The Safe Investing Blog

Stock Market Outlook entering the Week of June 30th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook shows an uptrend in place for U.S. equities as we head into July.

The S&P500 ($SPX) dropped 0.1% last week, so the index remains ~4% above the 50-day moving average and ~12% above the 200-day moving average.

SPX Price & Volume Chart for the Week of June 30 2024

All three indicators (ADX, On Balance Volume and Institutional activity) remain bullish. Friday’s reversal came with abnormally high trading volume, showing institutions were very active.

The energy sector ($XLE) outperformed last week, followed by Communications ($XLC).  All the other sectors were down, with Utilities leading the way again ($XLU).

S&P Sector Performance for Week 26 of 2024

A third week of leadership from Oil, although somewhat muted at +1.2%. The hits just keep on coming for Bitcoin, losing another 6.7%, for a 3 week drop of roughly -16%! That’s a good reminder of the volatility associated with Bitcoin, as well as crypto an asset class. Price performance resembles that of a commodity (like oil or wheat), and is why it’s still not an appropriate store of value for most investors. Gold and the dollar have been almost perfectly correlated over the past 2 weeks, each remaining essentially flat.

Asset Class Performance for Week 26 of 2024

COMMENTARY
Although the $SPX reached a new all time high on Friday morning, the rest of the session should give investors pause. A rejection of the high for the day, coupled with abnormally high trading volume, suggests aggressive selling by market participants. While end of month/quarter/half rebalancing may be the driver, keep an eye on the distribution day count for signs of more selling over the next week or two.

The final Q1 US GDP figure showed a gain of 1.4%, dropping significantly verses Q1 2023 (+2.2%).

Meanwhile, May PCE data was inline with estimates and showed a slight decline year over year.

For the week ahead, ISM releases June manufacturing PMI data on Monday.  Federal Reserve Chairman Powell speaks on Tuesday, just ahead of May JOLTs data, followed by June ISM Services PMI and FOMC minutes on Wednesday.  And finally, June NFP/ unemployment data comes out Friday morning.

Trading-wise, a short week due to Independence Day.  U.S. markets will trade for a half-session on Wednesday, close on Thursday, then resume trading on Friday for what is likely to be a low volume day.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of June 23rd = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook shows an uptrend in place for U.S. equities.

The S&P500 ($SPX) rose 0.6% last week.  The index ended the week ~4% above the 50-day moving average and ~13% above the 200-day moving average.

SPX Price & Volume Chart for the Week of June 23 2024

All three indicators (ADX, On Balance Volume and Institutional activity) remain bullish.

Consumer Discretionary ($XLY), led by Amazon, Tesla, and Home Depot, was the best sector last week.  Utilities ($XLU) led to the downside.

S&P Sector Performance for Week 25 of 2024

The trend in asset prices carried over for a second week in a row, with oil leading to the upside (+3.8%) and Bitcoin leading downward (-3.5%).  Those returns put their two week performance at +8% and -9.2%, respectively.

Asset Class Performance for Week 25 of 2024

COMMENTARY
May retail sales were up 2.3% versus last year; slightly lower than the 2.7% y/y increase seen in April.  Otherwise, a fairly quiet week on the macroeconomic front.

Most of the commotion occurred withing futures and options; Friday’s quarterly options expiration was the largest ever.

This week, we get the final Q1 GDP figure (Thursday) and May PCE data (Friday).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of June 16th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook shows an uptrend in place for U.S. equities.

The S&P500 ($SPX) rose 1.6% last week.  The index ended the week ~4% above the 50-day moving average and ~13% above the 200-day moving average.

SPX Price & Volume Chart for the Week of June 16 2024

All three indicators (ADX, On Balance Volume and Institutional activity) remain bullish, thanks in large part to technology stocks.

So it’s no surprise to see the Tech sector ($XLK) leading the way last week.  What is a bit of a surprise?  All of the other sectors underperforming versus the index.  That’s not a sign of a healthy market, but we have to play the cards we have, not the cards we want.

