Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
U.S. futures are up significantly as global data was positive during the Monday holiday, and some pushing off of air strikes into Syria helps to lift spirits some:
- Chinese manufacturing hit a four-month high in August and euro zone factory activity rose at its fastest pace since May 2011. On Tuesday, data revealed that the U.K.’s construction sector expanded at its fastest pace in almost six years in August.
Stocks remain in a corrective period as most key sectors have issues with their technical patterns. There remain some small pockets of momentum stocks where many are hiding out but if this correction continues those areas should likewise get hit (the “Generals of the Market” are usually the last to go). As for the S&P 500, it goes without saying this is a sloppy chart. A primary flag in August was broken to the downside via a gap down, and then a bear flag (in orange) was broken a week later. Hopes for the normal V shaped rally died with that. Now we have a much more choppy situation. MACD remains in a bearish condition as well.
Key sectors such as transportation and financials also show the same type of issues.
This is the week where we get the heavy dose of economic data:
Tuesday – ISM Manufacturing, expectations of a decrease to 53.8 from 55.4. Recall this figure had turned sub 50 just a few months ago so >50s reading would be welcome.
Thursday – ADP employment, expectation of a drop from 200K to 177K. ISM Non Manufacturing, expectation for a decrease from 56.0 to 55.0.
Friday – August employment data, expectation of +175K v 162K in the prior month, and a flat unemployment rate.
Other than Syria there is growing talk Larry Summers might be favored by the Obama White House to get the Fed Chairmanship over Janet Yellen. For those who know Summers’ background as a man who along with Robert Rubin essentially dismantled financial regulation … this development is simply incredible and says all you need to know about your financial system.
Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass–Steagall Act).
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