Quietly, another record for the S&P
11/06/17

A late-week rebound kept the record-high streak intact, as volatility continued to hug historical lows.

Last week the S&P 500® (SPX)—thanks to a strong rebound after a pullback low on Thursday and follow-through buying on Friday—etched another entry into the record books. For the week, the index gained 0.26%.

S&P 500 new highs notched, 1/2/17–11/3/17

Source: OptionsHouse

But despite posting its eighth consecutive weekly higher high and higher close, the S&P’s price action was relatively low-key—some may say surprising, given it was such a big week of earnings and economic numbers. Housing, consumer confidence, productivity, and factory orders all beat estimates. But the market failed to turn any of the news into serious upside momentum, and seemingly shrugged off Friday’s so-so payrolls number (at least the prior month was revised higher) to close out the week near the top of its range.

As for the hit parade, the top-performing sectors for the week were information technology (+1.82%), energy (+1.76%), and real estate (1.5%).

The worst-performing sectors were telecom services (-2.68%), industrials (-0.81%), and consumer discretionary (-0.76%).

Apple closed out a busy week of earnings by beating expectations. Traders took the stock up more than 3% on Friday to a record high close of $172.48. A conspicuous loser was streaming music provider Pandora (P), which tanked 25% to $5.59 on Friday when it turned in dismal Q3 numbers.

Last week’s relatively subdued trading was reflected in the ongoing trend of contracting volatility. Not surprisingly, the CBOE Volatility Index (VIX) closed out the week at 9.14, a record low close and not too far from the year-to-date intraday low of 8.84—another reminder for traders to be wary of complacency in a market that can seem to go in only one direction. 

CBOE Volatility Index, 5/1/17–11/3/17

Source: OptionsHouse

Looking ahead, although most of the marquee tech names have already released Q3 performance numbers, this week still has a full slate of earnings announcements, including Sysco (SYY) and BroadSoft (BSFT) on Monday, CBOE Global Markets (CBOE) and Toyota (TM) on Tuesday, Rockwell Automation (ROK) and Humana (HUM) on Wednesday, and Navidia (NVDA) on Thursday.

It’s also a slow week for economic releases, following this past week’s usual start-of-the-month deluge of headline numbers. Aside from a handful of Treasury auctions and announcements Tuesday through Thursday, the only reports of note are Consumer Credit (Tuesday), Wholesale Trade (Thursday), and University of Michigan Consumer Sentiment (Friday).

But don’t let a quiet market and a slow market news calendar trick you into believing the market isn’t capable of turning in a surprise. The market, like nature, abhors a vacuum.

 

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