Last week we saw the technology laden NASDAQ market drop over 10% from its prior week high, hitting 6906 down from a high of 7728 a week earlier. We have spoken at length over the last few letters how insiders and institutions have been selling out of technology positions but retail seems to be picking up what they are putting down. This kind of action where the weak hands are buying from the strong hands is a notorious set up for a market set back and last week did not disappoint.
What an interesting week, to say the least, from Elon opening his mouth too wide and Uber/Lyft fighting NYC on new ride share app regulations. All in all, last week presented us with a chance to look at a NYC taxi medallion chart, who wudda ever thought? Anyway, regulations were signed into law last week by NYC mayor De Blasio, limiting the amount of ride sharing app licenses, as well as requiring a minimum pay for its drivers of $17.22 an hour.
On Friday we saw the equity markets first head fake only to be driven higher after NFP printed 157k and unemployment fell 0.1 to 3.9%. In the morning, the SP500 saw initial buying then fell back to 2828 support and then never really looked back, here is the chart from Friday August 3rd:
The big economic news for last week came out on Friday as US Q2 GDP posted a decent 4.1%, estimates were as high as 4.4% but let’s not lose sight of the fact that we haven’t had a plus 4% print in nearly 4 years. This news wasn’t enough to help the NASDAQ which, and as we have warned about sector rotation, has seemingly stung the tech sector. The NASDAQ lost nearly 1% on the week while the Dow gained 1.5%. The sector arbs seemed to dominate flows here as the NASDAQ has seen selling while the other indexes as a whole have seemed to benefit. Anyway, here is a quarterly chart of US Real GDP: