We are still maintaining a long bias into the week ahead, however with the extremely tight range being experienced in all market capitalizations for the last two weeks, be aware that a breakout in either direction is possible. Only the higher volume on the last two up-days suggests that the breakout could be to the upside. In the meantime, we'll be keeping our stops close.
Here's a summary of the week ahead.
Large Caps - Long
Mid Caps - Long
Small Caps - Long
Nasdaq - Long
XLK - Technology
XLV - Health Care
XLE - Energy
XLI - Industrials
XLP - Consumer Staples
XLU - Utilities
XLF - Financials
XLY - Consumer Discretionary
XLB - Materials
Economic Reports of Significance (all times are EDT - GMT-4)
- 09:45 - PMI Manufacturing Index
- 10:00 - ISM Manufacturing Index
- 10:00 - Construction Spending
- 08:30 - Personal Income & Outlays
- 08:15 - ADP Employment Report
- 10:00 - ISM Non-Manufacturing Index
- 10:30 - EIA Petroleum Status Report
- 08:30 - Jobless Claims
- 10:00 - Factory Orders
- 08:30 - Employment Situation
- 08:30 - International Trade
- Before Market Open - Proctor & Gambel (NYSE:PG)
- Before Market Open - Avnet (NYSE:AVT)
Our bias remains long, and we will pay closer attention to Nasdaq stocks and Health Care stocks. We'll keep our stops very close for several reasons:
- All three market capitalizations continue to show an extremely tight trading range. Until we see the direction of the breakout, we'll need to remain cautious for a move to the downside.
- The 10-year yield is still trending down, indicating a continued flight to safety. Weakness in the Utilities sector suggests this flight may be ending however we'd like to see confirmation in the treasury yield before reaching that conclusion.
- This is Employment Situation week, and that adds a measure of uncertainty to Friday's behavior.
- The Bank of England has their announcement on August 4th, and there will be uncertainty leading into Thursday based on the view they will take regarding Brexit risks.