The S&P 500 posted its first weekly decline in four weeks but held narrowly above a key technical level that the Nasdaq broke. The divergence leaves the S&P 500's uptrend technically intact heading into a week that includes Fed Chairman Kevin Warsh's Jackson Hole speech and Nvidia's earnings report.
The S&P 500 and the Nasdaq both posted their first weekly decline in four weeks on Friday. Each index kept its year-to-date gain above 12%. Both indexes also undercut the low of their Aug. 4 follow-through days, a move that, according to IBD Senior Market Analyst Mike Webster, negates the follow-through day that had confirmed the current uptrend.
S&P 500 holds narrow technical edge
The S&P 500 closed Friday's session just above its 21-day exponential moving average, while the Nasdaq ended below that line.
According to IBD Senior Market Analyst Mike Webster: "You can't have a power trend on the Nasdaq anytime soon", since the index needs its low to hold above the 21-day line for 10 consecutive days before regaining that status. Still, IBD Market Research Director Justin Nielsen said investors do not need to wait for a power trend or another follow-through day to start buying again, as long as the market keeps holding above its rally-day low.
Fed's Jackson Hole speech looms over the week
Warsh's speech Friday at the Jackson Hole policy symposium will provide the week's focal point. Its significance grew after the Treasury stepped up buybacks of long-term Treasury bonds to stem a rise in rates, after long-term yields began surging following the Fed's 9-3 vote to hold its key rate steady.
Markets currently price just a 40% chance of a September rate hike. Wednesday's personal income and outlays report is forecast to show core PCE inflation easing to 3.2% from 3.3%.
Nvidia's fiscal second-quarter results are due late Wednesday, adding another catalyst for the index before the week is out.
Source: Investor's Business Daily
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