I'm back from a reunion of my wife's family in Pasadena and Oxnard, CA last week. It was great fun to meet and greet cousins and other relatives from throughout the US and The Philippines. We had a wonderful time eating too much, relaxing and not worrying about the markets. But now we're back, so let's see what happened while we were away.
The S&P 500 was up 0.3% last week. On Tuesday, the market suffered another distribution day, which had Investors Business Daily (IBD) call the market "in correction". Friday brought a large up day, but on light volume. Friday is considered a reversal day, so the market is technically in "rally attempt mode" right now. A follow through day is necessary to have the market go back into "confirmed rally".
Geopolitics (primarily Ukraine) seemed to dominate the market sentiment last week more so than economic data. Productivity numbers were substantially better than what economists had expected. It came in at 2.5% for Q2 while the consensus estimate was 1.5%. Productivity growth is important as it impacts corporate profits. The higher productivity, the higher corporate profits tend to be. Of course, if the economy were to shrink, corporate profits can still decline despite growing productivity.
Factory orders, initial claims, trade deficit (revised numbers) all came in better than expected.
One reason why EPS for the market as a whole has remained relatively stable, despite rising stock prices, has been the share buy backs that mostly large publicly traded companies have implemented.
Covered call positions have continued to perform well during this bouncy market.
Since we are in correction territory, I will not add to my holdings until we enter a "confirmed rally". My rules allow me to establish up to two new holdings during a follow through day. Although I am not updating my watch list during a market that is in correction, I will draw from my existing watch list once the market returns to confirmed rally mode.
Good luck this week,
Trader_Joe
The S&P 500 was up 0.3% last week. On Tuesday, the market suffered another distribution day, which had Investors Business Daily (IBD) call the market "in correction". Friday brought a large up day, but on light volume. Friday is considered a reversal day, so the market is technically in "rally attempt mode" right now. A follow through day is necessary to have the market go back into "confirmed rally".
Geopolitics (primarily Ukraine) seemed to dominate the market sentiment last week more so than economic data. Productivity numbers were substantially better than what economists had expected. It came in at 2.5% for Q2 while the consensus estimate was 1.5%. Productivity growth is important as it impacts corporate profits. The higher productivity, the higher corporate profits tend to be. Of course, if the economy were to shrink, corporate profits can still decline despite growing productivity.
Factory orders, initial claims, trade deficit (revised numbers) all came in better than expected.
One reason why EPS for the market as a whole has remained relatively stable, despite rising stock prices, has been the share buy backs that mostly large publicly traded companies have implemented.
Covered call positions have continued to perform well during this bouncy market.
Since we are in correction territory, I will not add to my holdings until we enter a "confirmed rally". My rules allow me to establish up to two new holdings during a follow through day. Although I am not updating my watch list during a market that is in correction, I will draw from my existing watch list once the market returns to confirmed rally mode.
Good luck this week,
Trader_Joe
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