QUICK TAKE: No Bias. Leadership shows crumbles as the technical support of key moving averages is tested.
Choppy price action on the major indexes as the third week of straight selling for large caps saw rotation into value oriented defensive names.
| INDEX | WEEK CLOSE | CHANGE | % CHANGE | YTD % |
| DJIA | 27657.42 | -8.22 | -0.0 | -3.1 |
| Nasdaq | 10793.28 | -60.27 | -0.6 | 20.3 |
| S&P 500 | 3319.47 | -21.50 | -0.6 | 2.7 |
| Russell 2000 | 1536.78 | 39.51 | 2.6 | -7.9 |
A decline in sell volume bodes well for the bull market. Heavy, buying volume is partly attributed to options expiration Friday.
Look for second quarter window dressing to boost recent winners as we get closer to October.
The Bull isn’t over until it cast its shadow. Low interest rates, easy money and cheap borrowing for companies has been rocket fuel for this market.
Lots of news to stir the pot this week.
Weekly Bullishness:
- Buyouts: NVIDIA (NVDA, +0.20%) to buy Arm Holdings from Softbank for ~$40 billion in cash and stock, and Gilead Sciences (GILD) buying Immunomedics (IMMU, +102%) for $21 billion, more than 100% premium.
- The Snowflake (SNOW, +100%) IPO was off to a good start after being initially priced at $120 and closing the week at 240.
- Marriott (MAR, +0.62%) reported a pickup in demand. Dividend remains on Hold.
- AstraZeneca (AZN, +5.06%) resumed its COVID-19 vaccine trial in the UK. Pfizer’s (PFE, +1.55%)said it believes it will have enough data by the end of October to know if its vaccine is safe and effective. Merck (MRK, +2.31%) has begun human testing of a COVID-19 vaccine candidate.
Weekly Bearishness:
- Federal Reserve Chairman Jerome Powell went on warning, “More fiscal support is likely to be needed,” for a “highly uncertain” economy, and that Congress needs to act quickly on another coronavirus relief package.
- More virus lockdowns for Israel and social restriction for Europe as Covid-19 fears linger.
- Predictions for lesser oil demand from the IEA, which said, “We expect the recovery in oil demand to decelerate markedly in the second half of 2020.” And BP, which called an end of an era for high growth in demand.
- Retail Sales report for August was weaker than expected. Total sales were up 0.6% m/m (Briefing.com consensus 1.0%) following a downwardly revised 0.9% increase (from 1.2%) in July. Excluding autos, sales were up 0.7% (Briefing.com consensus 1.0%) following a downwardly revised 1.3% increase (from 1.9%) in July. The key takeaway from the report is that it points to some slowing in retail spending activity following the expiration of enhanced unemployment benefits, but, importantly, it didn’t reveal a spending contraction as increases were seen in many categories.
- Initial jobless claims for the week ending September 12 fell 33K to 860K, against a forecast of 830K. Claims remain sky high compared to same week a year ago when they were 211K.
- Online business review portal Yelp said their data showed that 60% of businesses that have permanently closed since the pandemic. Restaurants were hit hardest. The National Restaurant Association also said that 100,000 restaurants have closed either permanently or long term, accounting for $240B in lost sales.
LEADERSHIP
The tech bigs are in pullback mode. The overall market is likely to go where they do.
- Microsoft (MSFT, -1.78%), raised its dividend by 1%. Stock has fallen sharply below its 50-day, which we’ll have to consider resistance now.
- Facebook (FB, -5.28%) is dealing from a backlash from celebrities as well as antitrust issues from the FTC. It’s testing the support of the 50-dma.
- Apple (AAPL, -4.61%) is also testing its 50-dma.
- Alphabet (GOOG, -3.99%), is trading above its 50-dma.
- Amazon (AMZN, -5.18%) is also trading above its 50-dma.
SECTOR ACTION
| SYMBOL | NAME | SCTR | % CHG |
| XLE | Energy Sector Fund | 17.4 | 3.03 |
| XLI | Industrial Sector Fund | 89.2 | 1.51 |
| XLB | Materials Sector Fund | 94.5 | 1 |
| XLV | Health Care Sector Fund | 50 | 0.91 |
| XLRE | Real Estate Sector Fund | 40 | 0.14 |
| XLF | Financial Sector Fund | 41.2 | -0.12 |
| XLU | Utilities Sector Fund | 24.8 | -0.7 |
| XLK | Technology Sector Fund | 82.6 | -1.06 |
| XLP | Consumer Staples Sector Fund | 35.2 | -1.48 |
| XLY | Consumer Discretionary Sector Fund | 88.7 | -1.49 |
| XLC | Communication Services Sector Fund | 53.8 | -1.74 |
EXCHANGE DATA
| NYSE | 18-Sep |
| Issues Traded | 3,149 |
| Advances | 1,841 |
| Declines | 1,265 |
| Unchanged | 43 |
| New Highs | 206 |
| New Lows | 51 |
| Adv Vol | 12,490,600,585 |
| Decl Vol | 11,437,924,845 |
| Total Vol | 24,203,797,886 |
| NASDAQ | |
| Issues Traded | 3,633 |
| Advances | 2,373 |
| Declines | 1,183 |
| Unchanged | 77 |
| New Highs | 230 |
| New Lows | 85 |
| Adv Vol | 12,259,610,396 |
| Decl Vol | 8,331,960,826 |
| Total Vol | 20,812,849,671 |
| Volume Stats | |
| NYSE Vol % Chng f/prev wk | 46% |
| NYSE Adv/Dec Vol | 1.1 |
| Naz Vol % Chng f/prev wk | 40% |
| Naz Adv/Dec Vol | 1.5 |
| Advances/Declines | |
| NYSE | 1.5 |
| Naz | 2.0 |
| New Highs | |
| NYSE | 96% |
| Nasdaq | 76% |
| New Lows | |
| NYSE | 0% |
| Nasdaq | -21% |
Stay loose,
Dan