Summer Storm Strikes

The war of words between the U.S. and North Korea sent the major indexes spiraling last week, the Dow Jones and the S&P 500 recording their second worst week of the year, the Dow falling 1.1% and the S&P 500 plunging 1.4%. The NASDAQ, which had already showed signs of a possible sell-off over the last few weeks, ended off 1.5%.

It took time but in the end the geopolitical tension between North Korea and the U.S. spilled over to Wall Street. On Thursday, investors fled from stocks and looked for refuge in gold and bonds; some market strategists think that the selling could resume. The fact of the matter is that it’s rather atypical to go a whole year without seeing a 5% correction, and such a correction is yet to surface on Wall Street since the high recorded in August of last year.

Take for example, the Swiss bank, UBS, which recommends that long-term investors whose horizon is measured in  years, should take it easy and capitalize on every lower entry point to add to their stock holdings. At the same time, the bank’s recommendation to investors whose positions range from a number of weeks to a number of months, is to be a little more defensive.

It could be that we’re entering a longer period in which stocks will be vulnerable to higher-level volatility, when considering the tensions escalated by nuclear threat that activated selling pressure, pressure that some market investors had expected to surface invariably at some point this year.

In the event selling indeed continues, a correction of 5% from the latest high could send the index falling another 100 points, bringing it to the 2,337 point area, which coincides with the 200 period EMA. A more significant selloff of over 10% last surfaced on Wall Street in January-February 2016. All-in-all, Wall Street usually sees a price retreat at least once a year – a price correction once a year, and a bear market every 5 years, which would be a regression to the mean. A price retreat is defined as a decline of between 5-10% from the latest high. A price correction is defined as a decline of over 10% from the latest high, a bear market being when the stock market records a decline of over 20% from its latest high.

It’s indeed mid-August but this coming week features a number of important market catalysts, including retail chain sales on Tuesday and the release of the minutes from the Fed’s latest meeting on Wednesday. Wal-Mart (WMT) and Home Depot (HD), 2 of the best-performing companies in the retail sector, stand to report their Q2 results this week, along with a number of smaller retailers.

It goes without saying that the unexpected war of words between U.S. President Donald Trump and North Korea is likely to continue, and weigh on the market. The market will not miss a beat in responding over the short term to every sign of escalation or tapering in regards to geopolitical risk. At the same time, every expert in geopolitical events, will readily espouse that these spills are almost always buying opportunities.

The rampant geopolitical tension isn’t the only thing that investors are eyeing as possible triggers for a sell-off in a market which has not seen a price retreat already for 18 months, since February 2016. The catalyst for a price correction could be one of a long list of events, though one main worry is the expectation at play that central banks around the world will resume their policy of monetary tightening over the next few months. That’s likely to rattle markets which have rallied for 8 straight years, riding the wave of ultra-low interest rates.

The President of the European Central Bank (ECB), Mario Draghi, is expected to speak at the Fed’s annual Jackson Hole symposium which will be held on August 24th. Draghi is likely to signal that the change is impending and that the ECB is likely to provide further detail in its coming September meeting. The Fed symposium is an excellent opportunity for senior bankers to clarify their intents for lowering the U.S. central bank’s inflated balance sheet, while also expressing their views on inflation and future rate hikes. The lack of inflation, which also found expression in the CPI released last Friday, has made the market even more skeptical that the Fed can continue its streak of rate hikes in December.

IndexLastDaily change
DJX21,8580.07%Up
SPX2,4410.13%Up
Nasdaq6,2570.64%Up

 

Have a great trading week!

 

Economic Calendar

 

DAYTIME (EST)EventForecastImpact
Tuesday8:30Retail Sales0.3 %Medium
Tuesday8:30Empire State9.8Medium
Tuesday8:30Import and Export Prices0.2 %Medium
Tuesday10:00Business Inventories0.4 %Medium
Tuesday10:00Housing Market Index65Medium
Wednesday8:30Housing Starts1.225 MMedium
Wednesday10:30Oil Crude InventoriesLow
Wednesday14:00FOMC MinutesHigh
Thursday8:30Jobless Claims241 KMedium
Thursday8:30Philadelphia Fed Business Outlook Survey17.0Medium
Thursday9:15Industrial Production0.3 %Medium
Thursday10:00Leading Indicators0.3 %Medium
Friday10:00Consumer Sentiment93.9High
 
 
 
 

 

Earning Calendar

 

SymbolCompanyAM/PMDay
SYYSysco CorporationAMMonday
JDJD.com, Inc.AMMonday
AAPAdvance Auto Parts, Inc.AMTuesday
DKSDick’s Sporting Goods, Inc.AMTuesday
TJXThe TJX Companies, Inc.AMTuesday
HDThe Home Depot, Inc.AMTuesday
COHCoach, Inc.AMTuesday
AAgilent Technologies, Inc.PMTuesday
TGTTarget CorporationAMWednesday
CSCOCisco Systems, Inc.PMWednesday
NTAPNetApp, Inc.PMWednesday
SNPSSynopsys, Inc.PMWednesday
LBL Brands, Inc.PMWednesday
VIPSVipshop Holdings LimitedPMWednesday
MSGThe Madison Square Garden CompanyAMThursday
WMTWal-Mart Stores, Inc.AMThursday
BABAAlibaba Group Holding LimitedAMThursday
GPSThe Gap, Inc.PMThursday
ROSTRoss Stores, Inc.PMThursday
AMATApplied Materials, Inc.PMThursday
ELThe Estee Lauder Companies Inc.AMFriday
DEDeere & CompanyAMFriday
FLFoot Locker, Inc.AMFriday

 

Today’s Picks – Day Trading!

SymbolBreakoutBreakdownMomentumMomentum
YELP$42.33CAREL
KEM$19.79ATHMMYL
SPPI$9.27KRO 
SGMO$10.50TRIP 
PAA$20.00CYH 
PAGP$20.64  
HP$46.00  
  
   

 

New York Strategy Swing

#DateStockLong\

Short

StatuesData CloseProfit\

Loss

114.6.2017SIGShortClose23.6.2017+2.29%
216.6.2017AABA (YHOO)LongClose26.6.2017+3.14%
321.6.2017KRShortClose27.6.2017-2.75%
429.6.2017DKSShortClose3.7.2017+1.04%
56.7.2017HAINLongClose18.7.2017+2.52%
66.7.2017DKSShortClose13.7.2017+3.96%
710.7.2017ORCLLongClose13.7.2017+1.38%
813.7.2017YUMCShortClose31.7.2017+2.12%
918.7.2017LBShortClose20.7.2017+1.34%
1020.7.2017FIVEShortClose26.7.2017+1.97%
1121.7.2017HOGShortClose27.7.2017+0.39%
122.8.2017AKAMShortClose3.8.2017-1.12%
133.8.2017NKELongClose8.8.2017+0.02%
144.8.2017SBUXShortOpen +2.52%
158.8.2017NTAPLongClose9.8.2017-1.17%
16
17
18  

Today’s Picks – Swing “New-York Strategy

No.1 –    GRUB

Company NameGrubHub 
Entry Point54.62
Stop Area53.29
1st Target55.20
Swing Target57.26
Avg. Volume2.06M
SectorTechnology | Internet Information Providers
Earning Date
Risk RateNormal
Risk\Reward Ratio1.98:1

No.2 – SLCA

Company NameU.S. Silica Holdings
Entry Point24.99
Stop Area26.80
1st Target24.20
Swing Target20.24
Avg. Volume3.00M
SectorBasic Materials | Industrial Metals & Minerals
Earning Date
Risk RateNormal
Risk\Reward Ratio2.62:1