Inconclusive Week

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This entry will be shorter than usual, as my wife Carmen and I are celebrating our 24th anniversary today with our daughter’s family in San Diego.

The week ended with stocks showing a negative bias but no clear directional conviction. The major equity indexes closed mixed with the Dow, S & P, Wilshire 5000 and New York Stock Exchange Composite all down by a fraction of one percent for the week, with the Nasdaq and small cap indexes up by a fraction.

As might be expected, trading volume was generally light through most of the week, quite possibly because this is one of the last weeks of summer. It was somewhat noteworthy, however, that we saw a continuation of the recent pattern of volume shrinking on days of rising prices and volume rising when prices fall—indicative of sellers acting rather more aggressively than buyers.

Monday began ominously as prices opened almost 100 Dow points lower than Friday’s close. There was no follow-through selling, however, and a low volume rally brought prices back to virtually break-even at the close. Tuesday and Wednesday saw more low volume attempts to rally early each day. In each instance, sellers came in to take away much of each day’s gain in the final hour. Bad economic news pushed prices down Thursday on rising volume. A poor opening today led to new lows for the week in the middle of the day except for the Nasdaq indexes. All in all the market action was weak, but selling was not aggressive. Nasdaq’s positive divergence at today’s price lows offers some hope for the bulls.

In all likelihood the last week of August will again be slow as traders head for the beaches to enjoy summer’s end. One possible caution: a variety of market conditions and patterns are flashing warning signals. While there is no certainty that they will resolve to the downside, it appears that we are in a window that probably extends well into September in which disappointing news could lead to a very sharp decline in stock prices. Seasonally, September is the worst month of the year. We remain cautious.

Tom Feeney is the chief investment officer for Marathon Asset Management Co, a registered investment advisor with the Securities and Exchange Commission, and for Mission Management & Trust Co., a full service trust company regulated by the Arizona Department of Financial Institutions. If you would like to explore the management of an investment portfolio of $1 million or more by either of the firms, you are invited to email your interest to or call (520) 529-2900 to speak with one of the Portfolio Coordinators.