consumer confidence

Volatile start to November…

Posted on by George Mahfouz

The markets kicked off the month of November on Thursday with a 1% gain only to give it back the very next day. The Dow Jones Industrial Average (chart) finished the shortened trading week essentially flat -0.11%, the Nasdaq (chart) -0.19%, the S&P 500 (chart) -0.16% and the small-cap Russell 2000 (chart) -0.14%. Without question the jittery start to November can be attributed to the upcoming election on Tuesday and the mixed signals from corporate America as companies continue to report their Q3 results.

Despite the increase in volatility, economic reports out this past week from consumer confidence to manufacturing showed signs of improvement. Even the labor market showed an increase in the number of new hires in the month of October. That said, it’s certainly easy for these metrics to be overlooked considering what’s in store next week. Once the Presidential and Congressional elections are over, I think all market participants can once again focus on the fundamentals of the economy, corporate America and the direction the country will go into with the newly elected officials in place.

Let’s not forget about Q3 earnings reporting season which will continue next week with reports coming out of the likes of Humana (NYSE: HUM), News Corp. (NasdaqGS: NWSA), Qualcomm (NasdaqGS: QCOM) and Walt Disney Co (NYSE: DIS) just to name a few. Good luck to all.

Have a great weekend 🙂

~George

What a day for the bulls!

Posted on by George Mahfouz

Stocks took off right out of the gate this morning thanks in part to a better than expected payroll number. Private sector hiring had its best showing in five months creating 163,000 new jobs compared to the 100,000 number most economists anticipated. This was enough to send the Dow Jones Industrial Average (chart) up 217.29 points, the Nasdaq (chart) +58.13, the S&P 500 (chart) +25.99 and the Russell 2000 (chart) +19.88. After trading the majority of the week in the red, three of these four key indices closed slightly up on the week, with the sole exception being the Russell 2000 (chart).

One of the concerns I have about the July labor report is that even though the private sector hired more workers than anticipated, this number is still way below the 250,000 monthly jobs necessary to have a meaningful impact on the unemployment picture. I have also watched a deterioration of consumer confidence as of late along with sluggish retail sales numbers. This does not bode well for the overall economy because the consumer plays a significant role in how our economy performs.

Now to the markets. If you are an investor, or a trader for that matter, you might be scratching your head and asking, “how could equities be at multi-month highs when we have anemic job growth and weakening consumer confidence?” The answer is very simple and that is – the Fed. Policymakers here and abroad have made it abundantly clear, if the markets and/or the economy needs us, we will accommodate! This mantra and position has helped fuel stocks all year long. Unless the central banks change their tune, a floor will continue to be placed underneath this marketplace.

Personally, it is difficult for me to have the confidence in going long or short equities in this environment. On one hand, you have a struggling economy and lagging corporate earnings. On the other hand, you have central banks from around the globe having a “whatever it takes” attitude while injecting a steady flow of cheap money into the system. That said, there are trading opportunities on both sides of the fence and seemingly technical analysis may become more influential on stocks or indexes then anything else right now. Good luck to all.

Have a great weekend 🙂

~George