Slow and steady drip up all this past week in a very quiet news environment. A gap down top open the day Tuesday (which was recovered quickly) and a gap up Thursday (which held) were the highlights!
The latest on TRADE WARS!(tm):
Tuesday, news hit that China vowed to retaliate and plans to ask the World Trade Organization next week for permission to impose sanctions on the U.S. for Washington’s noncompliance with a ruling in a dispute over U.S. dumping duties, Reuters reported. That’s part of a dispute that goes back to 2013.
“Trade wars are certainly a concern, but I don’t know that they’re a one-moment-in-time thing. So far we’ve looked past them, but over the longer term a trade war could be very damaging,” said Richard Weeks, managing partner at VWG Wealth Management. Despite that, Weeks said he remained cautiously optimistic about stocks. “Between high corporate profits, stock buybacks, and muted interest rates, there’s still an underlying bid to the market no matter how you slice it. There are still plenty of things to be concerned about, but there aren’t enough reasons to be too pessimistic,” he said.
The U.S. economy grew at a “moderate pace” even though there were pockets of weaker activity in certain districts, according to the latest Beige Book released Wednesday. Trade concerns and a lack of workers are also delaying projects, the report said.
For the week the S&P 500 gained 1.2% and the NASDAQ 1.4%.
Economic news was sparse and not market moving. Friday, retail sales were reported as rising 0.1% vs 0.3% expectations but the market ignored the news.
Pot continues to be “hot” – another massive move this week for Tilray (TLRY).
Transports are also at highs so it is difficult to get too bearish on stock when that is happening.
Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.
The week ahead…
We are back to a low volatility environment:
“It may not seem like it, but the SPX hasn’t seen a 1% decline since June 25 or a 1% gain since June 1. That’s pretty amazing knowing that many high-profile stocks have gotten hurt over the last few months,” said Frank Cappelleri, technical strategist at Instinet LLC.
Short term: Both indexes pulled back to their 20 day moving averages the week prior to this. And now bounced off.
This Russell 2000 is basically stalled.
The NYSE McClellan Oscillator remained red all week which is usually a caution sign but the senior indexes certainly didn’t care one bit!
Long term: Still very positive for the “buy and never sell” crowd.
Charts of interest / Big Movers:
Tuesday, Sonos (SONO) skidded 22% after the speaker maker’s first earnings report since its initial public offering showed a net loss and sales that were worse than those reported in the same quarter a year ago. The speaker maker’s stock had rallied into the release, soaring 13% in Monday’s session.
Francesca’s (FRAN) tumbled 35% Tuesday and hit all-time lows after the women’s clothing chain reported fiscal second-quarter earnings and sales that missed expectations, and provided a downbeat outlook, citing “weak traffic trends.”
I am not sure I have ever seen a stock fall this much in one day but Wednesday Vital Therapies (VTL) plummeted 93% after it said it is halting the development of a system aimed at treating liver failure after a disappointing trial.
What a wild week for this one. On Monday, Fred’s surged on news Walgreens will purchase files and related pharmacy inventory of 185 Fred’s stores across 10 Southeast states. Walgreens will pay Fred’s $165 million, subject to adjustment, plus an amount equal to the value of related pharmacy inventory. Fast foraward to Thursday and the stock (FRED) plunged 18% after it reported a drop of 3.5% in its second-quarter same-store sales. It also reported a drop in revenue and a loss that widened from the previous year.
Kroger (KR) sank 9.9% Thursday after it reported its second-quarter results, which included same-store sales that rose less than expected.
Have a great week and we’ll see you back here Sunday!