Market at a Glance - 8/31/2017 By: Christopher Mistal | August 31, 2017 | Email | Print

8/30/2017: Dow 21892.43 | S&P 2457.59 | NASDAQ 6368.31 | Russell 2K 1391.32 | NYSE 11805.07 | Value Line Arith 5645.59

 

Psychological: Confused. According to the most recent Investors Intelligence Advisors Sentiment survey bulls are at 49.5%, bears are at 19.1% and correction is at 31.4%. Although there are substantially less bulls now than there were in July, they are slightly outnumbered by bears and those expecting a correction. This nearly even split suggests now is not a good buying opportunity.

 

Fundamental: Stalled. Little has changed over the last five weeks. Q2 GDP has been revised up to 3%, but the longer-term trajectory still remains murky. The unemployment rate remains in the low 4% range and existing home sales fell to their lowest level in a year in July. The Trump Administration has put the brakes on new regulation and rolled back some, but major policy initiatives have still not become law. At some point stock market valuations could matter again. 

 

Technical: Bouncing. At mid-August, Stochastic, relative strength and MACD indicators applied to DJIA, S&P 500 and NASDAQ were all negative and at or near oversold levels. This set the stage for the rebound occurring now. Previous all-time closing highs loom large and are likely to provide significant resistance. If all three indexes can breakout to new highs together, then the rally has a fair chance of continuing otherwise the rally will likely stall.

 

Monetary: 1.00-1.25%. Fed Chair Yellen’s highly anticipated speech at Jackson Hole focused less on monetary policy and more on financial regulation reform. Her view that any changes should be “modest” likely means she will be replaced when her term ends in February as the Trump Administration would prefer a more aggressive roll back. The uncertainty created by who will replace her could ultimately have a negative impact on the market.

 

Seasonal: Bearish. Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971), Russell 1000, and Russell 2000 (since 1979). September’s rankings improve modestly in post-election years, but average performance is still negative across the board.