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© Curt Renz

  Stock Market Update

The popular averages closed slightly to the downside on Thursday. Durable goods orders rose more than expected in July. Unemployment claims unexpectedly dropped a bit last week. The Fed chair will be speaking from Jackson Hole on Friday with investors concerned about interest rate policy. Meanwhile, the prices of crude oil and gold fell on Thursday.

   Above is my 3-month chart of the S&P 500. While my outlook arrows were green, there was a nice hop above the 50-day moving average on May 24 with some continuation afterward. The selling that began on June 9 then painted my weekly outlook arrow a cautious yellow as the 50-day moving average was approached. That moving average was breeched intraday on June 14 and the SPY price closed just under on June 15. That colored my monthly outlook arrow yellow. The fall further under on June 17 turned my three-month outlook arrow yellow.

   The rise on June 20 brought the SPY price back near the 50-day moving average and it inched above on June 21. It remained stuck there on June 22, keeping my technical outlook arrows in a cautious mode. The jump above on June 23 briefly pointed them upward. However, the plunge on June 24 in response to the unexpected Brexit quickly repainted them yellow. The rebound on June 28 above the 200-day moving average restored them to green. The continuation above the 50-day MA that followed appeared to bode well.

   The pullback on July 5 found support at that 50-day MA. The strong net gains that followed pushed the SPY price to all-time highs on July 11, 12, 14, 18, 20  & 22. Another new high on August 5 after an essentially flat few weeks boded well. That’s been confirmed by continued  record setting on August 11 & 15.

   The recent narrow trading range with light volume is not unusual during late summer. As corporate earnings continue to improve, money that has been locked up in low paying fixed income investments may resume being transferred to the stock market once the vacation season ends.

   I’ve added the builder of my new home CalAtlantic Group (CAA +0.1%) to my portfolio. S&P Global reiterated its Buy rating on Thursday while raising its price target from $36 to $40. Tom McClellan sees rising lumber prices as an anticipation of Echo Boomers soon buying homes in large numbers and boosting the share prices of the homebuilders.

DISCLAIMER: Our commentaries are provided as general information and not investment recommendations. You are responsible for your own investment decisions. Our opinions are based on historical research and data believed to be reliable. There is no guarantee that results will be profitable. We are not responsible for errors or omissions. We may hold positions in vehicles that are mentioned.

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