Category: Market Week In Review

The market added another week of record closes across the major indexes while the Nasdaq continued a power trend which is in its twelfth day. Investors were not without worries this week. Their attention was on the pandemic at the beginning of the week. However, it turned to the employment data at the end of the week.

It was a great week across all major indexes. The week opened with a gain on Monday that erased losses from the prior Friday. Once investors had a chance to absorb the new Fed hawkish stance and get past a quadruple witching day, they were ready to push back into growth stocks and see the markets another step upward.

The markets were volatile this week, with a clear character shift after the Fed statements on Wednesday. The meeting and comments from the Fed this week shifted the outlook from analysts and investors in surprising ways. In addition, the quadruple witching day on Friday added extra volatility that helped amplify what we might expect in the coming weeks.

It was a week of slow but sure advances, with every day reaching a higher high than the previous day. Only one day saw a decline in the closing price, and that was only -0.09%. Volume was high entering the week and then wained later in the week while the advance/decline line remained above 1.0 on average through the week. Crazy meme stocks aside, the week wasn’t exhilarating, but it’s a good week of building support for higher prices.

The short week pivoted primarily on Friday’s unemployment data, a key signal for investors of how well the economy is recovering. The Nasdaq declined through the first three days but rallied back on Friday after the data was released. The caution for investors was apparent in the top sector list before and after Friday’s upside reversal.

The week opened with reassurances that the Fed would not change monetary policy , helping to move the dialogue off inflation and turn the trade back toward growth. However, caution remained. There were gains, but some indecision in the indexes remained, and rotation was back into value and defensive plays at the end of the week.

Are you tired of hearing about inflation yet? Well, it’s still very much the focus of investors and driving the wild up-and-down movements in the Nasdaq. This week’s most crucial moment was clearly on Wednesday at 2:00 pm when the Fed released the minutes from last month’s meeting. Investors poured over the report looking between the lines for hints of inflation concerns and potential fed action to control it.

The focus was all on inflation this week. The updated consumer price index numbers were due on Wednesday, and investors entered the week expected the worst. On top of inflation , an oil pipeline closure on the east coast meant even more upward price pressure for consumers. Monday started the week with a terrible-looking marubozu candle which has no upper or lower wick. Prices went straight down from open to close. Utilities was the leading sector as investors took defensive positions. Five stocks declined for every advancing stock.

The market is the great fortune teller, always trying to price in the future, not the present. We saw that in action this week in several ways. The first was with Janet Yellen’s comments on Tuesday that interest rate hikes might be needed in the future. That sent investors into a frenzy sell-off before she walked back the comments.

The week began with continued momentum from the end of the previous week as investors speculated ahead of earnings reports from the biggest most influential companies in the market. Those companies gained on Monday as investors became more bullish , sending the put/call ratio to an overly bullish level. The result was that much of the positive earnings reports were already priced into the market, setting expectations even higher.