E-Mini S&P 500 stayed in the upper end of the higher range, but failed to launch and clear the high of $1403.75 established three days ago. $1400.00 seemed like the hard resistance that if broken may lead to a much higher level, but the market simply retreated from the higher highs. The sentiment of the market still is in "wait and see" mode with uncertainty and anxiety.
The USDA came out Friday with an extremely bullish outlook on some of the crops that have succumbed to drought. Inflation fears were felt throughout the marketplace due to anticipated higher food costs. The US monthly budget deficit contracted to $69.6 billion in July from $129.4 billion a year ago. The deficit remains at the $1 trillion plus level for the fourth year in a row. The Economic Cycle Research Institute Weekly Index increased to 122.5 from the 122.1 growth rate the previous week.
Out of the S&P 500 reporting earnings to date, 72% have exceeded expectations. JC Penney (JCP) was up 5.9% to $23.40. Facebook (FB) was up 3.8 % to $21.81. Broadcom (BRCM) was up 3% to $35.35. Research in Motion Ltd. (RIMM) was up 6.3% to $8.29. Yahoo Inc. (YHOO) was down 5.4 % to $15.15. Monster Beverage (MNST) was down 11 % to $54.27. Chesapeake Energy Corp. (CHK) was down 3.1% to $19.68. The US consumer seems more cautious than ever, increasing savings and checking deposits by $356 billion.
China's exports increased 1.0% year-on-year in July, but fell below market expectations for 8.6 %. China's imports increased 4.7%, while expectations were for 7.2 %. New loans in China hit a ten-month low. It is thought with the decline in the economic outlook for China that the Chinese central bank may initiate an easing in monetary policy possibly this weekend.
The Eurozone has been battling with fears of recession as even Germany is thought to be vulnerable. Exports and domestic demand for German products is slack, creating worry regarding Germany's role in the euro rescue efforts. Italy has a wealth of assets, but has difficulty sustaining its economic balance sheet. They are in the process of possibly putting together state assets to sell to increase the revenue necessary to maintain the state. The current government has put together property and utility facilities to sell. The purpose would be to shrink the public debt by 80 billion euros a year.
Greece has a redemption due on August 20th and is in the process of privatization of some of its buildings and utility companies. They must create the spending cuts and tax hikes to qualify for the next tranche of bailout funds as the troika will be visiting them in September to note the progress made.
On the stock side: JPMorgan Chase and Co. (JPM) was unchanged at $36.92. Citigroup Inc. (C) was up 0.10% to $28.89. Bank of America (BAC) was up 0.06% to $7.72. Alcoa Inc. (AA) was up 1.35% to $8.98. Boeing Co. (BA) was down 0.30% to $74.06. Caterpillar Inc. (CAT) was up 0.57% to $88.90. General Electric Co. (GE) was up 0.19% to $21.10. Halliburton Co. (HAL) was up 0.19% to $35.12. Hewlett Packard Co. (HPQ) was up 1.03% to $19.61. SPDR Select Sector Fund - Financial (XLF) was up 0.13% to $14.95.
Monday, we have no major US economic reports due out!
Monday, what to expect: We maintain a bullish bias unless the (September) E-Mini S&P 500 penetrates $1358.50. Monday, we anticipate an inside to lower day. Friday's range was $1402.75 - $1392.00. The market settled at $1402.50. Our comfort zone or point of control for this market is $1397.00. Our anticipated range for Monday's trading is $1401.50 - $1383.50.