Daily Rundown: August 12

BOB LANG: Good morning, Action Alerts Plus members. It's Friday, August 12th, 2022, and it's time for our rundown. So let's talk a little bit about the markets here. Markets so far are very strong this morning, following through on some robust rallies earlier in the week following the CPI and then the PPI number from midweek. Good price action we've had, good breadth, lower volatility, basically leading the bulls up to higher levels.

We've had this strong breadth, as I mentioned earlier. And this means basically more buyers are coming in on a regular basis. We've seen a nice string of higher breadth for the past few weeks. And so that's been pretty consistent with what we've seen with the price action, as well.

Fed funds futures right now portray a 70% chance of a 50 basis point rate hike in September. That's down from earlier in the week, when we saw about a 70% chance of a 75 basis point rate hike. So obviously, the inflation numbers that came in earlier this week have basically tempted the investors and traders to tell the Fed, look, time to slow down. But I'm not quite sure if that's going to be the case. We did have higher levels on a year-over-year basis. So it is a bit of a mixed picture when it comes to the Fed funds futures right now, but it's certainly pointing towards the right direction.

S&P 500 stocks, interesting statistic here is that 86% of the stocks in the S&P 500 are now above their 50-day moving average. That is a rather extreme level on the high side. But as you recall, back in middle of June, it was only 2%, maybe about 15 or 20 stocks out of the 500 that were above the 50-day moving average. So we've gone from really one extreme to the other. We're probably going to settle somewhere in the middle there if we do get a bit of a pullback on the index.

So as far as the markets are concerned, market territory, the downtrend line that started from 2022, still bending down. Still resistance for the S&P 500. That comes in at about 4275 to 4300. We've had, as we mentioned the other day, we've had a really strong move up in the price action.

And once that touches that downtrend line, it's going to be like a collision of two large celestial bodies, I mentioned this morning in the morning notes. So it would be some sort of explosion happening. Are we going to see players starting to sell off on that touch of resistance, or are we going to blast right through there and make a run up towards the 4400, 4500 level on the S&P 500? It'd be tough to watch, but it'd be interesting to watch that action as it occurs.

Here's an interesting stat for you. So even though the markets are up today, let's take a look at the previous nine days, which encompasses all the trading in August. So August trading nine days, excluding today. Seven of those nine days, the S&P 500 was down, and two days they were up, August 10th and August 3rd.

So one would think that the markets were down for the month, but actually, that's not the case. 1.8% gain so far in August, with only two gaining days out of the nine sessions that we've had so far. So those two sessions, August 3rd and August 10th, were enough to push the markets higher against those seven down days in August. Pretty phenomenal statistic over there.

And then, of course, today, we're up a little bit today, about a half a percent right now. So that could be three up days out of 10. Still rising, pushing the markets a little bit higher. If we do hold these gains today, we're talking about now a 2.3% gain for the month of August. Still pretty stunning when you have 70% of the days of the month down.

Yesterday, we trimmed Costco, as it was really basically taken as a prudent step to take some profits off the table after a really strong run by the stock. And we continue to build out our position in McCormick. We added some more funds to that name yesterday.

We often see this stock making a big run into the holiday period. We're just at the start of that right now. So last year, actually the last two years, we saw the stock make a run from August all the way up to November. Really hard to get on board. So we're using these opportunities when the stock pulls back to add some more shares.

So that's going to be it for the rundown, everyone. Have a great weekend, and I'll see you guys all on Monday.