Table 10 Is a Hot Spot

Earnings Season Rolls On During Summer Doldrums...Natural Gas Leaders Emerge

Market Wrap Up

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Table 10 Is a Hot Spot
Something stood out in the economic data this past week and we're not talking about the standout employment report for July. We'll get to that in a bit.

The thing that stood out to us was found in the Personal Income and Spending report for June. Actually, it was found deep down in the report -- in Table 10 to be exact -- where few outside observers might dare themselves to go.

Table 10 might be the hot spot at your local restaurant, but in the aforementioned report, it was a hot spot of differentiation in the year-over-year pace of real disposable income growth and real personal consumption expenditures (PCE) growth.

One is growing faster than the other and, by doing so, some big picture questions are...

Earnings Season Rolls On During Summer Doldrums...Natural Gas Leaders Emerge
Before I took some vacation time last week, I warned about the market's "first down day" (Aug 2) in weeks getting "too crowded, too fast" on the Short/Selling side resulting in limited downside and a possible squeeze back to recent highs. It's a simple behavioral pattern that has repeated itself over and over again after a strong uptrend slips into a sideways/consolidation phase like it did in the latter half of July.

Sellers pressed below the Weekly Range Lows on Aug 2 allowing the SPY to meet up with its rising 20-day moving averages...a textbook signal for Buyers to get involved. After limited follow-through to the downside, Friday's job data was an easy catalyst for Buyers to squeeze Shorts back to fresh highs.

We still have a decent amount of Earnings reports released this week, but the season will wind down into the latter half of August. Over the years I've coined the last week of August up to Labor Day weekend as the "dog days of the summer doldrums." It is often a painfully slow and dull timeframe as traders look to enjoy what's left of the summer vacation period. It's usually not until about midway through September do the markets start to get more active with opportunities again.

From a Swing Trading perspective, some of the best opportunities that I have...

Market Wrap Up
The Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite have all risen to new record highs in recent weeks and months.  It has been a laudable development considering the macro backdrop is still dropping a lot of disappointment on the world.

The more disappointment that is dropped on the world, though, the more it seems central banks are willing to pick things up with additional policy accommodation.  That has turned out so far to be a futile attempt to ignite animal spirits in the world economy.

Zero interest rates didn’t do the trick.  Quantitative easing didn’t do the trick.  And negative interest rates aren’t working.  Animal spirits are still missing in action, which is plain to see in GDP growth rates for the world’s leading economies. 

Read the full Market Wrap Up here.

TD Ameritrade's Economic Reports Primer Series

Part 6 : New and Existing Home Sales
Each month, economists and traders turn to the existing and new home sales reports to gauge current activity in this critical area of the economy and develop an outlook for home sales. Our Chief Market Analyst Patrick J. O'Hare ranks the existing home sales report a 5 on a scale of 1 to 10. For the daytrading crowd, however, he advises monitoring the new home sales report each month. "That offers more tradability in an industry-specific way," O'Hare says, as it often generates volatility in home builder stocks.
Read part six now.

Part 7: Consumer Confidence and Sentiment
Patrick J. O'Hare concedes that he's "not a huge fan of the confidence surveys." Why? It's not hard data. "It's polling people about their feelings. How you feel from one day to the next can change. And people often say one thing and do another. When it comes to consumer spending, these confidence numbers don't drive spending. It's income growth that drives spending," he says.
Read part seven now.

How to Read a Profit and Loss Statement
Understanding, even at a high level, how to read an income statement – sometimes called an earnings statement – can help investors make more informed decisions. Patrick J. O'Hare says that when in doubt, listen to several earnings calls to learn the cadence of the executive team. "Pay attention to the tone and verbal banter," O'Hare says. "You can hear the level of confidence or lack thereof provided by the executive."
Read the full story now.

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