Energy ($XLE) led to the downside.  Energy sector stocks have not been kind to investors since April.  Industrials and Financials also weakening significantly over the past month.

S&P Sector Performance for Week 24 of 2024

Oil was the big winner last week, rallying 4.2% and reclaiming its 200-day moving average after a rough couple of months.  Bitcoin did not fair well, dropping 5.4% and is now looking for support from its 50-day moving average.

Asset Class Performance for Week 24 of 2024

COMMENTARY
The May Consumer Price Index (CPI) declined versus April and came in below expectations, giving stocks a boost mid-week as investors looked forward to eventual rate cuts.

The Producer Price Index also showed signs of improvement, although that was due to an upward revision in the April figures (prior Headline reading was +1.8%, prior Core reading was +2.1%).

Despite seemingly positive inflation data, the U.S. FOMC decided to keep rates unchanged, citing the need for more evidence that inflation is really in the rear-view mirror.

For the week ahead, May retail sales figures are released on Tuesday, U.S. markets are closed Wednesday (Juneteenth holiday), and Quarterly options expiration is Friday.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of June 9th = Uptrend

• ADX Directional Indicators: Uptrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook shows an uptrend in place for U.S. equities.

The S&P500 ($SPX) climbed 1.3% last week to hit a new, all time high.  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 June 09 2024

ADX flipped back to bullish on Wednesday, rejoining On Balance Volume and institutional activity showing uptrends.

S&P Sector Performance for Week 23 of 2024

Some sectors didn’t benefit from the indexes strong performance. While Technology ($XLK) led the way higher (+2.6%), rate sensitive sectors lost ground, with Utilities ($XLU) and Energy ($XLE) both dropping more than 3%.

Sector performance was a read-through from asset classes, with Oil leading to the downside.  Bitcoin gained 2.3%, erasing the prior week’s loss.

Asset Class Performance for Week 23 of 2024

COMMENTARY
Did you watch TheRoaringKitty webcast?  No?  Good.

Last week’s economic data was “conflicted”.  On the one hand, April ISM manufacturing PMI fell unexpectedly, although employment grew.  On the other hand, April ISM Services PMI rose dramatically, although employment contracted.  The JOLTs number showed job openings declined in April, while May NFP had the highest job growth in 5 months.

This week we get May CPI and another Federal Reserve Rate decision (Wednesday), May PPI (Thursday), and a smattering of Treasury auctions throughout the week.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of June 2nd = Uptrend

• ADX Directional Indicators: Downtrend
• On Balance Volume Indicator: Uptrend
• Institutional Activity (Price & Volume): Uptrend

ANALYSIS
The stock market outlook starts June in an uptrend after a wild day of trading to close out the month.

The S&P500 ($SPX) was down 0.5% last week.  The index closed ~2% above the 50-day moving average and ~11% above the 200-day moving average.

SPX Price & Volume Chart for the Week of June 02 2024

ADX flipped to bearish on Thursday, and OBV stays bullish.

Institutional activity was mixed last week, but remains bullish overall.  Market makers sold mid-week (2 more distribution days for a total of 4), then bought substantially at the 50-day moving average on Friday.

S&P Sector Performance for Week 22 of 2024

Although a majority of sectors ended the week in positive territory, large capitalization stocks like Microsoft ($MSFT) counteracted those gains in the broader index.  Technology ($XLK) dropped 2.3%, while the Energy ($XLE) rebounded from its recent losing streak and finished 2% higher.

Across asset classes, it was a case of “least bad”, with each one registering a loss last week.  Bonds suffered the least damage, down 0.10%, while Bitcoin fell 2.3%.

Asset Class Performance for Week 22 of 2024

COMMENTARY
The second estimate for Q1 GDP came in at 1.3%, which is 0.3% below the first estimate of 1.6% and well below Q4 GDP at 3.4%.  Consumer spending slowed more than initial estimates, for both good and services, while government spending was revised slightly higher.  Inflation remains sticky, with PCE showing no additional reductions in April.

