After weeks of upward stock price bias, last week was a pullback beginning with the start of August on Tuesday and continuing throughout the week. 

News during the week was mixed: more strong employment numbers – but not so good that investors worried about another Fed rate hike in the near future, and corporate earnings were mostly solid. The negative, however, was the sudden downgrade of U.S. government debt by rating service Fitch, from AAA to AA+. 

Against this neutral backdrop, the pullback in prices looks like the usual profit-taking by investors with unusually short time horizons or lacking confidence in long-term conditions. 

Our stocks were mixed – many declined although some still held solid or made modest gains. Our shorts were mostly productive. Despite price declines, seeing very few long-to-short trade signals. A bit of a routine give-back week. 

Next week’s market action should provide more indications as to whether this week was a typical pause in an uptrend or whether a legitimate downtrend is taking hold. 


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