“You work hard for your money. We’ll work hard to protect it.”
Market Direction Is Important –
Updated Chart of the S&P 500 and Secondary Signals
Of our Four secondary indicators under our MTI:
Relative Strength Index (RSI)-Negative
Chaikin Money Flow (CMF)-Positive
Money Flow Index-MFI-Positive
More on the Market and the Economy:
Stocks plummeted for the second straight day on Friday on worries about global growth, logging the worst week in four years. The decline came on the biggest trading volume of the year, and pushed the Dow into correction territory for the first time since 2011, as the index declined 10% from it’s record close in May. The Dow dropped 3.1% for the day, ending the week down 5.8%. After falling 2.11% on Thursday, the S&P 500 fell 3.2% on Friday, ending the week with a 5.77% drop. The Russell 2000 small-cap index also entered correction territory. The yield on the 10-year Treasury posted its largest weekly decline in 5 months, slipping to 2.042% – the lowest since April.
This week data will be released on new home sales, durable goods, pending home sales, consumer spending and GDP.
The IRS announced that the data breach it reported in May was much broader than originally disclosed. After initially estimating that over 100,000 individuals were affected, it was reported that an additional 220,000 victims were impacted, bringing the total to more than 334,000. In a statement, the tax agency said that “as it did in May, the IRS is moving aggressively to protect taxpayers whose account information may have been accessed. The IRS will begin mailing letters in the next few days to about 220,000 taxpayers where there were instances of possible or potential access to ‘Get Transcript’ taxpayer account information”.
After four straight months of strong gains, the Conference Board’s Leading Economic Index fell .2% in July, dragged down by a decline in permits to build new homes. “Despite a sharp drop in housing permits, the U.S. LEI is still pointing to moderate economic growth through the remainder of the year. Current conditions, measured by the coincident economic index, have been rising moderately but steadily, driven by rising employment and income, and even industrial production has improved in recent months,” according to the Conference Board.
Conditions for a rate hike haven’t been achieved yet, according to the Fed’s latest FOMC meeting minutes: “Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point”. Almost all members indicated that “they would need to see more evidence that economic growth was sufficiently strong and labor market conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term”. The minutes also showed that officials are concerned about the impact of a slowing Chinese economy: “several participants noted that a material slowdown in Chinese economic activity could pose risks to the US economic outlook”.
Nationwide housing affordability declined on firming home prices in the second quarter, according to the NAHB housing opportunity index. During the quarter, 63.2% of new and existing homes sold were affordable to families earning the US median income of $65,800. “Though affordability edged slightly lower in the second quarter, the HOI remains well above 50, where half of the households can afford half the homes sold…pent-up demand and continued job growth should contribute to a gradual, steady rise in housing throughout the year”, according to the NAHB.
This week will mark the tenth anniversary of Hurricane Katrina – the deadliest hurricane since 1928, and the costliest on record. The storm was responsible for 1,833 deaths and caused damages totaling around $151 billion, including $75 billion in the New Orleans area and along the Mississippi coast.