Tag: NASDAQ Composite

A Half Point Fed Rate Cut? The Stock Market Thinks So

Post By Stock , , , , , , , , , , , , , , ,

KEY

TAKEAWAYS

  • Stocks make a strong recovery after last week’s selloff.
  • Large-, mid-, and small-cap stocks closed higher, with small caps the clear leader.
  • Gold and silver prices surged on interest rate cut expectations.

This week’s stock market action may have caught many investors by surprise. After last week’s massive selloff, this week’s turnaround reignited investor enthusiasm in equities. Large-cap growth stocks were the leading asset class in the early part of the trading week, and, by Friday, the clear leaders were the mid- and large-cap stocks.

This week’s Consumer Price Index (CPI) and Producer Price Index (PPI) showed that inflation has cooled, which means the Fed will probably cut interest rates. More optimistic is the thinking that there may be more than the 25 basis points (bps) we were expecting last week.

Broader Market Index Price Action

The Dow Jones Industrial Average ($INDU), S&P 500 ($SPX), and Nasdaq Composite ($COMPQ) closed higher for the week. The S&P 500 and the Dow are trading close to their August highs, but the Nasdaq has some catching up to do. In Nasdaq’s defense, it was the hardest hit among the three.

The Nasdaq’s daily chart gives a clearer picture of where the index stands now, technically speaking, battling against resistance from the downtrend line. A break above this line would mean the bulls are still in the lead, but a break above the August high would indicate bulls are charging to the finish line.

FIGURE 1. WILL THE NASDAQ COMPOSITE BREAK THROUGH ITS DOWNTREND? A break above the downtrend would be bullish for the tech-heavy index, but a more confirming move would be a break above its August high.Chart source: StockCharts.com. For educational purposes.

If you participated in the “dip buying” this week, the resistance of the downward trendline is one to watch carefully. And if you missed buying on the September dip, a break above the trendline should be an early signal to prepare to add positions, but waiting for the index to break above its August high would be wiser.

There are a couple of factors to keep in mind. One is that it’s still September, a seasonally weak month for stocks. The second is there’s an FOMC meeting next week. Investors expect an interest rate cut to be announced, but how much will the Fed cut rates? The odds of a 50 basis point cut have risen since last week; as of this writing, according to the CME FedWatch Tool, the probability of a 25 bps cut is 51%. The probability of a 50 bps is 49%. These percentages drastically differ from last week’s odds, when the odds for a 25 bps rate cut were above 70%.

The stock market is acting like it expects a 50 bps cut. If the Fed cuts 25 bps, though, the market could be disappointed, so tread carefully. A lot is riding on the Fed’s decision on Wednesday.

Small Cap Revival

The S&P Small Cap Index ($SML) started gaining traction this week, surging on Friday. Looking at the ratio chart of the iShares Russell 2000 ETF (IWM) and SPDR S&P 500 ETF (SPY), we can see small-cap stocks are beginning to gain strength, but still have some work to do before outpacing the bigger stocks.

FIGURE 2. SMALL CAPS VS. LARGE CAP STOCKS. Small caps surged this week, but they still have more to go before catching up with their bigger cousins.Chart source: StockCharts.com. For educational purposes.

Small caps surged in July when inflation fears were in the rear-view mirror, but fell after concerns of a recession surfaced. Now that interest rate cuts are on the table, small-cap stocks may see more upside. A break above the upward-sloping 50-day simple moving average (SMA) could give IWM a further boost.

What’s Happening With Precious Metals?

Gold prices hit an all-time high on Friday, riding on interest rate cut expectations. The daily chart of the SPDR Gold Shares (GLD) below shows price breaking above a consolidation area, gapping up, and hitting an all-time high.

FIGURE 3. GOLD PRICES HIT AN ALL-TIME HIGH. After breaking out of a consolidation pattern, gold prices gapped up and surged.Chart source: StockCharts.com. For educational purposes. Why the rise in gold in tandem with a rise in equities? Investors want to hedge their positions in case the Fed makes a surprise move.

Silver prices also moved higher, as seen in the chart of the iShares Silver Trust ETF (SLV). A break above the downward-sloping trendline and Friday’s large gap up are positive for silver traders. If silver prices continue to rise, the series of lower highs could be behind the white metal—for a while, anyway.

FIGURE 4. SILVER SURGES. SLV breaks above its downward-sloping trendline. Whether this upward move will continue rests on how much the Fed cuts rates in next week’s FOMC meeting.Chart source: StockCharts.com. For educational purposes.

The only known market-moving event next week is—you guessed it—the FOMC meeting. Expectations of a 50 bps cut are rising. How much will the Fed cut? We’ll know soon.

End-of-Week Wrap-Up

  • S&P 500 closed up 4.02% for the week, at 5626.02, Dow Jones Industrial Average up 2.60% for the week at 41,393.78; Nasdaq Composite closed up 5.95% for the week at 17683.98
  • $VIX down 26.01% for the week, closing at 15.56
  • Best performing sector for the week: Technology
  • Worst performing sector for the week: Energy
  • Top 5 Large Cap SCTR stocks: Insmed Inc. (INSM); FTAI Aviation Ltd. (FTAI); Applovin Corp (APP); Cava Group (CAVA); SharkNinja, Inc. (SN)

On the Radar Next Week

  • August Retail Sales
  • August Housing Starts
  • Fed Interest Rate Decision
  • FOMC Economic Projections
  • August Existing Home Sales

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Point #Fed #Rate #Cut #Stock #Market #Thinks

Tuesday’s big stock stories: What’s likely to move the market in the next trading session

Post By Business , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 9, 2024. 

Brendan Mcdermid | Reuters

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.

Here’s what CNBC TV’s producers were watching as stocks rallied Monday and what’s on the radar for the next session.

