Key Takeaways
- Nasdaq Continues To Lead
- Amazon And Apple Report After Close On Thursday
- July Employment Report On Friday
I didn’t think I would miss too much taking a week off at the end of July. Boy was I wrong. Markets continued adding to their yearly gains and the S&P 500 is now up 19% year-to-date, while the Nasdaq Composite is up an amazing 38%. In a week filled with earnings and economic data, we’ll see if the party can keep going.
An interesting trend we’re noticing here at tastytrade is the way in which retail investors are interacting with markets. Up until just a couple weeks ago, about half our customer trades were in the index ETFs such as SPY and QQQ. More recently, we’re seeing a shift with only about 30 – 35% of trades, much more normalized, being in index products and Index related ETF’s. What we are seeing is the balance taking place in individual underlyings such as Microsoft and Netflix, much of it being bullish, especially in Netflix. To me, that says we’re seeing a bit more optimism from customers as they are starting to venture out in to individual names which suggests potential for further market strength.
About half the S&P 500 have reported earnings so far and another 25% are scheduled to report this week. While many were forecasting a doom and gloom earnings season, what we’ve seen so far is better than expected, although earnings overall are still forecast to be down over 7% from a year ago. Yet through last week, 80% of companies reporting topped earnings expectations. Albeit, forecasts for the quarter were a bit on the pessimistic side; however, the beat in expectations and relatively bullish comments by CEOs and CFOs have been a pleasant surprise.
A couple of the bigger names reporting this week include Apple and Amazon. Both companies are scheduled to report on Thursday after the close. Then, before markets open on Friday, we’ll get a look at July employment. The market is looking for 186 thousand new jobs created and an unemployment rate of 3.6%. The combination of earnings and the employment report makes for a lot of data to digest between Thursday’s close and Friday’s open.
One last product I’m closely watching is oil. We’ve seen some strength here lately and oil is trading over $81 a barrel in premarket. While many inflation indicators suggest things have stabilized, if there is one commodity that could potentially upend everything, it’s oil. Therefore, I’m closely watching this as it could factor into future Fed interest rate decisions.
Given the abundance of news coming this week, it’s worth noting the VIX remains below 14. That is a very low level by historical standards and suggests a very complacent market. As I’ve said before though, it’s not uncommon for a relatively benign event to have an outsized effect when volatility is this low. Therefore, I would stick with your investing plans and long term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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