The roller coaster continues. Let’s review the movement last week. Markets were up dramatically in the final 10 minutes of trading on Monday to close out last year (it felt really artificial). We had the New Year’s holiday on Tuesday. Markets went up slightly on Wednesday. They were down severely on Thursday over Apple and ISM manufacturing data concerns. But markets were up, way up, on the December jobs number. The day-to-day movement doesn’t have any consistency. And when I think back to my favorite roller-coaster ride (Millennium Force), even with all the ups and downs you end up at the same place you started. So last week markets were up a touch, but a number of highs and lows in-between.
My model’s status: It’s all down. Markets have gone up over the last two weeks, with what seemed like artificial upward pushes on 12/26 and even more so on 12/31. But Speeds 1, 2, 3, 4 and 5 are all negative. If you look at the charts, the direction of the Market since early October is clearly down. From 10/3 – 12/24 the S&P500 is down -19.6%; from 10/3 – 1/4 it’s still down 13.4%. We’ve seen four mini-rallies within this timeframe. Will this latest mini-rally continue? We’ll see.
The December jobs number just rocked. The November number disappointed at 176,000. December expectations were for 180,000 new jobs. The number came in at 312,000.
The U3 unemployment number rose to 3.9%. The number has been at 3.7% for several months. Expectations were for it to either remain at 3.7% or drop a touch to 3.6%. Even though it went up two ticks, it’s still a great number.
The ISM manufacturing number dropped significantly from 59.3 to 54.1. Expectations were for 57. Some have said it might have been artificially high. Regardless, a number over 50 means “expansion” for our economy. Hopefully this is just a one-off and we see a higher number next month.
The economic focus of the week: The minutes from the latest Fed meeting in Mid-December come out Wednesday at 2pm. In October Fed Chair Powell sounded hawkish (their interest rate not close to neutral). But now they sound dovish. Will the details from the last meeting give us any further clue about the direction they will be taking?
Earnings season begins in earnest next week. Major financial companies will start reporting the week of 1/14: Citigroup, Goldman Sachs, JPMorgan, KeyCorp, PNC, and Wells Fargo. We’ll also get the numbers from Netflix.
Indicator focus: December’s ISM non-manufacturing index, November factor orders (Mon); November’s international trade, December’s NFIB small-business index (Tue); Minutes from the December Fed meeting (Wed); November’s wholesale inventories (Thu); and December’s consumer price index (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.