I receive a weekly market update from a previous work colleague that I would like to share with you. He provides a very nice summary of the week’s market activity that is concise, while providing a great overview of market conditions and trends. Please be sure to read the disclaimer at the bottom of the summary. You can also subscribe to this weekly newsletter if you find it useful.
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The S&P 500 dropped 2.3% on the week, ending at 1,300. The Dow was down 2.3% on the week to 12,150.
The May unemployment report saw the rate tick up to 9.1% from 8.9% last month. The up tick was attributed to workers returning to the active search for work. More surprising was the low level of job creation, the economy added just 54,000 jobs in May against much higher expectations. In addition, March and April job creation numbers were revised downward. This came on the heels of initial unemployment claims of 422k, still above the 400k level that economists say signals overall job growth.
That news capped a week of disappointing economic news. The ISM manufacturing index dropped to 53.5 from last month’s 60.4, although the services index showed a slight improvement to 54.6. Factory orders were down 1.2%. Case-Shiller’s 20 city index showed that home prices dropped 3.6% year-over-year, continuing the slide since November. The economy continues to grow slowly.
In international news, the EU has agreed in principle on another solution for Greece. Chinese manufacturing appears to be slowing in response to the curbs on credit. Oil continues to trade around $100.
From technical perspective, the S&P 500 is continuing a relatively steady decline from the highs at the end of April. Except for the high this week which roughly matched last week, each week over the last five has seen successively lower highs and lows. It ends this week at a key support level around 1,300 with the daily stochastic in oversold territory and pointing down. The daily MACD is negative and also pointing down.
If the pattern of the last five weeks holds, the market may turn up from here before retesting resistance around the 1300 level. Longer term weekly indicators continue to point down suggesting further downside. If the S&P 500 moves past the current level of support, the next level of support will be around 1,250.
That’s it for now; please feel free to forward this to friends who may be interested. If they want to subscribe, have them send me an email. If you’d like to unsubscribe from this weekly email, reply to this address with Unsubscribe in the subject line.
Bill Connors, CPA
Vice President
512- 275-0814 direct
512-422-8344 cell
512-476-5754 fax
http://www.riverstonewealth.com/
RiverStone Wealth Management (RSWM) does not accept brokerage orders or cancels through this medium and is not responsible for any orders so placed. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you are not the intended recipient, please contact the sender and delete the material from any computer. WARNING: All email sent to or from this address will be received or otherwise recorded by the RSWM email system and is subject to archival, monitoring or review by, and / or disclosure to, someone other than the recipient. RSWM does not offer tax or legal advice. Any information related to tax is offered through RiverStone Business Advisory Services, Inc. (not a CPA firm). If this communication contains information or opinion about tax matters, it is not a “covered opinion” under US Treasury Circular 230, and therefore can not be used by the recipient as a legal defense from federal tax penalties.
RiverStone Wealth Management does not accept brokerage orders or cancels through this medium and is not responsible for any orders so placed. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this message by mistake, please contact the sender and delete the material from any computer. WARNING: All email sent to or from this address will be received or otherwise recorded by the RiverStone Wealth Management email system and is subject to archival, monitoring or review by, and / or disclosure to, someone other than the recipient.
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