Aug. 10, 2018 – The market really felt like August this week. Major indices were pretty quiet, and in most cases, trade volumes were incredibly light. There were still some big moves from stocks trading after earnings, or after tweets from the company’s CEO.
We started the week with a rally. The S&P 500 finished last week above a key resistance level and with no new trade-war developments over the weekend, stocks rose through the day. That enthusiasm continued into Tuesday, when stocks gapped up at the open again.
The rest of week saw some new trade escalations temper any enthusiasm from earnings season. As has been typical, trade talk hits the Dow Jones Industrial Average the hardest, while doing the least damage to the Nasdaq.
Friday the market gave up the week’s gains. Traders were spooked by developments in Turkey, where a collection of factors, including new sanctions from the U.S., have tanked the lira. That lead to stocks in Europe falling as everyone tried to figure out what exposure has to Turkey, which, prior to the administration of the current president, Recep Tayyip Erdoğan, had been trying to get closer to the EU.
All told, the S&P 500 lost 0.2%% this week. The Dow lost 0.3% and the Nasdaq gained 0.3%.
The S&P 500 opened Monday and continued to build upon the rally that we saw last Thursday and Friday. It continued showing strength and pulled further away from the 2,800 level that held the S&P 500 in its magnetic field for so long. This gave a very bullish outlook to investors. The index powered away from the 2,800 level and through what little resistance was left other than the resistance that comes with setting new highs. With a gap up Tuesday morning, many investors were expecting that the S&P 500 was on the verge of setting new highs, but it was unable to muster the strength needed to do so and closed nearly flat for the day. Wednesday and Thursday were much the same, as the S&P 500 would open very near the previous day’s close and close very near where it opened. After showing four days of strength, it was no surprise that some rest was needed, but we had hoped to see the index rise again to new highs. Instead of setting new highs, it gapped down on Friday. Given the current uptrend both short and long term, it is very possible that the S&P 500 will set new highs in the near future.
The Nasdaq, Dow Jones, and Russell 2000 followed nearly the same path as the S&P 500, with only slight deviation amongst them. The Nasdaq and the Russell 2000 both again tried to reach for new highs, but like the S&P 500, they were unsuccessful. The biggest deviation among the indices was with the Russell 2000 this Friday. The S&P 500, Nasdaq, and Dow Jones all gapped down and were unable to recover the lost ground throughout the trading day Friday. The Russell 2000 also gapped down, but it was successful in gaining back the lost ground, continuing to rise.
FSS Swing Trading Strategy Update
We’re past the peak of earnings season, but will still be looking to trade on recent reporters. If the S&P 500 can sustain a breakout above 2,800, we should also see more upward momentum across the market.
This week’s activity in our positions
We’re carrying two positions into the weekend.
- HCA 0.3%
- MRK -0.5%
We closed one position this week.
- ROKU 4.0%