Craig Johnson’s

Market Commentary

Monday, August 18, 2014

Financial Markets Recap for Last Week:

  • Stocks continued to move higher last week. The Nasdaq Composite racked up the largest gain of the major market indices for the week rising over 2%.
  • The Nasdaq Composite, which is a market capitalization weighted index, enjoyed huge gains from the biotechnology sector and continued strength from the semiconductor and technology sectors.
  • The Dow Jones Industrial Average and the Russell 2000 (representative of the small market capitalization segment) gained under 1% for the week. The Russell 2000 performance remains negative for the year to date.
  • Earnings continued to dominate market news as numerous retail names reported their results.
  • Global news and some mixed economic reports also impacted trading.
  • The yield on the ten year U. S. Treasury note continued to slide last week with a sharp rally in the fixed income arena on Friday that was enhanced by events in Ukraine. The rally sent the yield on the ten year to 2.305%. The ten year U. S. Treasury note yield closed the day near 2.35%. The ten year yield reached its highest point this year on the first day of 2014, a tad over 3%.
  • Oil prices were quite volatile during the week, but closed over $97 a barrel just below the level that they started the week.
  • Gold has been trading in a near $200 price channel since September of last year. The top of the channel is $1394 an ounce and the bottom of the channel is $1190 an ounce. Gold closed Friday near $1306 an ounce.

Financial Markets Health and Outlook:

  • Earnings season will more or less wind down this week. This will probably slow stock market trading even more than it has already been experiencing recently. Last week, a couple of the trading days were some of the lightest trading volume days of the year.
  • The number of economic reports will also be on the low side this week with the consumer inflation report being released on Tuesday and the Federal Reserve minutes from their recent meeting being released on Wednesday.
  • The Nasdaq Composite and the Nasdaq 100 have broken out well above resistance and have provided the market with a lift. The S&P 500 and Dow Jones Industrial Average are trying to break above resistance, while the Russell 2000 is trying to break the downtrend it has been in before it becomes something more significant.
  • The break of support at 2.40% for the yield on the ten year U.S. Treasury note yield opens the possibility that yields could drop to the next level of support in the 2.10% area. (Repeated from last week). Last week’s further decline down to the 2.30% level on the back of a strong bond market makes the possibility of reaching the 2.10% area more likely.

 


Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.

Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice.  The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness.  References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service.  Past performance is not a guarantee of future results.

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