Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

No Recovery Happening Here

Published 08/26/2020, 12:04 AM
Updated 07/09/2023, 06:31 AM
US500
-
DJI
-
US2000
-
DIA
-
SPY
-
QQQ
-
IWM
-
IXIC
-
TOL
-
TLT
-

Today’s chart (below) is the consumer confidence survey data, which yesterday hit it’s lowest level since 2014.

Consumer Confidence Survey Data Chart

At the same time, data on new home sales, and earnings from home builder Toll Brothers (NYSE:TOL), are at their best levels in years.

It seems a little inconsistent to have very low AND declining consumer confidence at the same time that there’s a housing boom.

What is not surprising is that stocks, of course, focused on the bullish data and rallied. This makes sense considering that housing, real estate, and their related impacts on consumption are often estimated to be responsible for over 10% of GDP.

There are two reasons to take note of yesterday's Consumer Confidence data, and even more importantly, next month’s data.

Low and declining confidence would logically indicate that the economic recovery is happening slower than expected, and this should be bearish for stocks. On a day that didn’t have conflicting bullish news, this data may have caused stocks to sell off.

Additionally, there is some bullish news here. Consumer confidence will come back. With it sitting at such a low level, its return will be big. And when the market sees big gains in consumer confidence, even from a low level, it will be bullish for stocks.

It may not be next month, but keep your eye out for these reports going forward.

Best wishes for your trading.

Key Levels

Note: PDL = Prior day low, PDH = Prior day high

S&P 500 SPY All-time high. 340 then 335 are important support.

Russell 2000 (IWM) Closed over PDH. Now sitting on 10 DMA. Key area to break is 157, then 160 is resistance area. Support at 155 then swing low is 153.60

Dow (DIA) New swing high then consolidation. Gap fills at 291.  Support at 280.

NASDAQ (QQQ) Inside day. 275 is pivotal support area. 260 is key support level and a trendline.

TLT (iShares 20+ Year Treasuries) Gapped down into the middle of its range 167-163. In a Warning Phase.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.