This week starts the beginning of the “silly” season of politics. The Democratic National Convention starts this week as the Republican National Convention will start next week. While this year is different for many reasons it is still extremely important from a political and market standpoint. This will be the first look at a detailed policy plan from the two parties. We really haven’t started the election yet. This will be the first peak at what both parties are running on and where they will compete. It will also be important to see what parts of the markets will be impacted from this.
We talk about the election but we also have our eye on the earnings. Of course this starts with the consumer and one report that was released last week that was important was retail sales for the month of July. Retail sales went up 1.2% for the month. While this missed expectations, it was still encouraging to see the consumer lift the retail side that had been a drag.
From a Technical Analysis standpoint, as we have previously discussed, we have been tracking the S&P 500 Index. From a resistance level we had been eyeing the 3,300 mark which we have held above since Thursday, August 8th. Of course, this trend would need to continue to indicate a more bullish tone in the markets. The next level that we are looking at is 3,390. On the flip side if the market becomes volatile and falls, there will be some support zones to focus on that could indicate more of a bearish market.
One thing that could be a big topic in the fall is Covid-based litigation. There are a lot companies that are taking litigation legal reserves up. When Covid first started, a lot of individuals were working remotely. This changed when some people started going back to work near the end of June. This type of litigation might come to play if someone was required to come back in by companies and certain protocols weren’t followed as they should have been. We are starting to see companies prepare for items like this. If they have to allocate more money towards this, they could potentially not be using it for other things such as resources and hiring.
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