustainable, uncertainty seems to flourish as growth opportunities are questioned.
Market sentiment looking at options volumes is bullish with a put/call ratio of 0.8. This has led to another decline in the 10-day moving average of this ratio that appears to have topped-out in the short-term; a bullish sign for the market. The supposed “buy” signal revealed by the overly bearish put/call ratio on Wednesday has been given justification as of Friday’s market action, however due to the indeterminate timeframe of the upturn move, the signal has not been marked. The important thing right now is to not let your guard down until a sustainable upward trend can be formed. For now the downward trend is in place and investors face the risk of taking a hit, depending on your time horizon, if the trend is resisted.
Sectors that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | 2.60% | 79.55% |
| Basic Materials Sector (XLB) | 2.99% | 38.63% |
| Financial Sector (XLF) | 2.16% | 21.91% |
| Health Care Sector (XLV) | 1.03% | 9.67% |
| Consumer Discretionary Sector (XLY) | 1.62% | 67.39% |
| Industrials Sector (XLI) | 2.02% | -0.40% |
| Technology Sector (XLK) | 1.20% | 47.63% |
| Utilities Sector (XLU) | 1.90% | 44.69% |
| Consumer Staples Sector (XLP) | 0.64% | 31.12% |
With Oil and Gold both gaining on the day, Material stocks found strength as well and ended the day as the top performing sector. Lowered revenue outlook from Intel for the present quarter put a slight amount of pressure on the Technology sector, which ended the day as being one of the weaker groups on the day. Shares on Intel finished positive, however. This sector continues to line up for a seasonal trade as the period of weakness for technology stocks in September leads to the start of a period of strength come October following the lows of the third quarter.
S&P 500 Index
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1030.99 | 1047.79 | 1056.50 | 1073.30 | 1082.01 |
Total Returns
Yesterday: 1.66% – Trailing 5 days: –0.66% – Trailing 30 days: –3.76%
Averages for current day based on past 20 years of data
- Current Day: –0.54% with 28.57% of sessions gaining
- Next 7 days: –0.46% with 48.00% of sessions gaining (Max return: 0.62% by September 1 on Average)
- Next 30 days: –0.84% with 51.61% of sessions gaining (Max return: 2.07% by September 11 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11551.97 | 11715.84 | 11801.83 | 11965.70 | 12051.69 |
Total Returns
Yesterday: 1.94% – Trailing 5 days: 1.34% – Trailing 30 days: 1.57%
Averages for current day based on past 10 years of data
- Current Day: –0.14% with 50.00% of sessions gaining
- Next 7 days: –0.09% with 54.17% of sessions gaining (Max return: 1.04% by September 2 on Average)
- Next 30 days: –2.15% with 47.06% of sessions gaining (Max return: 2.41% by September 14 on Average)
| Sponsored By... |
|
|