Apple’s big iPhone launch

  • Apple unveiled its latest slate of iPhones, Apple Watches and AirPods at its much-watched “Glowtime” event Monday, but investors didn’t seem impressed. The stock fell as the event kicked off, but staged a late-day rally to close in the green.
  • Shares hit an all-time high in mid-July, and they are almost 7% from those levels.
  • Still, Apple has been the second-best performing “Magnificent Seven” stock over the last three months.
  • The group has been led to the downside by Google-parent Alphabet, which is down almost 15% in three months, and Nvidia, down nearly 12%.
  • Apple, meanwhile is up more than 12% in the past three months. It’s trailing only Tesla, which is up 22% in that period.
Stock Chart IconStock chart icon

Apple’s performance in the past month

Oracle earnings

Tall order

  • Monday marked Brian Niccol’s first day as CEO of Starbucks. Shares were up a little over 1%.
  • Niccol takes over from embattled former chief Laxman Narasimhan, who became CEO in March of last year. Under Narasimhan, SBUX shares were down 7.6%. Shares are down 14% from their 52-week high hit last November.
  • Niccol had previously been CEO of Chipotle, a role he took in March 2018. Under his tenure, CMG shares were up nearly 750%.
  • Chipotle shares hit an all-time high in June, just before a 50-for-1 stock split went into effect. The stock is down 21% from that high.
Stock Chart IconStock chart icon

hide content

Starbucks’ 2024 performance

Cancer drug results

  • Shares of Summit Therapeutics soared 56% on very heavy volume after its lung cancer drug showed significantly better results than Merck’s Keytruda in Phase 3 trials.
  • It was the stock’s best day since just May, when it jumped more than 270%.
  • Shares are trading at an all-time high, up more than 630% this year.
  • Merck, meanwhile, was down 2% Monday.
  • Summit was the best performing stock in both the SPDR S&P Biotech ETF (XBI) and iShares Biotechnology ETF (IBB).
  • The second best biotech stock on Monday was Relay Therapeutics, which was up 52% on positive results for its breast cancer drug.

Taking off

Stock Chart IconStock chart icon

hide content

JETS ETF performance in the past month

 New S&P companies

—Kavitha Shastry

CNBC will interview several big market-moving CEOs Tuesday

  • AT&T’s John Stankey is on in the 10 a.m. hour, Eastern time. The stock shot up 2.5% Monday, hitting a new 52-week high. It is up 8% in a week. The dividend on AT&T is 5.2%.
  • Michael Arougheti of Ares Management is also in the 10 a.m. hour. The stock is 10% from the July 31 high.
  • Larry Culp of GE Aerospace is live in the 1 p.m. hour. The stock is 7% from a 52-week high. It jumped 2.5% Monday, but it’s down 5.3% so far in September.
Stock Chart IconStock chart icon

hide content

GE Aerospace’s performance in 2024

Apple’s suppliers

GameStop reports after the bell Tuesday

Stock Chart IconStock chart icon

hide content

GameStop’s one-month performance

Basel III

Boeing August orders and deliveries

—Jason Gewirtz

Source link

#Tuesdays #big #stock #stories #Whats #move #market #trading #session

Charting Forward: Opportunities You Can Seize in September

Post By Stock , , , , , , , , , , , , ,

KEY

TAKEAWAYS

  • Stocks close higher on Friday with volatility remaining low.
  • September is typically a weak month for equities.
  • Energy and Utilities tend to perform better in September.

It’s a quiet end to August, with the broader stock market indexes wavering higher and lower. The Market Overview panel on the StockCharts Dashboard shows equity indexes closing higher. And yes, the Dow Jones Industrial Average ($INDU) closed at a record high.

FIGURE 1. MARKET OVERVIEW PANEL IN THE STOCKCHARTS DASHBOARD. All broader indexes were up on Friday.Image source: StockCharts.com. For educational purposes.

Stock Market Outlook

With August behind us, we now prepare for one of the worst months in the stock market. PCE data came out today, and it was pretty much in line with estimates. This means an interest rate cut in the next FOMC meeting is pretty likely. The Fed’s next meeting isn’t until September 18, and, given historical seasonality patterns, don’t expect too much upside in the first half of the month.

FIGURE 2. SEASONALITY CHART OF THE S&P 500 INDEX ($SPX). September is usually a weak month for large-cap stocks. Image source: StockCharts.com. For educational purposes.

The seasonality chart for the S&P 500 shows that August typically sees a 1% rise in the index. In 2024, the index’s performance was slightly higher, with a 2.28% rise. September looks dismal, but this is an election year, so things may turn out differently.

The S&P 500 has recovered from its August pullback, breaking a downtrend line (see chart below). Since then, the index has been trading sideways, refusing to reach its July 16 all-time high. Yet it’s trading above its 21-day exponential moving average, which is trending up.

FIGURE 3. DAILY CHART OF S&P 500 INDEX. The index is trading sideways, close to its all-time high. The Stochastic Oscillator indicates that momentum is slowing slightly.Chart source: StockCharts.com. For educational purposes.

The stochastic oscillator is displaying some slowdown in momentum, as the oscillator shows a slight decline amidst the relatively flat movement in the S&P 500.

More interesting is the S&P 500 Equal Weighted Index ($SPXEW), which hit all-time highs. The relative strength index (RSI) and moving average convergence/divergence (MACD) indicate there could be room to rally. This suggests that investors are rotating out of the mega-cap stocks and into smaller-cap ones.

FIGURE 4. WEEKLY CHART OF S&P 500 EQUAL-WEIGHTED INDEX. The index is at a new all-time high. The RSI and MACD indicate there’s room for more upside move.Chart source: StockCharts.com. For educational purposes.

This begs the question of how mid-cap stocks perform. The daily chart of the S&P 500 Mid Cap Index ($MID) shows that mid-caps are trading sideways, but the index is close to its all-time highs, which happen to be close to the upper end of the trading range.

FIGURE 5. S&P 500 MID-CAP INDEX ($MID). The index is trading sideways but is trading close to the top of the range. Market breadth is also expanding, favoring bulls.Chart source: StockCharts.com. For educational purposes.

Market breadth in the mid-caps looks to be broadening, with 73.25% of mid-cap stocks trading above their 50-day simple moving average. The advancers also outnumber the decliners.

You’ll likely find a similar situation with the S&P 600 Small Cap Index ($SML).

StockCharts Tip!

Click the above chart of $MID and change the symbol to $SML. Voila! You’ll get an updated chart specific to $SML.

So, which stocks in the mid and small-cap asset class should you focus on? This is when it helps to revert to the seasonality chart. Going through all the sector ETFs, Energy, and Utilities tend to be the leaders in September. Out of the two, the chart of Utilities Select Sector SPDR (XLU) shows a well-defined trend.

CHART 6. DAILY CHART OF XLU. Utilities have been in a sharp uptrend. The RSI and MACD indicate there’s room for more upside. Chart source: StockCharts.com. For educational purposes.

All moving averages overlaid on the chart are trending higher. The RSI and MACD also support the upward trend.

Closing Bell

So, while large-caps typically decline in September, it makes sense to consider investing a portion of your portfolio in mid and small-cap utility and energy stocks.

