August 17, 2021, 1:19 pm EDT
Yesterday was the all-time highs for DJIA and S&P500. Today shows a major warning signal with DJIA -450 points or -1.3% down at this moment.
Disappointing retail sales of -1.1% and weak earnings report from Home Depot (HD) -4% are the factors or reasons on the surface. Indeed, retail sales or consumer spending is critical to US GDP calculation because it took more than two-third (~70%) of total GDP portions.
US COVID-19 cases increased from the beginning of July 100K to 1 million (weekly) today is another major reason behind the weak retail sales. COVID-19 delta variant seems to beat vaccines in terms of speed and intensity.
Stock markets remind us of 2020 Feb-March when the breakout started. Pharmaceutical (MRNA, JNJ, PFE) and food (KR, K, HRL, SJM, GIS) stocks regain strength.
If we see these defensive stocks keep rising, it would be confirmation of the change of direction. At this moment, it serves as a major warning signal.