This week could be a make or break week for the markets. It could also be a lot of nothing.
There’s a big difference.
A lot of nothing ultimately means very little net movement by the close this Friday from where we closed last Friday.
And less than noting means a flat week on noticeably diminished volume.
That’s a possibility because we’re coming to the end of summer, the end of traders and big decision-makers being on vacation. So, it wouldn’t be surprising to see a lot of nothing going on over the next two weeks leading up to Labor Day weekend.
On the other hand, there’s already been a lot of big-wig vacationers calling into their offices barking trading instruction to their minions from their Hamptons homes and the resorts of Southern Europe, on account of not being able to relax as news flow moves markets more than usual in the usually quiet half summer.
Eurozone and Home Sales and Manufacturing, Oh My!
Today Eurozone CPI comes out. Investors will be watching to see if there’s any deflation indicating economic weakness predicated on falling prices which is predicated on weaker consumption.
On Wednesday, we get July existing home sales, expected to be up 2.3% to 5.39 million units. If those numbers come in a lot weaker, on the heels of lower mortgage rates which are expected to boost sales, investors will lean on the pending recession narrative.
Also Wednesday, we get the IHS Markit manufacturing (and services) PMI numbers on major economies around the world. Investors will be watching to see where there may be surprising slowdowns and if certain economies are more clearly looking like they’re slowing or heading into recession territory.
All eyes will be on the U.S. where expectations for manufacturing PMI is for it to fall to 50, the dividing line between growth and contraction, down from just 50.4 in July.
And on Friday, Jerome Powell speaks at the central bankers’ confab in Wyoming. He can move markets with the right or wrong turn of phrase.
There’s more news every day, but those headlines will be on everybody’s radar.
Last week was another weak one for capital flow, if not as bad as it could have been.
The net destruction wasn’t that bad in volume terms. Up volume over the week for the NYSE and Nasdaq combined came in at 14,921 (millions) and down volume came in at 15,580.
New highs came in at 1,017 while new lows on the week came in at 2,047. All in all, not bad.
Futures are up strongly this morning, maybe they’ll hold, and the week will be a positive one.
It needs to be.
Otherwise, if we’re up today and give it all back and then some tomorrow or Wednesday, like we’ve been doing, investors just might start taking more profits.
Or worse, traders could try and use negative sentiment on any weakness to pound stocks back down to test their lows again.
Either way, on the positive side, which we could see, or the negative side, which we could see, it could be a make or break week for stocks.
So don’t think it’s time to rest on your laurels, just because many traders are sleeping on vacation.
I’m still working to make you rich.
Just in the past few weeks alone, with all the rise and falls of the volatile market, my subscribers to 10X Trader have had the chance to secure several triple-digit gains of 100% and even 133%!
For the entire month of August, we’ve only traded in the green, and I have no plan to stopping now.