  1. On Your Dashboard, click the Sector Summary link (bottom right of Sector Summary panel).
  2. Select One Month from the Period dropdown menu.
  3. Click Utilities Sector Fund in the Name column.
  4. Click the name of the top-performing Industry within the sector.
  5. Sort the columns by Universe (U column) by clicking the up and down arrows to the right of U.
  6. Scroll down to the mid-cap stocks and analyze away.

Enjoy your Labor Day weekend, and be ready for market action to resume on Tuesday.

End-of-Week Wrap-Up

  • S&P 500 closed up 0.24% for the week, at 5648.40, Dow Jones Industrial Average up 0.94% for the week at 41,563.08; Nasdaq Composite closed down 0.92% for the week at 17713.62
  • $VIX down 5.42% for the week closing at 15
  • Best performing sector for the week: Financials
  • Worst performing sector for the week: Technology
  • Top 5 Large Cap SCTR stocks: Insmed Inc. (INSM); FTAI Aviation Ltd. (FTAI); Carvana Co. (CVNA); SharkNinja, Inc. (SN); Tenet Healthcare Corp. (THC)

On the Radar Next Week

  • Aug ISM Manufacturing PMI
  • Aug S&P Global Services PMI
  • Aug ISM Services PMI
  • Aug Non Farm Payrolls
  • Fed Beige Book

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Charting #Opportunities #Seize #September

S&P 500 Teetering On 100-Day Moving Average Support

Post By Stock , , , , , , , , , , , ,

KEY

TAKEAWAYS

  • The stock market indexes end the week on a positive note after a scary Monday
  • Volatility steps back slightly after a brief spike over 65
  • Next week’s consumer and producer inflation data could help set direction

A sigh of relief? The US stock market started the week on a pessimistic note, but changed course toward the end of the week, ending in a more positive tone.

Last week’s weaker-than-expected jobs report scared investors into thinking that perhaps the Federal Reserve was too late in cutting interest rates. However, last week’s ISM Services report and Thursday’s jobless claims eased those concerns.

Stock Market Indexes Are Better, Technically

While the charts of the S&P 500 ($SPX), Dow Jones Industrial Average ($INDU), and the Nasdaq Composite ($COMPQ) are showing signs of strength, it’s too early to declare that it’s beginning to rally to the upside. Let’s analyze the charts of all three indexes in more detail and see where they stand.

The Mega-Cap S&P 500 Index

The S&P 500 held the support of its 100-day simple moving average (SMA) and its 50% Fibonacci retracement (from the April low to July high). While the S&P 500 looks like it’s trying to move higher (see chart below), the next resistance level isn’t too far off. The 38.2% Fib retracement at 5400 was a support level for some previous lows. If the S&P 500 reaches that level, the August 2 gap will be filled.

Until the index breaks above the 5400 level, you can’t call this week’s price action a bullish rally. All the more reason to watch the price action in the S&P 500.

CHART 1. DAILY CHART OF THE S&P 500. The index ended the week closing above its 100-day moving average and its 50% Fibonacci retracement level, but it’s too early to call this a bullish move.Chart source: StockCharts.com. For educational purposes.

Tech-Heavy Nasdaq Composite

The Nasdaq Composite is also improving, but hasn’t reached the ranks of the S&P 500. From a technical standpoint, the Nasdaq Composite is approaching its 100-day SMA and 50% Fibonacci retracement level (from April lows to July high), which could act as a resistance level (see chart below). Looking back, you can see that level was a resistance and support level in the past.

CHART 2. DAILY CHART OF NASDAQ COMPOSITE. Watch the resistance level that’s close by. Will the index break through this level, or will it be a resistance level that it’ll have a tough time pushing through?Chart source: StockCharts.com. For educational purposes.

The Dow Jones Industrial Average differs slightly from the S&P 500 and Nasdaq, but also looks better technically (see chart below). It peaked on July 18, declined a few days later, and tried to reach the previous peak.

The price action is almost like a double top pattern. What’s interesting is that the index almost reached its measured move lower. The measured move from the July 18 high to July 24 trough was 3.4%. From the chart below, you can see that a 3.4% decline from the July 24 low would bring the index to 38,438. The Dow went as low as 38,499 before moving higher.

Overall, it seems that equities are trying to recover. But will the recovery be sustained?

Recession worries may be in the rearview mirror for a while, but investors continue to walk a fine line. On Monday, the CBOE Volatility Index ($VIX) went as high as 65.73. The last time we saw those levels was in March 2020, when COVID was a concern.

Volatility has come down significantly, but is still above 20. It’s too early to say the market is done with fear; we’ve only started to see a change. Remember, it was just a few days ago when the stock market saw an excessive selloff. Next week, there are important reports on consumer and producer inflation, retail sales, and consumer sentiment.

Inflation Data: What To Know

With rate cut expectations on the radar, you’ll want to stay on top of next week’s inflation data. The Federal Reserve Bank of Cleveland estimates a year-over-year percent change of 3.01% for headline CPI and 3.33% for Core CPI. If the data shows that inflation is coming down as it has been in the last few months, investors could sigh a huge relief. Conversely, if the data comes in hotter than expected, it could throw things off. But that’s unlikely since a rate cut in September is very probable. That’s not to say it’s not possible, though.

Watch the price action in bonds ahead of the US inflation data. Bond prices showed signs of leaving the start line but have retreated. The daily chart of the iShares 20+ Year Treasury Bond ETF TLT below shows the ETF bounced off a support level.

Which direction will TLT move? If the inflation data supports a September rate cut, then TLT will move higher, possibly before the report is released.

Another note is that the CME FedWatch Tool shows the probability of a 50 basis point rate cut in September at 49.5. That’s a significant drop from the end of last week, when the probability was close to 90%.

Closing Position

Proceed with caution. We’ve seen how quickly the market can change direction. Any piece of negative data could send volatility through the roof again. The stock market is hanging on, and the best you can do is note the important support levels in the broader indexes, sectors, and individual equities. If equities can hang on next week, they’ll be on more solid footing. Right now, you need to have a safety net close by.

