Home Stock Tech Wreck Leads Markets Right into a Downtrend — This is The place Key Assist Lies | The MEM Edge

Tech Wreck Leads Markets Right into a Downtrend — This is The place Key Assist Lies | The MEM Edge

Tech Wreck Leads Markets Right into a Downtrend — This is The place Key Assist Lies | The MEM Edge


In keeping with the Inventory Dealer’s Almanac, August has been the weakest month for the Dow and the second-worst month for the S&P 500 since 1987. (September is the worst month). This seasonal weak point, coupled with over exuberance amongst buyers, has set the markets up for not less than a pause after final week’s pullback places each the S&P 500 and Nasdaq right into a close to time period downtrend.

Among the many catalysts for final week’s pullback was an uptick in rates of interest together with an intolerance for lower than good earnings reviews that pushed down shares equivalent to mega-cap Apple (AAPL), amongst different corporations. Earnings season is usually a vital interval for the markets as investor sentiment is revealed based mostly on dealer’s response to outcomes. In bullish intervals equivalent to final quarter, unfavorable information is neglected. A working example is Apple’s rally following their Might 4th launch of 1st quarter outcomes, which additionally confirmed declining total gross sales.

As for rising rates of interest, they’re usually a explanation for angst for the markets – notably for Progress shares because of a diminished valuation of their future earnings. Since mid-Might, the Progress-heavy Nasdaq has been trending increased regardless of an increase in yields as buyers have been targeted on reviews of tempered inflation amid a steady financial system. This can be a departure from earlier intervals when the Nasdaq has pulled again amid an increase in charges.

Day by day Chart of Nasdaq Composite vs. 10-Yr Yield

Whether or not you’re taking motion based mostly on final week’s break within the markets may have every little thing to do along with your funding horizon. Brief-term buyers will need to lock in not less than partial earnings and stem losses whereas maintaining a tally of key areas of assist for the broader markets. Longer-term buyers can look to longer-term charts for steerage, because the month-to-month chart of the S&P 500 exhibits that the longer-term uptrend stays in place.

Beneath is a day by day chart of the S&P 500 the place I spotlight the subsequent space of potential assist, which is at its 50-day transferring common and is 1.6% away. Ought to the markets reverse pattern, potential upside resistance will initially be the 10- and 21-day transferring averages adopted by the late July excessive in worth at 4600. A transfer above this key degree will set the stage for additional upside.

Day by day Chart of S&P 500 Index

If you would like to be saved updated on the standing of the broader markets, in addition to be alerted to 1 space that is presently withstanding the downtrend elsewhere, use this hyperlink right here to trial my twice weekly MEM Edge Report. This no-obligation supply will offer you prompt entry to present reviews.


Mary Ellen McGonagle, MEM Funding Analysis

Mary Ellen McGonagle

Concerning the creator:
is an expert investing marketing consultant and the president of MEM Funding Analysis. After eight years of engaged on Wall Avenue, Ms. McGonagle left to turn out to be a talented inventory analyst, working with William O’Neill in figuring out wholesome shares with potential to take off. She has labored with shoppers that span the globe, together with massive names like Constancy Asset Administration, Morgan Stanley, Merrill Lynch and Oppenheimer.
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