Weekly: Stocks end August on a mildly positive week of trading

Friday, August 29, 2014 -

NOTE: The stock market will be closed on Monday, Labor Day and we will be out of our offices this coming week – so our charts and commentary may be infrequent and lighter than normal this coming week as we update from the road.

Stocks finished the week on a positive note, allowing August to go into the record books as one of the best August gains in many years.

Friday brought another record light volume day of trading, where stocks managed to idle just above yesterday’s close but still shy of recent highs, preserving a positive trading week for the last week of the summer.

Good news on consumer sentiment offset weak news on consumer spending, suggesting consumers may feel ok about a lousy recovery but are not willing to spend any more money just because they are happy they have a job.

The Dow gained 19 points (+0.1%) to end at 17,098, while the S&P 500 rose 7 points (+0.33%) to 2,003 – another closing high but a bit shy of an all-time intraday high of 2,005 set earlier in the week.

The Nasdaq added 23 points (+0.5%) to 4,580. The NYSE finished at +0.3% and the small cap Russell 2000 led the way at +0.7%, though still below the weekly high and well off recent highs.


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Summer is Over

Despite the sideways choppy trading this week, it ended positive for stocks and added to what turned out to be the most positive finish for an August in fourteen years.

For a long time we have shared a common opinion that when volumes are at their lowest the market manipulators are most successful. Intervention from the Fed and its dealer banks or via government intervention is simpler. And the final week of August was one of the quietest stretches for the stock market this year. The first four sessions of this week produced the four lowest volume days of the year.

The lack of activity during the week was a function of some participants being away on vacation, while many others opted to stick to the sidelines ahead of a three-day Labor Day weekend in the U.S. that could see developments on the geopolitical front.

Under such low volume, index prices benefited from traditional month-end flows, which we often refer to as the monthly window dressing period (the last week of the month through the jobs report in the first week of the new month).

But as I have maintained for some time, this does nothing in my mind to remove the overvalued bubble the stock market is in. In fact, the positive August makes the September and October time frame even more . . .

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