End-of-Week Wrap-Up

  • S&P 500 closed down 0.04% for the week, at 5344.16, Dow Jones Industrial Average down 0.60% for the week at 39,497.54; Nasdaq Composite closed down 0.18% for the week at 16745.30
  • $VIX down 12.91% for the week closing at 20.37
  • Best performing sector for the week: Industrials
  • Worst performing sector for the week: Materials
  • Top 5 Large Cap SCTR stocks: Insmed Inc. (INSM); Carvana Co. (CVNA); FTAI Aviation Ltd. (FTAI); Sprouts Farmers Market (SFM); SharkNinja, Inc. (SN)

On the Radar Next Week

  • July Producer Price Index (PPI)
  • July Consumer Price Index (CPI)
  • July Retail Sales
  • August Michigan Consumer Sentiment
  • July Housing Starts
  • Fed speeches from Bostic, Harker, Musalem, Goolsbee, 
  • Earnings from Walmart (WMT), Cisco Systems (CSC), Home Depot (HD), among others.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Teetering #100Day #Moving #Average #Support

Recession Fears Top of Mind As Tech Stocks Selloff

Post By Stock , , , , , , , , , , , ,

KEY

TAKEAWAYS

  • Weak manufacturing and jobs data sends investors into panic mode
  • All broader stock market indexes fall over 2%
  • Bond prices rise

The dog days of summer are here. And the stock market gives us a brutal reminder of this.

The first trading day of August began on a very pessimistic note. Thursday’s weak manufacturing data spooked the stock market. All broad stock market indexes, including the S&P 600 Small-Cap Index ($SML) and the S&P 400 Mid-Cap Index ($MID), fell sharply after the Purchasing Managers’ Index (PMI) from the Institute of Supply Management (ISM) came in at 46.8 (below 50 indicates contraction). 

Friday was even worse after the July jobs report data was well below expectations. The broader indexes continued their slide with the charts of the broader equity indexes ending the week with technical breakdowns. But in the recent past, hasn’t the stock market rejoiced when a softer jobs number was released?

It’s Different This Time

Thursday’s quick shift from green to red shows how this market can shift on a dime. On Wednesday, investors were optimistic about a rate cut in September after hearing Fed Chairman Powell’s comments after the FOMC meeting. Maybe those comments were fresh in everyone’s minds because the following day, investor sentiment shifted drastically. 

After the PMI data came out, concern grew that perhaps the Fed’s decision to leave interest rates unchanged in the July meeting may not have been a smart decision. A September rate cut may be too late.

Friday’s weaker-than-expected employment report didn’t help. It magnified the fear and accelerated the selloff in equities. If you dig deeper into the report, it’s enough to create some fear. If the labor force participation rate is rising, as is evident in the July NFP, but there aren’t enough jobs to hire the additional job seekers, unemployment will rise. 

The fear has now shifted from a soft landing to a possible recession. That the Fed hasn’t cut interest rates yet is maybe enough reason for investors to wrap up for the rest of the summer months and reset in September. 

Two bad reports like the ones we just got tend to set off red flags. Stocks got slammed across the board—large caps, mid-caps, small caps, tech stocks, and industrials—all underwent significant drops. Another shift can be seen in the CME FedWatch Tool. Since the July NFP report, there’s a 73.5% chance of a 50 basis-points rate cut in September. 

Sentiment Shift 

So, how bad was the technical damage? The weekly chart of the S&P 500 ($SPX) shows it tested its 20-week simple moving average (SMA) support and closed slightly above it. So, from a longer-term perspective, the damage isn’t as deteriorating as your portfolio or daily chart may suggest. 

CHART 1. WEEKLY CHART OF S&P 500 INDEX. The index tested its 20-week moving average. Will it hold? That’s something to watch next week. Chart source: StockCharts.com. For educational purposes.

The daily chart tells another story. If there were one word to describe the action in the daily chart below, it would be “wipeout.” Well, maybe it’s not that bad.

CHART 2. DAILY CHART OF THE S&P 500 INDEX. The index has broken below the trendline from the October lows but is now at its 100-day simple moving average support. Chart source: StockCharts.com. For educational purposes.

The S&P 500 has broken below its upward trendline from the October lows and is now testing its 100-day SMA support. The market breadth indicators in the lower panels aren’t showing too much weakening, but it’s something to watch for. 

If the S&P 500 continues its downward move into next week, it could challenge the April lows before returning to firm ground. That would be about a 13% decline in value, which could be a healthy correction. That can be painful to deal with in an overextended market. 

The Nasdaq Composite ($COMPQ) was hit even harder than the S&P 500. In the Nasdaq’s weekly chart, you can see the index is at the support of its 25-week SMA and also hit the support of its March 18 high.

CHART 3. WEEKLY CHART OF NASDAQ COMPOSITE. Keep an eye on some key support levels. Chart source: StockCharts.com. For educational purposes.

The daily chart below suggests that the index is likely to reach its April lows—almost a 20% move from the high. If tech company earnings follow the trend of either weak guidance or lower-than-expected earnings reports, the Nasdaq could take a deeper dive.

CHART 4. NASDAQ COMPOSITE ALMOST AT A 61.8% FIBONACCI RETRACEMENT. The tech selloff could continue, so keep an eye on the next support levels. Chart source: StockCharts.com. For educational purposes.

Bonds Step Up

If investors are pulling money out of stocks, where is the money going? Could it be bonds? Maybe. Bonds were one of the bright spots on Thursday. The weekly chart of the iShares 20+ Year Treasury Bond ETF (TLT) below shows that bonds broke out on strong momentum on Friday. If you’re sitting on some cash, it may be time to allocate a portion of your portfolio to bonds.

CHART 5. WEEKLY CHART OF TLT. Bond prices have broken out to the upside. This could be the time to pay attention to bonds. Chart source: StockCharts.com. For educational purposes.

As the stock market indexes dropped, the Cboe Volatility Index ($VIX) spiked. On Friday, the VIX almost hit 30 but closed below the high. Talk about a panic rise!

Closing Position

Overall, August started badly. This is a difficult market for long-term investors. Should you wait it out or sell your long equity positions and park some of your cash in bonds? It’s best not to focus on all the noise and stop worrying about the day-to-day moves. But you should still monitor important support and resistance levels.

Another point to remember is that we’re amid a seasonally weak period, which tends to be more pronounced during an election year. Let’s hope we’ll get out of this in September without too much damage and perhaps a 50 basis point rate cut.

  • S&P 500 closed down 2.06% for the week, at 5346.56, Dow Jones Industrial Average up 2.10% for the week at 39,737.26; Nasdaq Composite closed down 3.35% for the week at 16776.16
  • $VIX up 42.71% for the week closing at 23.39
  • Best performing sector for the week: Utilities
  • Worst performing sector for the week: Technology
  • Top 5 Large Cap SCTR stocks: Carvana Co. (CVNA); Insmed Inc. (INSM); MicroStrategy, Inc. (MSTR); Alnylam Pharmaceuticals, Inc. (ALNY); Ryan Specialty Group Holdings, Inc. (RYAN).

