Hey Folks, get my take on the current price action in the Markets as the bullish sentiment continues to stampede onward.
WEEKLY SOUND BITES:
- Indexes ended the week higher, rebounding from a sell-off on Monday. The advance was somewhat narrow, with much of the gains concentrated in technology and internet-related FANG+ stocks. Growth shares outperformed value stocks for the fifth consecutive week, leaving them ahead YTD. Trading volumes were also especially light, with the number of shares trading hands on Thursday at their second-lowest level of the year. And this past Monday we saw the Russell 2000 was down 10% from its closing high on March 15, marking its first correction in more than one year. On Monday, the steep declines were tied to the growing fears about the spread of the delta variant of the coronavirus, however, the remainder of the week we saw the “buy the dip” crowd come back into the markets driving price action up to all-time highs in the S&P and NASDAQ.
- On the Economic front, positive news on the housing sector gave the bulls a lift with U.S. housing starts increasing by more than forecast in June, suggesting residential construction is stabilizing despite lingering supply chain constraints and labor shortages. Existing home sales in June, reported Thursday, also rose for the first time in five months. The week’s labor market data were less encouraging, with weekly jobless claims hitting their highest level (419,000) in two months. Prominent second-quarter corporate earnings reports also appeared to play a role in the rebound. It was the second-busiest week of earnings reporting season, with 81 of the S&P 500 Index companies scheduled to report results with over 88% reporting actual EPS above estimates and 86% reporting top line revenues above estimates. Thus far the Year over Year Revenue growth is coming in at 20.2%.
- U.S. Treasury yields followed a similar pattern to the equity benchmarks. Growing fears surrounding the delta variant spurred a steep decline in the benchmark 10-year Treasury note yield at the start of the week, which was exacerbated by technical trading factors that pushed long-term yields on Tuesday morning to their lowest levels since early February. However, yields quickly retraced earlier moves as worries over potential lockdowns in the U.S. eased.
- European economies continued to reopen despite a sharp rise in coronavirus infections. The ECB kept its key policy measures unchanged but revised its forward guidance, indicating that it would keep interest rates “at their present or lower levels until it sees inflation reaching 2%. eurozone composite Purchasing Managers’ Index (PMI), which covers activity in the services and manufacturing sectors, climbed to 60.6 in July—its highest reading since July 2000.
- In China, no major economic readings were released over the week. Nationwide home sales in the first half of 2021 rose 38% over the same period in 2019 despite tighter credit conditions. Many of China’s provinces continued to suffer heavy losses from extreme rainfall and flooding which may affect some supply chains in the months to come.
Enjoy This Week’s Round-Up;
Don’t Be a Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
