This Week’s Going to Be Interesting

|July 20, 2020

Despite the Nasdaq Composite ending last week down 1.1%, the other major benchmarks ended the week higher. The trend for all of them, including the Nasdaq Composite, is still, up.

But there were minor cracks in the yellow-brick road last week.

A big crack developed on Monday when the Nasdaq 100 (NDX), an important index of the biggest 100 (non-financial) stocks listed on the Nasdaq, rose 2% in the morning, breaking through to new all-time highs, then collapsed spectacularly, ending the day down more than 2%.

That kind of intraday reversal is often a turning point signal. By turning point, I mean a change in the trend.

Then on Thursday Netflix reported earnings that disappointed investors, who sold the stock down 6.5% on Friday, to a level that pierced its 20-day moving average to the downside.

The hit to the Nasdaq, as stunning as it was on Monday and as mildly down at the end of the week as it was, was still worrisome.

It hasn’t been often, in the last 12 years that the Nasdaq Composite’s been down while the other major benchmarks have been up strongly. Last week, while the Nasdaq Composite fell 1.1%, the Dow gained 2.3% and the S&P 500 gained 1.2%.

On top of it all, the volatility index of the Nasdaq, the VXN, has been trading above the volatility index of the S&P 500, VIX, which it hasn’t done since both indexes fell in February and early March.

This week, on the Big-Tech earnings front, we get to see Microsoft’s numbers and Tesla’s numbers on Wednesday and Amazon’s numbers on Thursday.

All eyes are now on earnings, especially tech earnings, especially after Netflix took a big hit on Friday on its earnings.

The trend, for all the benchmarks, is still up. And it’s going to take a hard knock, probably coming from the tech sector’s earnings to reverse the market’s direction.

That’s not likely, but what everyone should be watching for.

Sincerely,


Shah Gilani

Shah Gilani
Shah Gilani

Shah Gilani is the Chief Investment Strategist of Manward Press. Shah is a sought-after market commentator… a former hedge fund manager… and a veteran of the Chicago Board of Options Exchange. He ran the futures and options division at the largest retail bank in Britain… and called the implosion of U.S. financial markets (AND the mega bull run that followed). Now at the helm of Manward, Shah is focused tightly on one goal: To do his part to make subscribers wealthier, happier and more free.

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Because I am – bullish, that is.

Because, you know, it’s all good until it isn’t.

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The Dow was up 723 points last week, or 2.6%. It’s now 3.2% from its all-time highs of last February. The S&P 500 notched another all-time high last week, ending the week up 3.3%. And the Nasdaq Composite hit a record high, ending the week up 3.4%.

Since the March 23, 2020 lows, in only five months, the Dow is up 54.11%, the S&P 500 is up 56.78%, and the Nasdaq Composite, wait for it…is up 70.47%

But, it’s all good… until it isn’t.

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