On the Radar Next Week

  • July ISM Services PMI
  • August 30-Year Mortgage Rates
  • June Consumer Credit Change
  • July Manufacturing PMI
  • Fed speeches from Daly and Barkin
  • Earnings from Lucid Group (LCID), Caterpillar Inc. (CAT), Gilead Sciences (GILD), Robinhood Markets, Inc. (HOOD), Palantir Technologies, Inc. (PLTR), and many more.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Recession #Fears #Top #Mind #Tech #Stocks #Selloff

Recovery Rally In Stock Market Offers Hope: What You Need To Watch

Post By Stock , , , , , , , , , ,

KEY

TAKEAWAYS

  • After two days of massive selloffs, Friday’s recovery offers some hope.
  • Investors await earnings from mega-cap tech companies, economic data, and Fed meeting.
  • Small caps continue to trend higher.

Major equity indexes rose on Friday after a selloff that hit the Technology sector especially hard. But this doesn’t necessarily mean that everything is OK going into next week. Wall Street seems to be in whiplash land, veering from one market area to another.

The Dow Jones Industrial Average ($INDU) closed higher by 1.64%, providing a boost to Industrials. The Nasdaq Composite ($COMPQ) and S&P 500 ($SPX) closed mid-range. That all indexes closed above their Thursday lows is encouraging and a good way to end a week that looked like it could end in doom. 

Softer Inflation Data Sheds Optimism

It’s possible the June Personal Consumption Expenditure (PCE) price index was the catalyst behind the recovery rally. The PCE rose 0.1% month over month and 2.5% year over year. The core CPI rose 0.2% month over month and 2.6% year over year. The data suggests that inflation is slowly converging toward the Fed’s 2.0% target. So, perhaps the soft landing scenario will become a reality. Let’s wait to hear what Fed Chair Powell says next week.

The S&P 500 bounced off the 50-day simple moving average (SMA) and touched the October–April trendline at its high but closed lower (see chart below). Will the trendline act as a strong support level for the index to conquer?

CHART 1. UPTREND IN THE S&P 500 SINCE OCTOBER 2023. The S&P 500 is in an important area, and investors should watch to see if it breaks above or below the trendline or moving average. Chart source: StockCharts.com. For educational purposes.

The long-term trend is still looking strong, but given that the next few months is a seasonally weak period, expect the market to correct. As long as it stays above its 25-week SMA and the SMA is trending higher, the long-term trend will be bullish. 

The Nasdaq was hard hit on Wednesday and Thursday, and Friday’s recovery didn’t take the index above its 50-day SMA (see chart below). It’s still looking indecisive as it straddles below the 38.2% Fibonacci retracement level (see chart below). 

CHART 2. DAILY CHART OF NASDAQ COMPOSITE WITH FIBONACCI RETRACEMENT LEVELS. The Nasdaq failed to break above its 38.2% Fibonacci retracement level. Let’s see what next week brings. Chart source: StockCharts.com. For educational purposes.

Where Are Investors Flocking?

The Dow Jones Industrial Average, which got hit hard after hitting a new high on July 17, was the big winner on Friday. And since the S&P 400 midcap index has a high concentration of Industrials, the S&P 500 Mid Cap Index ($MID) got a boost. 

Small-cap stocks also rose, with the S&P 600 Small Cap Index ($SML) hitting a new 52-week high. Does this mean that undervalued small caps are a good place to park your cash while the mega-cap indexes go through their correction? It may be worth considering, given that most of the big tech companies reporting next week are looking weak technically. 

So, what’s going well? The cooling inflation data increased expectations of interest rate cuts which helped bank stocks. While the broader equity indexes were struggling, the KBW Bank Index ($BKX) saw a mild correction followed by a rally (see chart below). The index closed at a new 52-week high.

CHART 3. KBW BANK INDEX HITS NEW 52-WEEK HIGH. Expectations of cuts in interest rates this year sent bank stocks higher. Chart source: StockCharts.com. For educational purposes.

The stock market is forward-looking, so it’s important to pay attention to what comes next. We’re entering a week of heavy earnings from some big mega-cap tech stocks. There’s also the Fed meeting. While no rate cuts are expected in next week’s meeting (the CME FedWatch Tool shows a 95.3% probability of no rate cuts in July), investors will listen closely to Chairman Powell’s comments during his presser. Next week is also an economic data-heavy week with July Manufacturing PMI and Non-Farm Payrolls. Both will give some indication of the US economic landscape. 

Expect some market volatility next week. Although the Cboe Volatility Index ($VIX) eased on Friday, it’s still high, relatively speaking. Each day in the market is different. Take each day as it comes. 

  • S&P 500 closed down 0.83% for the week, at 5459.10, Dow Jones Industrial Average up 0.75% for the week at 40,589.34; Nasdaq Composite closed down 2.08% for the week at 17357.88.
  • $VIX down 0.79% for the week closing at 16.39
  • Best performing sector for the week: Utilities
  • Worst performing sector for the week: Consumer Discretionary
  • Top 5 Large Cap SCTR stocks: MicroStrategy, Inc. (MSTR); Carvana Co. (CVNA); Insmed Inc. (INSM); Tenet Healthcare Corp. (THC); Arm Holdings (ARM).

On the Radar Next Week

  • FOMC meeting
  • May S&P/Case-Shiller Home Price MoM
  • June JOLTs Report
  • July Manufacturing PMI
  • July Non-Farm Payrolls
  • Earnings from Advanced Micro Devices (AMD), Apple, Inc. (AAPL), Amazon.com, Inc. (AMZN), Coinbase Global Inc. (COIN), Intel Corp. (INTC), Meta Platforms (META), Microsoft Corp. (MSFT), On Semiconductor Group (ON), Snap Inc. (SNAP), and many more.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Recovery #Rally #Stock #Market #Offers #Hope #Watch

After the Tech Bloodbath: Ways to Strategize Your Portfolio

Post By Stock , , , , , , , , , , , , ,

KEY

TAKEAWAYS

  • Tech stocks took a dive on Wednesday but look like they are making up some of those losses prior to hitting the next support level.
  • Expect volatility in the stock market in the coming weeks since it’s earnings season and there’s a Fed meeting next week.
  • Keep an eye on small-cap stocks since they could outperform large-cap stocks in the coming weeks.

Wednesday’s price action in the stock market indicated that fear is back. The Cboe Volatility Index ($VIX) closed up by over 22%, the biggest percentage move for the year. There’s a chance volatility could remain elevated for the near term—it’s the middle of earnings season, the November election landscape has changed, and it’s a seasonally weak period for equities.

