It was a rough week for the U.S. stock market and related ETFs last week as weak earnings reports continued to flow and economic reports were mixed. The upcoming week is packed with more important earnings reports and the action peaks on Friday with the monthly Non Farm Payrolls report and significant stock market volatility can be expected as these reports come in. Furthermore, “Frankenstorm” (aka Sandy) could have a significant impact on this week’s trading activity.
On My ETF Radar
In the chart of the S&P 500 (SPY) we can see lots of negative action in this major stock market index.
Starting at the top, RSI, relative strength is in decline and now at about 38, approaching oversold territory which starts at 30.
The S&P 500 (NYSEARCA:SPY) recently formed a “triple top” at the recent highs around 1450-1470 and this is generally a negative factor as it was unable to break higher and now this area becomes major resistance to moves higher.
The index is in a clear downtrend, now below its 50 day moving average, which indicates short term weakness.
Most importantly, the S&P 500 (NYSEARCA:SPY) now approaches very significant support at the 1400 level and the widely watched 200 day moving average which is commonly thought of as the demarcation line between bull and bear markets.
So weakness prevails with a major test coming up at the 1400 level. A sustained break south of that level and the 200 day moving average would set the stage for still lower prices ahead.
Weekly Stock Market and Major Index ETF Wrap Up:
Dow Jones Industrial Average (DIA) -1.8%
S&P 500 (SPY) -1.5%
Nasdaq 100 (QQQ) -0.5%
Russell 2000 (IWM) -0.98%
Gold (GLD) -0.6%
Oil (USO) -4.6%
ETF News You Can Really Use
It was a rough week for stocks and ETFs last week as major US stock markets ended lower for the week as a result of ongoing weak earnings and concerns over slowing global growth.
Major U.S. bellwethers including Google (GOOG), IBM (IBM), McDonald’s (MCD), Federal Express (FDX), Amazon (AMZN) and even Apple (APPL) have disappointed analysts and investors in recent days, generating a somber tone for US markets. The Fed meeting last Wednesday did little to improve the mood as the meeting concluded with no encouraging words from Dr. Bernanke and his colleagues.
Positive economic news was found in the University of Michigan consumer confidence index which rose to 82.6, its highest level since before the onset of the financial crisis but still coming in below expectations of 83.0. Weekly jobless claims declined, durable goods orders took a big jump and the Chicago Fed economic activity index improved. New and pending home sales climbed and Q3 GDP was revised up to 2.0% from the previously estimated 1.3%.
The week ahead brings more earnings reports from major U.S. companies including Chevron (CVX), Visa (V) and Mastercard (MA), General Motors (GM) and Ford (F), Starbucks (SBUX), US Steel (X), Barclays (BCS), Clorox (CLX), Time Warner (TWX), Met Life (MET), Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) and Berkshire Hathaway (BRK.A), among many, many others.
But the bigger news events will likely come from economic reports as the week’s calendar is packed with important data points.
Monday brings September personal income and spending, Tuesday highlights Case/Shiller housing numbers and consumer confidence, Wednesday brings the closely watched Chicago PMI, and then the action really picks up on Thursday with weekly jobless claims, October ADP Employment Report, Markit PMI, October ISM and September Construction Spending. Friday is the peak with September factory orders and October Non Farm Payrolls and Unemployment rate which will be widely covered due to its potential impact on the following week’s Presidential election.
Bottom line: By Friday, we’ll have a much closer look at earnings from major U.S. companies, consumer confidence, housing, manufacturing, European economic conditions and the last jobs and unemployment report before the Presidential election. These fundamental factors coupled with technical weakness, the “Frankenstorm” on the East Coast and the closing days of the Presidential campaign should make for a very volatile and exciting week for participants in the U.S. stock market.
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