Sept. 8, 2020 - The calendar doesn't promise much this week, leaving the market to continue whatever it was doing last week.
So far, the damage hasn't been too bad... Yes there have been some big losses, but the S&P 500 is trading at early-August levels, while the Nasdaq, which has fallen much further on a percentage basis, is also trading at early-August levels.
People who bough Apple (AAPL), Tesla (TSLA) or a couple of other names in the last 30 days are looking at some steep losses, but most investors with a diversified portfolio are doing fine.
It is reasonable to wonder what caused the selloff, but we might suggest that the preceding up-side move was equally unwarranted. Stock-splits don't change the fundamentals, that was the only news on those two stocks in particular in the last couple of weeks.
Much more worrisome than some high-fliers being brought back to earth are weaknesses from the financial and energy sectors. These stocks held up relatively better when the selling started last week, suggesting we were seeing some profit-taking or other activity in the tech stocks. Selling the stocks that haven't recovered is a different strategy altogether, and suggests a real lack of enthusiasm about the economy going forward.
That's not an entirely unreasonable position given some of the trends we noted Friday in the labor market. However, economic data, including last week's jobs report, has been better-than-expected recently.
We'll be keeping an eye on things from a technical perspective this week. Major indices, and some of the big-name stocks that have been leading the market are all near their 50-day moving averages, which can serve as a level of support.
Tuesday's close at the lows of the day isn't particularly encouraging in the short term. Overnight trading is often misleading in a technically driven market, so we're more likely to see a bottom formed during the day set a lasting low. From day to day, we'd prefer to stop setting new lows. A day that doesn't set a fresh low can often serve as the start of a rally.
Economic Events this Week
Tuesday- 6:00 a.m. - NFIB Small Business Optimism
- 7:00 a.m. - MBA Mortgage Applications Index
- 10:00 a.m. - JOLTS - Job Openings
- 10:30 a.m. - EIA Crude Oil Inventories
- 8:30 a.m. - Initial Claims
- 8:30 a.m. - Producer Price Index
- 8:30 a.m. - Consumer Price Index