On Wednesday, the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) experienced the worst trading day of the year. The Nasdaq Composite was hit hard, closing lower by 3.64%. From a big-picture point of view, how much damage did the drop do? Let’s look closely at the price action in the Nasdaq Composite, starting with the weekly chart.

The Macro View of the Nasdaq

Looking at a five-year weekly chart below, the uptrend that commenced in October 2023 is still in play. The moving averages overlaid on the chart are adjusted to reflect support levels for the uptrend since October 2023. The short-term uptrend followed the eight-week exponential moving average (EMA). In April 2024, the Nasdaq Composite bounced off the 25-week simple moving average (SMA), and in October, the index bounced off its 48-week SMA. 

CHART 1. WEEKLY CHART OF NASDAQ COMPOSITE. Will the Nasdaq find support at its 25-week moving average? Chart source: StockCharts.com. For educational purposes.

On Wednesday, the Nasdaq Composite broke below its eight-week EMA, the first alarm bell indicating that things may not be great in AI land. The following day, the selloff continued in the early part of the trading day but recovered some losses. 

If the selloff continues, the next point to watch would be the 25-week SMA which corresponds closely with the support of the last previous weekly high. Will the Nasdaq bounce off this level similar to what it did in April or will it continue lower and bounce off its 48-week SMA like it did in October? Or will the Nasdaq honor the support level of previous highs and lows (blue dashed lines)? 

Any of the scenarios could play out, or, as is characteristic of the stock market, it could do something unique.

A Shorter-Term View of the Nasdaq

Let’s turn to the daily chart (see chart below) to zero in on that first support level on the weekly chart, 16,670. To hit that level, the Nasdaq Composite will have to fall between the 100-day SMA and the 61.8% Fibonacci retracement level. You can see from the chart that the Nasdaq approached its 50% Fib retracement level but reversed and moved back up to the 38.2% retracement level.

CHART 2. DAILY CHART OF NASDAQ COMPOSITE. The index recovered. The question is, will it sustain? Chart source: StockCharts.com. For educational purposes.

If VIX remains elevated, expect more sizable movements in the Nasdaq and other equity indexes. The Personal Consumption Expenditure (PCE) for June drops on Friday.

Earnings Volatility

Earnings had a lot to do with this week’s price action. Alphabet (GOOGL) and Tesla (TSLA) reported on Tuesday after the close. Even though GOOGL beat earnings expectations, the decline in YouTube revenues led investors to sell the stock. TSLA earnings missed estimates, with the stock closing lower by 12.33%. 

Next week, we’ll hear from more Mag 7 companies. Given that investors are getting jittery about tech stocks, the companies have to produce incredibly strong earnings reports. Even one negative report can send the stock price and the entire stock market lower.

Assuming that equities fall further—it’s a fair assumption given that a correction is expected—what kind of investment strategy should you apply? Your first thought may be bonds, but they’re not showing signs of strength. Bond prices fell on Wednesday along with stocks. Commodities and cryptocurrencies aren’t showing signs of enthusiasm either.

Small-Cap Stocks

Small-cap stocks are outperforming large-cap stocks, as displayed in the chart of the ratio between iShares Russell 2000 ETF (IWM) and the SPDR S&P 500 ETF (SPY) below. Compare the price action to what occurred between December 2023 and January 2024. The S&P chart in the lower panel doesn’t show a sizable correction during that period. But no two periods are alike so it’s best to keep a close watch on the different moving parts of the stock market. 

CHART 3. SMALL CAPS VS. LARGE CAPS. Small caps are outperforming large-cap stocks, although it doesn’t necessarily mean that large caps will pull back significantly. It’s still worth watching this chart. Chart source: StockCharts.com. For educational purposes.

IWM is made up of small-cap US stocks. Interestingly, one of the top holdings in IWM is Insmed Inc. (INSM), a stock with a high StockCharts Technical Rank (SCTR) score. It also has an interesting chart pattern (see chart below).

CHART 4. DAILY CHART OF INSMED INC. (INSM). The chart gapped about its previous all-time high in 2021 and is now consolidating. With a strong SCTR score, will the stock maintain its strong position? Chart source: StockCharts.com. For educational purposes.

The stock price gapped up above its February 2021 all-time high and has continued moving higher. It’s now consolidating. Watch for the stock to break out above the descending triangle pattern (blue dashed lines) or to reach the support of its 25-day SMA. An upside follow-through from either of these patterns could make this a strong trading candidate. So, set your alerts on StockCharts so you don’t miss this one. 

You could do a similar analysis on other top IWM holdings, such as FTAI Aviation Ltd. (FTAI), Vaxcyte Inc. (PCVX), and Sprouts Farmers Market Inc. (SFM).

Other Market Segments To Consider   

Other areas of the market worth considering are value stocks. Bring up a ratio chart of the iShares Russell 1000 Value ETF (IWD) to the iShares Russell 1000 Growth ETF (IWF). 

Regional banks are also performing well. Bring up a chart of the SPDR S&P Regional Banking ETF (KRE). If this catches your attention, head to the StockCharts Symbol Summary page, type in KRE, and start your research. The Profile section has a link to the ETF page from where you can find the top holdings. 

Closing Position

If volatile conditions persist in the market for the next month or so, you’ll need to develop a strategy to manage your portfolio to cushion your drawdowns. Next week there are more earnings and a Fed meeting. So, be prepared with your game plan.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Source link

#Tech #Bloodbath #Ways #Strategize #Portfolio

Important Market Breadth Indicators to Watch: Making Sense of Three Consecutive Down Days

Post By Stock , , , , , , , , , ,

KEY

TAKEAWAYS

  • Three consecutive declining days in the stock market increases risk appetite
  • Semiconductors were the catalyst for the selloff and trading below two support levels
  • Keep an eye on market breadth indicators to get indications of whether the stock market is correcting or if the selloff will be longer-term

Seasonally, the first two weeks of July have been great for the stock market. Now that the first two weeks of July are behind us, will the stock market take a breather until September? After how the market acted this week, it certainly feels that way.

Let’s start with a synopsis of the broader indexes, followed by an analysis of market breadth indicators.

A July Pullback?

This week, there were some dynamics in the financial markets worth pondering. The S&P 500 index ($SPX) hit a record high on Tuesday and then gapped lower on Wednesday, with the selloff continuing on Thursday and Friday. Three substantial consecutive down days triggered fears among investors and led to a selloff in large-cap mega-growth tech stocks.

The Nasdaq Composite ($COMPQ) was hit the hardest. The daily chart of the Nasdaq below paints a picture of the magnitude of the selloff.

