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Stocks Fall as Strong Economy Sidelines Goldilocks: Market Trends
David Russell
August 17, 2023

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Sizing Up the S&P 500

  • S&P 500 breaks June high as short-term bearishness grows
  • 20-day moving average accelerates to downside
  • Intermarket risks:
    • 10-year Treasury yield nears October high
    • U.S. Dollar index breaks downtrend from May
    • VIX holds 2021 closing low of 15
  • Macro conditions potentially less favorable (more hawkish; see below)
  • Potential levels:
    • 4328: June 26 low, near August 2022 high
    • 4200: February high and 50% retracement of March-July move.
S&P 500, daily chart, with select indicators and patterns.

Key News

  • Hawkish comeback:
    • Retail sales +0.7% vs +0.4% estimate. Ex-auto +1% vs +0.1% estimate
    • Fed minutes: “upside risks to inflation … could require further tightening of monetary policy.”
    • Industrial production +1% vs +0.3% est
  • But doves (deflation) lurking?
    • China slowdown: retail sales, industrial production, Country Garden collapse, PBOC rate cuts
    • Atlanta Fed inflation inflation expectations 2.5% in August vs 2.8% in July
    • Barchart.com: M2 money supply falling at fastest pace in at least 50 years
  • U.S. Steel (X) jumps amid takeover reports
Atlanta Fed’s GDPNow estimate, showing impact of recent economic data.

Mover of the Week: New York Times

  • Earnings, revenue beat
  • Subscriptions growing after business-model adjustments
  • Potential transformation story
  • NYT +31%

Upcoming Events

  • Friday (8/17): DE earnings
  • Wednesday (8/23): New home sales, crude-oil inventories
    • Earnings: NVDA, PTON KSS AAP ADI
  • Thursday (8/24): Initial jobless claims
  • Tuesday (8/15): Retail sales, NAHB housing index
    • Earnings: HD
  • Wednesday (8/16): Oil inventories, Housing starts/permits, Fed minutes
    • Earnings: TGT, CSCO
  • Thursday (8/17): Jobless claims, durable claims

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About the author

David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.