American Eagle bucked another week of bearish retail earnings reactions
Coming off its biggest two-week loss since
Brexit -- a
bullish signal for blue-chip stocks -- the Dow bounced back sharply this week, even with President Donald Trump's threats of a
government shutdown. The S&P 500 Index (SPX) and Nasdaq Composite (COMP) also had positive weeks, with the COMP set to snap its
longest losing streak since May 2016. What's more,
small-cap stocks staged a rare outperformance over their larger-cap peers, bringing this crucial
trendline test into focus next week.
This Stock Rally Still Has Legs
However, there's plenty of signs suggesting that U.S. stocks have not yet hit the
euphoria stage associated with market tops -- although this
rare data point on the CBOE Volatility Index (VIX) could point to another looming volatility spike. For starters, the number of SPX stocks hitting new 52-week lows reached an 18-month peak last week -- data that has historically created a "
best time to buy stocks" scenario two months down the road. Plus, several sentiment and options indicators we follow show
signs of increasing skepticism, an ideal setup for
contrarian traders.
The recent broad-market headwinds also seemed to create a potential buying opportunity for Advanced Micro Devices,which recently bounced off a historically bullish trendline. And amid an impressive
uptrend in the broader semiconductor sector, one analyst expects
Micron shares to double.
Tech, Retail Earnings Hit
Earnings also had several tech stocks in focus this week, with LED specialist CREE earning a round of
negative analyst attention after its results. Coming off last week's big earnings beat for Alibaba stock -- which prompted a
record-high price target from one analyst --
Chinese interest stocks 58.com and
Momo headed in entirely different directions. Meanwhile, ahead of the upcoming iPhone 8 launch, one analyst said to
buy Apple.
Retailers continued to hold Wall Street's attention, too. While
athletic apparel stocks were in analysts' bearish crosshairs early in the week, American Eagle stock hit a
new low just before its post-earnings
bull gap. And while
Sears Holdings shares saw an unexpected pop after the embattled retailer's quarterly results, cosmetics names
e.l.f. Beauty and
Ulta weren't so resilient.
GameStop shares are spiraling after earnings, too, though
options traders were prepared.
Buyout Buzz Surrounds Biotechs
Drug stocks were among other big movers this week, with
M&A chatter sending Paratek Pharmaceuticals soaring. Takeover rumors also swirled around fellow biotech Teva Pharmaceutical, though the stock carved out new
multi-year lows following a round of price-target cuts. Elsewhere in the sector, Adamas Pharmaceuticals hit a new annual high, thanks to a regulatory win for its
Parkinson's disease drug.
Jobs Data Hits Ahead of Labor Day Weekend
Looking ahead to next week, the economic calendar heats up ahead of the long holiday weekend.
Jobs data and the initial reading on second-quarter gross domestic product (GDP) will dominate the conversation ahead of the September Fed meeting. And while Fed Chair
Janet Yellen didn't offer any clues to an upcoming rate hike at today's Jackson Hole appearance, the
utilities sector is one to watch ahead of the highly anticipated policy-setting meeting.