CHART 1. THE NASDAQ SELLOFF. The Nasdaq Composite went through a significant selloff for three consecutive days.Chart source: StockCharts.com. For educational purposes.

The selloff on July 11, a 1.95% drop, indicated how much the Nasdaq Composite could drop in one day. That’s to be expected when the index is as toppy as it is. On a positive note, the Nasdaq is still trading above its 50-day simple moving average (SMA).

Semiconductor weakness brought down the Nasdaq and S&P 500. The strong bull rally in the stock market stemmed from the strength in semis, but the narrative changed this week.

The chart of the VanEck Semiconductor ETF (SMH) paints a grim picture of the fall in semiconductor stocks. SMH has broken below two important levels. One is the support level from previous lows. The second and more concerning one is that it dropped below its 50-day SMA and closed at the lower end of the candlestick bar.

CHART 2. DAILY CHART OF THE VANECK VECTORS SEMICONDUCTOR ETF (SMH). The ETF has broken below the support of its previous lows and the 50-day SMA. The next level to watch is the 100-day SMA.Chart source: StockCharts.com. For educational purposes.

And while the S&P 500 and Nasdaq gapped lower, things were slightly different with the Dow Jones Industrial Average ($INDU). On Wednesday, the index hit an all-time high, but followed the S&P 500 and Nasdaq with a downward move on Thursday and Friday.

Can Small Cap Stocks Hold Their Ground?

If you were tuned in to the media, you’d have heard the word “rotation” mentioned several times. While the big broad indexes were selling off, small-cap stocks rose out of their slumber. Were investors selling off their big winners and investing in small caps? It’s possible, given that interest rate cuts will likely occur in 2024.

But, on Friday, small caps also joined in the selloff (see chart below). However, the S&P 500 Small Cap Index ($SML) didn’t break the support level of its previous highs. The lower panels show that market internals are weakening, so it’s possible that small caps can fall below the blue-dashed support level if there’s more of the same next week.

CHART 3. SMALL CAPS SELLOFF BUT HAVEN’T BROKEN BELOW SUPPORT. The market internals in small-cap stocks are weakening, which could lead to the index falling below its support level.Chart source: StockCharts.com. For educational purposes.

It was an all across-the-board sell-off. Even precious metals and bond prices fell. Very little of the market was in green territory on Friday. Head to the Market Summary page on your StockCharts platform and scroll down the long list, and you’ll see there are a few greens in a sea of red.

Homebuilders, regional banks, and biotechs were some of the more relevant industries in the green. And, of course, cryptocurrencies were the winners, with Bitcoin leading the pack.

The Rise in Volatility

Given the magnitude of this week’s selloff, it’s no surprise the CBOR Volatility Index ($VIX) spiked higher. This suggests that fear amongst investors is on the rise. The bigger question is if this will remain this way for a while. The chart of the VIX below shows that it pulled back slightly toward the end of the trading day.

CHART 4. WATCH THE VIX. The VIX is a great fear gauge. The last time it spiked was when the S&P 500 corrected. Will this time be similar, or will it go even higher?Chart source: StockCharts.com. For educational purposes.

More important, notice how the VIX reacted in April 2024, the last time it spiked. That was when the S&P 500 corrected to its 100-day SMA, after which it resumed its uptrend. Can we expect a similar situation to take place this time? It’s possible, although this time it may be more important to see if the S&P 500 falls below its 50-day SMA.

It Helps to Look at Stock Market Internals

In the daily chart of the S&P 500 below, you see the index is trading above its 50-day SMA. So far, breadth indicators suggest that the bullish trend is still in play.

CHART 5. MARKET BREADTH INDICATORS AREN’T SIGNALING A BEAR MARKET YET. The S&P 500 is still above its 50-day SMA. Market breadth indicators, NYSE Advance-Decline Line, Percent of S&P 500 stocks trading above their 50-day SMA, and the S&P 500 Bullish Percent Index are showing signs of slowing down, but not necessarily weakness.Chart source: StockCharts.com. For educational purposes.

Points to note in the above chart are as follows:

  • The NYSE Advance-Decline Line is starting to show signs of weakening but, relatively speaking, it’s still high.
  • The percentage of S&P 500 stocks trading above their 50-day SMA is above 50, although it also is starting to trend lower.
  • The S&P 500 Bullish Percent Index is flattening out.

All three breadth indicators are indicating a slowing-down, but market breadth isn’t weak. Compare this with what happened in April. Let’s focus on the area between the two blue dashed vertical lines.

  • The NYSE Advance-Decline line was in a downward trajectory, flattened out, and reversed.
  • The percentage of S&P 500 stocks above its 50-day SMA fell drastically and went below the 50 level.
  • The S&P 500 Bullish Percent Index fell below 50, but for a short time.

Closing Position

The charts presented here are an example. Feel free to apply different moving averages for your analysis. Assuming you’re looking at the chart in Chart 5, if the S&P 500 falls below the 50-day SMA, it would be time to tread carefully. Corrections are healthy and necessary and, as long as they are corrections, they could open up opportunities to load up on some stocks or exchange-traded funds (ETFs). It depends on how weak the market internals are, which is why indicators included in the chart can be helpful.

Stay one step ahead of the market. Explore the different market breadth indicators available in StockCharts.

  • S&P 500 closed down 1.97% for the week, at 5505; Dow Jones Industrial Average up 0.72% for the week at 40,287.53; Nasdaq Composite closed down 3.65% for the week at 17726.94
  • $VIX up 32.58% for the week closing at 16.52
  • Best performing sector for the week: Energy
  • Worst performing sector for the week: Technology
  • Top 5 Large Cap SCTR stocks: MicroStrategy, Inc. (MSTR); Insmed Inc. (INSM); Carvana Co. (CVNA); Arm Holdings (ARM); Robinhood Markets, Inc. (HOOD)

On the Radar Next Week

  • June Existing Home Sales
  • June PCE Price Index
  • June Durable Goods Orders
  • First estimate of Q2 GDP growth
  • Earnings from Alphabet (GOOGL), Tesla (TSLA), Verizon Communications (VZ), Visa Inc. (V), Coca-Cola Co. (KO), Qualcomm Inc. (QCOM), PulteGroup (PHM), among many others.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Source link

#Important #Market #Breadth #Indicators #Watch #Making #Sense #Consecutive #Days

Stock Market Makes Spectacular Run, and It’s Not From the Popular Magnificent Seven

Post By Stock , , , , , , , , , , ,

KEY

TAKEAWAYS

  • Stock market sees rally in areas aside from the Magnificent Seven stocks
  • Small-cap stocks had an impressive performance in the last two trading days of the week
  • The stock market continues to show its bullish strength as we enter earnings season

What a strange trip it’s been!

