Market Report Aug 06 2023
Starting with the market performance over the last week, it was somewhat atypical with minor price fluctuations during the first two days. Despite some stock movements, the indices remained largely static with a negligible gain on the first day and slight selling pressure on the second. The real shift was observed on the third day when a considerable downward trend emerged. This downward momentum persisted through the week, culminating in a weak Non-Farm Payroll (NFP) report potentially acting as a bearish catalyst.
Assessing the week's performance, two out of the five days had notably bearish tendencies, with one day experiencing a gap down. This implies a cautious outlook for the following week, particularly for the S&P.
The NASDAQ exhibited a bearish engulfing pattern on the weekly chart, ending the week down 3.27%. This marks the most substantial decline since March, suggesting investors need to be wary of possible continued downward momentum.
On the economic front, the jobs report released on Friday fell short of expectations with only 187,000 jobs added versus a consensus of 200,000. In terms of individual stocks, Amazon reported declining revenues for the third consecutive year and AWS, a significant contributor to Amazon's revenues, reported decreasing cash flows for the second consecutive year. Despite these figures, Amazon's stock price did not fully reflect this financial deterioration.
Finally, we move to Apple, which recently lost approximately $160 billion in market value post-earnings despite becoming a $3 trillion company. This move lower is not unprecedented for Apple post-earnings, and is a trend observed in other large-cap companies such as Tesla.
During earnings season, it is prudent to base investment decisions on more than just price action. One effective strategy is to follow the investment patterns of large funds. Currently, they are favoring companies like Adobe, Google, Microsoft, Palantir, Tesla, and Workday. While we currently hold Google, Microsoft, and Tesla in our portfolio, it may be worth considering the other stocks for potential investment opportunities.
Anne Chapman
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