Last Week:

Markets have a bad week. It’s still not a heart-attack, but the heartburn got worse last week. Both the Dow and the S&P have erased all of their gains for year at this point.

What’s your model saying? It has four pieces. When things are good, it has 4 Bull pieces and 0 Bear pieces. For the S&P that changed last week. The earliest piece became a Bear piece, meaning we are at a 3-1 ratio now. This means the short-term view is negative, but the overall Market is still positive, just not as strong. This is true for the Dow and the Nasdaq as well. The Russell 2000 is now in a neutral read at a 2-2 ratio.

The first read on Q3 GDP came in above expectations. We get the GDP numbers in three reads: advanced, revised, and final. Q2 finished at +4.2%. The range for the first Q3 read was +2.6% to +3.8%, with a consensus of +3.3%. The actual number came in at +3.5%. The rolling four-quarter average is +3.2%.

Durable goods orders were expected to drop substantially, and while they did so, it wasn’t as bad as forecasted. The prior number was revised up slightly from +4.5% to +4.6%. Expectations for the new number was -1.5%, but the actual number came in at +0.8%. An increase in orders for defense aircraft is credited for the better number.

New home sales declined -5.5% in September. Sales are down -13.2% year-over-year.

The latest Fed Beige Book showed our economy continues to grow at a moderate to modest pace. The BB is posted twice each quarter or eight times each year. This was the seventh posting this year. The Dallas district posted robust growth, while the New York and St. Louis districts posted slight growth. The other nine districts were in between, with the Cleveland district growing modestly.   

This Week:

The economic focus of the week: It will come on Friday morning when we get the latest jobs and unemployment numbers. Expectations are for 190,000 jobs; and the unemployment rate is expected to stay at 3.7%.

Earnings season continues. Some of the companies reporting this week: Aetna, Alibaba, Anthem, BP, Cedar Fair, Chevron, Coca-Cola, Diebold, Eaton, Exxon Mobil, Facebook, Fiat-Chrysler, GE, GM, Kellogg, Mastercard, Parker Hannifin, Pfizer, Royal Dutch Shell, Timken, Under Armour, (NE Ohio companies bolded).

Indicator focus:  October’s ADP payroll report (Wed); October’s ISM manufacturing index (Thu); September’s factory orders, and the October jobs and unemployment numbers (Fri).

Have a great week.


P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Securities offered through Securities America, Inc., member FINRA/SIPC.  Advisory services offered through Securities America Advisors, Inc.  Parker Wealth Management and Securities America not affiliated.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.   The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.  The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.  Yahoo! Finance, the Wall Street Journal, Investor’s Business Daily and Barron’s are several of the sources used for financial information.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Consult your financial professional before making any investment decision.  You cannot invest directly in an index.   Past performance does not guarantee future results. No strategy can assure a profit or protect against a loss.  Investments in the securities markets involve risk, such as loss of your principal.