To The Moon

For week ending Fri, 21 Aug 2026, US stock market rally bent but didn't break - a disaster week, if I could say so. All the key indexes fell below their 21-day moving averages on Thu, 20 Aug 2026 with the Nasdaq also closing below its 04 Aug 2026’s follow-through day low — a highly bearish signal that the market rally will ultimately fail. The indexes rose modestly on Friday, with all except Nasdaq regaining their 21-day lines. For the week: (see above) DJIA : -0.75% (-386.10 to 53,277.01). The Dow is posting back-to-back weekly losses. S&P 500 : -1.49% (-116.31 to 7,674.37). Nasdaq : -2.26% (-604.20 to 26,180.46). In the wake of the latest market drawdown, Verdence Capital Advisors, founder & CEO, Leo Kelly thinks US equities could see even more losses, a slide toward correction territory in fall, autumn - if (a) US Treasury yields continue to rise and (b) Middle East tensions persists. Top 3 catalysts impacted US market last week: US bond yields and Scott Bessent’s treasury buyback. Middle East tension and Oil price volatility. US retail softness. As I have touched on them separately in my other posts, I will not revisit them here again. Click on links to refresh memory - post #1 (US treasury) and post #2 (Oil, Retail sales report & Waring tension. US Economic Reports. Suffice to say, the US reports out last week, did not manage to excite US market sentiments at all. The reports were: Mon, 17 Aug 2026 - NAHB Housing Market Index for Aug 2026. Wed, 19 Aug 2026 - US Fed’s minutes of meeting (MoM) released. Thu, 20 Aug 2026 - US jobless claims. Thu, 20 Aug 2026 - Leading indicators for July 2026. Fri, 21 Aug 2026 - US Flash Manufacturing PMI for Aug 2026. Fri, 21 Aug 2026 - US Flash Services PMI for Aug 2026. NAHB Housing Market Index. The August 2026 NAHB/Wells Fargo Housing Market Index (HMI) report revealed that US homebuilder confidence unexpectedly inched up one point to 35 from 34 in July. While this beat the consensus forecast of a decline to 33, the headline index remains firmly in contraction territory (below 50) for the 16th consecutive month. Overall, this monthly report is not enough to excite the US market. The marginal increase reflects stabilization rather than growth, leaving market sentiment mostly muted. US Fed’s July minutes of meeting. The FOMC voted 9–3 to hold the federal funds rate at 3.50% –3.75%. Further details showed that the FOMC committee was more fractured than usual, with 3 members dissenting against the pause. They were in favour of an immediate +0.25% rate hike - revealing a distinct hawkish tilt. Other than that, heightened inflation worries tied to Middle East energy constraints, persists. The FOMC also debated the dual nature of massive AI capital spending, noting it acts as a short-term cost & price driver for industrial inputs and electricity, even if it promises supposedly long-term productivity gains. Understandably, the team did not reach a definitive legislative conclusion regarding AI spending as it is still work-in-progress. They have characterized the AI infrastructure bottleneck as an atypical economic crosscurrent that required close data monitoring before making a policy move. Some officials also voiced explicit concern over financial stability risks, warning that failure to realize these anticipated AI productivity gains - could (a) trigger severe repricing of equity markets and (b) strain exposed non-bank institutions or regional financial institutions. Jobless Claims. For the week, both reports are still pointing to a steady, low-layoff but slow-hiring "low-hire, low-fire" US labour market. Weekly claims. For week ending 15 Aug 2026, weekly claims fell by -6,000 to 206,000 claims vs market estimates of 210,000 vs previous week’s upwards revised 212,000. 4-week average also rose to 204,000, ticking up slightly from a revised 199,750. New filings beat economist expectations and sit comfortably within the healthy historic range, proving that corporate layoffs remain remarkably low. Continuing claims. For week ending 8 Aug 2026, continuing claims rose by +18,000 to 1.799 million vs market estimates 1.79 million vs previous week’s upwards revised 1.781 million. The modest increase indicates that while workers are not losing jobs rapidly, those who are unemployed face a longer and harder search to land a new position. Its 4-week moving average also rose by +6,500 to 1.798 million from previous week’s 1.7825 million. This multi-week upward trend further confirms that while massive layoffs are not taking place, unemployed workers are taking longer to find new roles. Leading Economic Indicators (LEI). For July 2026, the LEI increased by +0.2% to 99.5, marking the 4th monthly increase vs market consensus of +0.1% vs June 2026’s upwards revised -0.1%. This signaled a positive 6-month growth rate for the first time in over 4 years, pointing to moderate economic expansion ahead rather than an impending recession. The annualized 6-month growth rate turned positive at +0.2% (January to July 2026), a sharp turnaround from the -1.3% contraction recorded over the previous 6 months. The S&P Global Flash US Manufacturing PMI preliminary report for August 2026, revealed US manufacturing activity continues to expand but losing momentum, easing to a 5-month low of 53.2 vs market expectations of 54 vs July 2026’s 53.9. The standards states any score above the 50.0 threshold indicates the sector is still growing rather than contracting. As such, latest preliminary report is at best mixed and considered “healthy”; while individual internal sub-indices show clear operational friction. Report’s key reveals: Ouput & Orders. Factory output slowed for the 3rd consecutive month, marking the weakest growth pace since July 2025. New orders also expanded at their slowest rate since March 2026. Inventory Drawdowns: Factories pulled back on input purchases for the first time since February 2026, shifting away from precautionary safety stock accumulation Hiring: On a positive note, manufacturing employment picked up modestly, adding jobs at the fastest pace since May 2026. Price Pressures: Selling price inflation moderated significantly, giving policymakers breathing room. However, input costs remained elevated, due to stubborn fuel & energy prices. US Flash Services PMI. The S&P Global Flash US Services PMI preliminary report for August 2026, jumped to 56.8 vs market expectations of 53.9 vs July 2026’s 54.6. Preliminary readings hit a 20-month high, driven by surging service sector activity. Overall private sector business growth reached a 52-month high, signaling that Q3 2026 annualized GDP growth could approach 3.0% (a forecast, not cast in stone). This is overall, a “good” report. The massive strength in services proves that consumer spending and US domestic service economy remain remarkably resilient. Historical US Services PMI 2020 - 2026 It is a ‘known’ fact that historically, overall performance of the US Services PMI has always been strong, with an official historical tracking average of 53.75 points. (see above) Record Low & High: It crashed to an all-time low of 26.70 points in April 2020, caused by the sudden, total shutdown of face-to-face commerce during initial pandemic lockdowns. It reached an all-time peak of 70.40 points in May 2021, fueled by the massive, unprecedented surge in consumer demand during post-pandemic economic reopening. (see above) My viewpoints: (mine only) In summary, above reports when taken together, support a picture of strong activity and sticky inflation that could pressure valuations. But in no way, do they provide the kind of sharp deterioration in growth or employment that typically precedes a market crash. However, with US real economy under pressure, current market stability relies almost entirely on narrow AI tech investment and corporate earnings resilience. This means, any (a) unexpected shock to corporate growth or (b) prolonged interest rate strain could easily trigger a severe market drawdown. Agree ? Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. US market 'maybe' crash & investor Plan B ? NVDA to cut short MU memory boom ? Druckenmiller's 13F $120m GOOG pivot. Buy ? Do you think the news prints are a timely alert & reminder? Do you think US market turning the corner hinges on how Trump handles the Middle East mess he created, that is 5½ months old ? If you find this post interesting, give it wings! ️ Repost and share the insights ? Do consider “Follow me” and get firsthand read of my daily new post. 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