Weekly Market View October 10 through 14

 

The markets were off just slightly this past week resulting in no net change for the past two weeks.  Markets are showing strength today.  Earnings reports begin this week and will begin flowing heavily in the next few weeks.

This Wednesday we will see the minutes from the previous FOMC meeting.  These minutes are often market-moving.  Banks will begin reporting toward the end of the week with Citibank, JPM and Wells Fargo among those scheduled to report.  We will also see some transportation stocks reporting with CSX (rails) and Delta Air Lines reporting mid-week.

Sectors related to interest rates are showing continued weakness with interest-rate increases on the horizon.

The S&P has backed off a bit from its highs but is maintaining its post-Brexit breakout.

spy

The NASDAQ is continuing to maintain its post-Brexit breakout and is setting new highs.

qqq

The volatility index (VIX), or “fear index,” has reached new lows. This reflects a bullish mindset among investors, but can also be interpreted as a sign of complacency.(The volatility index measures how much investors are willing to pay for options on the S&P.  Investors can buy put options on the S&P as a type of insurance on their portfolios if they are concerned that the market is going to go down.)

vxx

Focus on… Emerging Markets

Since the lows of early 2016, emerging markets have outperformed the S&P 500 as illustrated in the chart below (the red line is the S&P 500).  In this past month we have seen strength in Mexico and Brazil, for example.

eem-vs-spy

Upcoming Earnings

Full-blown earnings season will launch next week with many financials and a number of technology and health care stocks reporting.  Alcoa reported today before the open, and has traditionally been considered the stock that launches earnings season.  The financials begin reporting towards the end of the week and continuing into next week.  Among the companies of interest reporting this week are:

  • Mon: Alcoa (AA) before the open
  • Tues: Barracuda Networks (CUDA) after the close
  • Wed: CSX (CSX) after the close
  • Thurs: Delta (DAL), BlackRock (BLK), and Taiwan Semiconductor (TSM) before the open
  • Fri: Citigroup (C), JP Morgan (JPM), PNC Financial (PNC) and Wells Fargo (WFC) along with Infosys (INFY) report before the open

Upcoming Economic Reports

  • Wed: FOMC Meeting minutes, crude inventories
  • Thurs: Initial and continuing unemployment claims
  • Fri: Producer Price index (and core PPI), retail sales with and without autos

Strongest Sectors for past trading MONTH

Overall progress in the past trading month has been fairly limited and with only a few sectors like coal and energy showing consistent strength.  Talk of OPEC reducing production lifted the energy sector, and most specifically the oil services and oil and gas exploration sectors.  A number of international markets have shown strength including Mexico and Brazil.   Month over month strength was displayed by…

  • Mexico
  • Hong Kong
  • Oil services and energy
  • Banking
  • Japan
  • Coal
  • Medical devices
  • Steel
  • Russia
  • Nasdaq
  • Taiwan and China
  • Brazil
  • Technology
  • Networkers
  • Semiconductors

Weakest Sectors for past trading MONTH

Interest-sensitive sectors continue to show the weakness that we highlighted last week, as continued positive economic reports raise the likelihood of a rate increase.  Sectors which have been weakest month over month are:

  • Treasuries
  • Gold and gold miners
  • UK
  • Utilities
  • Homebuilders
  • Real estate and REITs
  • Silver
  • Consumer Staples
  • Agriculture
  • Home Construction

Strongest Sectors for past trading WEEK

Sectors showing strength in the past week were:

  • Many international markets including Mexico, Taiwan, China, Emerging markets, Japan and Korea
  • Medical devices
  • Financials
  • Technology
  • Steel
  • Oil Services
  • Broker dealers
  • Coal
  • Banks
  • Networkers

 

Weakest Sectors for past trading WEEK

Sectors that were weakest in the past week through mid-day Monday include:

  • Same as monthly weak sectors with the addition of…
  • Cyber security
  • Materials

 

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