Stock Market Outlook entering the Week of May 26th = Uptrend
- ADX Directional Indicators: Uptrend
- Price & Volume Signals: Uptrend
- On Balance Volume Indicator: Uptrend
ANALYSIS
The stock market outlook remains in an uptrend, heading into a holiday shortened trading week.
The S&P500 ($SPX) was flat last week. The index closed ~3% above the 50-day moving average and ~12% above the 200-day moving average.
SPX Price & Volume Chart for the Week of May 26 2024
All three signals (ADX, Price/Volume, and On-Balance Volume) ended the week in bullish territory. The index did pick up 2 distribution days. Given the “late” follow-though that erased a stalling day, the current rally is off to a weak start.
S&P Sector Performance for Week 21 of 2024
Under the hood, most S&P500 sub-sectors were losers last week. Technology ($XLK) and Communications ($XLC) were the only gains, thanks to their inclusion of Mag 7 stocks. Energy ($XLE) and Real Estate ($XLRE) were the worst sectors, each dropping more than 3%.
Asset Class Performance for Week 21 of 2024
Equities weren’t the only asset class to struggle, as gold dropped more than 3%, joining energy and real estate sectors. Bitcoin led the way again, rising another 3%.
COMMENTARY
Nvidia ($NVDA) stole the show last week, beating earnings estimates once again, and breaching the psychological $1,000/share mark. The company also announced a 10 to 1 stock split, which will lower the price of shares and options. The market needed a strong performance from this heavyweight to stay close to even on the day, since ~80% of the S&P sold off.
FOMC minutes showed that participants aren’t convinced interest rates are restrictive, given the recent string of higher than expected inflation readings. And Fed Fund Futures responded by pushing timing for the first-rate cut into November…that’s a far cry from the 6 rate cuts projected just a few short months ago.
U.S. markets are closed tomorrow (Monday) in observance of Memorial Day, so a short trading week ahead. The U.S. Bureau of Economic Analysis releases the second Q2 GDP estimate on Thursday, and the latest PCE data comes out Friday pre-market.
Best to Your Week!
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