After breaking out of its June 20 to July 3 sideways movement, the S&P 500 ($SPX) index finally broke out to the upside–until it didn’t. That was on Thursday.

Friday was a different story.

After Thursday’s CPI report, the stock market reacted in a way that suggested investors were rotating out of tech stocks into other areas of the stock market. Could this have been a knee-jerk reaction to the cooler inflation data, combined with the market historically performing well during the first two weeks of July? Or was it something else? Whatever the case, it didn’t last long, which seems to be the stock market’s most typical behavior of late. Reactions tend to be big, but only last a day or two.

This type of environment makes it more difficult for retail traders since it’s easy to get sucked into what others are thinking. That’s why it’s so important to look at the big picture before following the crowd. Remember, there are more algorithms making decisions. This is evident in how the stock market did a complete switcheroo on Friday.

The producer price index (PPI) number was slightly higher than estimates. This led to a 180-degree turn in market sentiment as onvestors returned to large-cap stocks. However, what was different about Friday’s stock market price action was that it wasn’t just the Mag 7 stocks that saw upside movement. The S&P 500 Equal Weighted Index ($SPXEW) broke out of its triangle pattern, piercing through the upper boundary. Small- and mid-cap stocks also rose. And the good ol’ Dow Jones Industrial Average ($INDU) hit an intraday record high, but couldn’t hang on to it high at the close. The same goes for the S&P 500 and Nasdaq Composite ($COMPQ).

Macro View Of the Stock Market

So, the rotation is still in play, and the trading week ends with participation broadening out to different areas of the market. That Thursday’s selloff didn’t continue into Friday shouldn’t be too surprising, given the CBOE Volatility Index ($VIX) is still at relatively low levels.

The bullish sentiment is still intact, as seen by the expansion of market breadth. The daily chart of the S&P 500 below includes the NYSE new 52-week highs and lows in the lower panels.

CHART 1. S&P 500 INDEX BREADTH. The new 52-week highs indicator has been expanding for the last three days.Chart source: StockCharts.com. For educational purposes.

Note that the number of new 52-week highs has expanded in the last three days. On Thursday, when equities went through a big selloff, the number of NYSE new 52-week highs increased, indicating money was still flowing into equities. It may not have been coming into tech stocks, but it was going somewhere.

The 15-day simple moving average (SMA), a reliable support level since June, indicates that the equities trend is still bullish.

If market breadth expands and the overall trend increases, there’s no reason to panic sell. It’s true that, historically, the stock market performs well during the first two trading weeks of July and slows down during the second two weeks of the month. But, at this point, it’s best to go with the flow, which currently looks like the trend—despite short-term turbulence—is up.

Small Cap Stocks Are Taking Off

The action in small-cap stocks is particularly interesting. The S&P 600 Small Cap Index ($SML) has broken above a strong resistance level with expanding breadth (see chart below).

CHART 2. S&P 600 SMALL CAP STOCKS. Small-caps were in the spotlight in the last two days of the trading week. Market breadth expanded significantly. Will there be a follow-through next week?Chart source: StockCharts.com. For educational purposes.

The percentage of S&P 600 stocks trading above their 200 day moving average is above 66%, while the Advance-Decline Percent and Advance-Decline Volume Percent have been in positive territory for the last three trading days.

The bottom line: The broader stock market indexes are trading at or close to all-time highs, small-caps are breaking above a resistance level, and volatility is at relatively low levels. These are all positives for the financial market until signs show otherwise.

Earnings Season Kicks Off

Earnings season kicked off on Friday with JP Morgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) reporting. Investor reaction was mixed even though all three beat estimates. JPM’s stock price closed lower by 1.21%, C declined by 1.80%, and WFC was the worst performer in the S&P 500, its stock price declining almost 6%.

Next week is thin on US economic data. The focus will be more on earnings, with mostly banks and energy companies reporting. The market seems to be shifting its behavior, so it’s important to focus on the price action and act accordingly. It’s difficult in the summer months when everyone likes to take vacations; we’re trying to make it easier for you by sharing our charts. So make sure to click on the live charts and add them to your ChartLists!

  • S&P 500 closed up 0.87% for the week, at 5615.35; Dow Jones Industrial Average up 1.59% for the week at 40,000.90; Nasdaq Composite closed up 0.25% for the week at 18,398.45
  • $VIX down 3.56% for the week closing at 12.46
  • Best performing sector for the week: Real Estate
  • Worst performing sector for the week: Communication Services
  • Top 5 Large Cap SCTR stocks: Insmed Inc. (INSM); Carvana Co. (CVNA); Super Micro Computer, Inc. (SMCI); NVIDIA (NVDA); MicroStrategy, Inc. (MSTR)

On the Radar Next Week

  • June Retail Sales
  • Earnings from BlackRock Inc. (BLK), Goldman Sachs (GS), Bank or America Corp (BAC), Charles Schwab Corp. (SCHW), Netflix (NFLX), Alcoa Corp. (AA), Haliburton Co. (HAL), and Schlumberger NV (SLB), among many other companies
  • Fed speeches from Chairman Powell, Daly, Kugler, and others
  • July MBA 30-year Mortgage rate
  • June Housing Starts
  • June Industrial Production

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Jayanthi Gopalakrishnan

About the author:
Jayanthi Gopalakrishnan is Director of Site Content at StockCharts.com. She spends her time coming up with content strategies, delivering content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was Managing Editor at T3 Custom, a content marketing agency for financial brands. Prior to that, she was Managing Editor of Technical Analysis of Stocks & Commodities magazine for 15+ years.
Learn More

Source link

#Stock #Market #Spectacular #Run #Popular #Magnificent

February was a great month for Wall Street. These were our 5 best-performing stocks

Post By Business , , , , , , , , , , , , , , , , , , , ,

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. 

Brendan McDermid | Reuters

February was a strong month for stocks and the Club’s portfolio.

The advance came as investors parsed through fourth-quarter earnings results and fresh economic data, searching for clues about when the Federal Reserve will finally cut interest rates. The Nasdaq Composite led the march higher in February, gaining 6.1% and finishing the month at its first record close since November 2021. Meanwhile, the Dow Jones Industrial Average and S&P 500 both hit a series of all-time highs throughout the month, climbing 2.2% and 5.2%, respectively.

Source link

#February #great #month #Wall #Street #bestperforming #stocks