The Bear Growls - Market Recap – Markets Hit Resistance
Week of July 13 -17, 2020
New/Flows
Monday, July 13, 2020 – DJIA 26085.80 +.04%, NDX 10602.21 -2.16%, SPX 3155.22 -.94%
Equity markets opened higher but ended flat to down 2%. The NDX index (QQQ) left a large range outside down day with a significant bearish tail. COVID-19 dominated the news flow as California reversed policy and reinitiated lockdowns. The US fiscal deficit for June came in at an astronomical $864 billion and for the quarter $3 Trillion. A Wall Street analyst predicted that AAPL would become a 2 Trillion $ market cap company by early next year. TSLA reduced the price of its Model Y SUV by $3K. The stock had a massive travel range on the day ($297) leaving a bearish outside down day with a long tail.
Tuesday, July 14, 2020 – DJIA 26642.59 +2.1%, NDX +.82%, SPX 3197.52 +1.34%
Equity markets traded higher with a distinct rotation from growth to value over the day. As part of that rotation recently out of favor sectors Energy (XLE) and Materials (XLB) caught bids. Moderna (MRNA) released positive vaccine data. The stock gapped higher had a large range day closing higher. The big 3 banks reported earnings (JPM, C, WFC) with all increasing reserves for future credit losses totaling an astounding $28 billion. On the international front in a sign of increased tension between China and the U.S., China announced plans to sanction Lockheed Martin (LMT) for impending sales of defense equipment to Taiwan.
Wednesday, July 15, 2020 – DJIA 26870.10 +.9% NDX 10701.68 +1.1%, SPX 3226.56 +.91%
Equity markets advanced with the NDX index taking the lead. China’s economy grew by 3.2%, AAPL won a major court case in Europe saving $14.8 Billion in tax breaks. American Airlines (AAL) notified employees that 25,000 Jobs were at risk after October 1st when federal assistance is scheduled to end. Godman Sachs (GS) had blowout trading revenue of $4.2 Billion far exceeding street estimates of $2.6 Billion. Chipotle (CMG) said it will add up to 10K employees for drive-through business. The stock has been a bull market leader. Within basic materials, demand has been increasing for Copper which has a high degree of correlation to economic activity.
Thursday, July 16, 2020 – 26734.71 -.5% NDX 10645.22 -.53%, SPX 3215.57 - .34%
After the release of unemployment numbers Equity markets opened and ended lower on the day but traded in a narrow constructive range. Jobless claims came in with 1.3 million initial filers and continuing claims of 17.3 million for the week of July 4. Morgan Stanley (MS) reported quarterly record revenue and earnings. Bank of America (BAC) reported earnings and set aside $5.1 Billion for anticipated credit losses. Large money center banks continue under financial pressure but appear to be far better prepared than during the great recession.
Friday, July 17, 2020 – DJIA 26671.95 -.2%, NDX + .18%, SPX 3224.73 +.28
Equity markets traded mixed on monthly expiration Friday in a quiet session. Housing starts and building permits came in light of expectations. Blackrock (BLK) was a standout as the firm reported better than expected earnings having taken advantage of the volatility in the markets over the last 3 months.
A look at the week ahead:
Monday, July 20, 2020
No major economic releases.
AZN/Oxford phase 1 trial results for COVID-19 vaccine
Tuesday, July 21, 2020
7:45 AM Goldman retail sales
8:30 AM Chicago Fed National Activity Index
8:55 AM Johnson/Redbook Retail Sales
10:00 AM COVID-19 vaccine manufacturers testify to House (MRNA, PFE, AZN, MRK, JNJ)
4:30 PM API inventories data for crude, gasoline, distillates
Wednesday, July 22, 2020
7:00 AM MBA mortgage applications
10:00 AM Existing Home Sales
10:30 AM DOE- crude, gasoline, distillates
Thursday, July 23, 2020 (Play Ball! Opening Day)
8:30 Weekly Jobless claims & continuing jobless claims
10:00 AM Leading Economic Indicators
Friday, July 24, 2020
9:45 AM Markit Manufacturing & Services PMI
10:00 New Home Sales
1:00 PM Baker Hughes (BHI) Rig Count
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