What Happened: “It’s certainly been a wild ride for stocks in 2020,” noted researchers at LPL Financial. “Barely past the halfway point, the year has already brought the worst pandemic to hit the U.S. in over 100 years, an unprecedented government-induced recession as much of the country was locked down, some stomach-churning market volatility, and massive, unprecedented stimulus from policymakers totaling several trillion dollars”
Remember This: “U.S. companies are about to give us a look into their worst quarter since the Great Financial Crisis,” suggested Lindsey Bell, Chief Investment Officer for Ally Financial's /zigman2/quotes/206227672/composite ALLY -1.11% Ally Invest. “Second-quarter earnings reports may not be pretty. But expectations for next year have stabilized. If investors stay more focused on next year’s earnings estimates than next week’s, the market will likely keep its head above water.”
Pictured: Profile chart of the S&P 500 E-mini Futures
Technical: Broad-market equity indices balanced last week, evidenced by the responsive, tight trading range.
Recapping Last Week’s Action: On Monday, the S&P 500 traversed higher and left minimal excess before balancing into the close. Tuesday’s session made an attempt for Monday’s high, near $3,180, but sold off, leaving value higher and closing just below the overnight low.
After a quick morning liquidation, Wednesday’s session rejected prices in the lower part of the balance area and left value overlapping, with a close at the highs. Thursday responded lower, after a quick push to the $3,170 area of resting liquidity, to and through a low volume area and the prior day’s low, before squeezing back into range.
Despite the high gamma expiration suggesting many names could pin, Friday opened up around a composite high-volume area, within range, and attempted lower, before responding back through the open, and repairing earlier weak highs.
Looking beyond broad market indices, the innovation-driven, technology-based sectors are extremely extended while relatively weak sectors, such as energy and financials, have found it hard to come by support.
Overall, the market is at an important level and will likely, based on its reaction to Friday’s close, experience volatility in the coming sessions.
Scroll to bottom of this story to view non-profile charts.
Key Events: Federal Budget; NFIB Business Optimism; CPI; NY Fed Manufacturing; Industrial Production; Initial Claims; Retail Sales; Business Inventories; NAHB Housing Market Index; Building Permits; Housing Starts.
Fundamental: In light of extremely accommodative policies, investors should feel optimistic.
S&P 500 E-mini Futures (ES) | SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/composite SPY +1.39%
Nasdaq-100 E-mini Futures (NQ) | PowerShares QQQ Trust /zigman2/quotes/208575548/composite QQQ +2.52%
Russell 2000 E-mini Futures (RTY) | iShares Russell 2000 Index /zigman2/quotes/209961116/composite IWM +0.41%
Gold Futures (GC) | SPDR Gold Trust /zigman2/quotes/200593176/composite GLD -0.47%
Crude Oil (CL) | United States Oil Fund LP /zigman2/quotes/203483736/composite USO +2.48% | Invesco DB Oil Fund /zigman2/quotes/202740135/composite DBO +2.39% | United States 12 Month Oil Fund /zigman2/quotes/209867783/composite USL +2.16%
Treasury Bonds (ZB) | iShares 20+ Year Treasury Bond /zigman2/quotes/206026314/composite TLT -0.91%
Cover photo by Andrea Piacquadio from Pexels.
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