Weaker growth and sticky inflation will put even more pressure on interest rate policy, as any move to improve one will hurt the other.  Rates resumed their rising trend over the past two weeks, making any kind of spending or stimulus even more expensive.  On the equity side, sector performance and institutional activity gives the impression of rotation and re-balancing, rather than any kind of reduction in exposure to equities.

And if Friday proved anything, it’s that this isn’t your father’s stock market. After a brief rise at the open, the $SPX sold off during the morning, losing roughly 1% by mid-session.  But once the index closed in on the 50-day moving average, buyers stepped in and pushed prices up roughly 0.5%.  Turns out that was just a warm-up.   In the final 30 minutes of trading, the S&P500 rallied almost 1%.  Not 1 stock.  Not the Magnificent 7.  The entire index of 505 tickers, representing 500 companies and ~44 trillion dollars of market cap.

Source: Google.com

Let it serve as a reminder about the nature of today’s financial markets.  Corporate financials (corporate revenue, earnings, debt) had nothing to do with the move.  Nothing.  No macroeconomic data (i.e. GDP, CPI) or fundamental research on Apple, Microsoft or Tesla would’ve prepared you to take or not take a position.  Instead, market makers had an imbalance of some kind, and needed to buy equities at whatever price was available before the market closed…at a rate of ~15 Billion dollars per minute.

This week, the market will digest May ISM manufacturing and services PMI data, as well as jobs-related data (April JOLTS and May Non-Farm Payrolls)

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

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!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of May 19th = Uptrend

• ADX Directional Indicators: Uptrend
• Price & Volume Signals: Uptrend
• On Balance Volume Indicator: Uptrend

ANALYSIS
The stock market outlook starts the week in an uptrend, with the index just shy of an all time high, thanks to April CPI data.

The S&P500 ($SPX) rose 1.5% last week and now sits above the 50 and 200-day moving averages (~3% and ~12% respectively).

SPX Price & Volume Chart for the Week of May 19 2024

The ADX and OBV signals are bullish heading into the week, showing buyers remained more aggressive than sellers last week. Price/volume shifted to an uptrend on Wednesday, after the SPX responded to dovish CPI data with a follow-through day. The move also resets the distribution day count.

S&P Sector Performance for Week 20 of 2024

Most sub-sectors of the S&P500 were green on an absolute basis, but most of those gains were generated by the general index.  Technology ($XLK) lead the way last week, while Industrials ($XLI) were the worst performer.

From an asset perspective, a weak dollar benefited all classes. The risk-on reaction to a dovish CPI print sent the price of Bitcoin almost 11% higher for the week, breaking out of the recent consolidation pattern.

Asset Class Performance for Week 20 of 2024

COMMENTARY
The “big news” last week was the return of the “RoaringKitty” X.com/Twitter account.  After radio silence since June 17 2021, a cryptic meme appeared Sunday:

This image was all it took to ignite a frenzy of social media speculation about a potential short squeeze in Gamestop ($GME), the ticker that made Keith Gill a household name.  Which, of course, led to a massive level of trading in several meme stocks prior to the market opening on Monday, as well as the rest the week.

Unsurprisingly, there was no “real” news driving the move, and the tickers gave back a majority of their gains.  There’s even some who claim that Mr. Gill sold the “RoaringKitty” account, calling into question who is posting and for what purpose (other than your classic pump and dump).  Just another reminder to be careful when you’re on the internet.

In other news, Federal Reserve Chairman Jerome Powell participated at the Foreign Bankers’ Association’s Annual General Meeting in Amsterdam, reiterating the stance that inflation remains sticky, but the U.S. economy is still performing well based on GDP growth, tight labor markets, and solid household finances.

His remarks came after the pre-market release Producer Price Indexes, which showed Headline and Core inflation accelerated in April. Market reaction was muted, likely due to the fact that the increases were in line with expectations.

*March Headline PPI was revised down to 1.8% from 2.1%; Core PPI to 2.1% from 2.4%

On Wednesday, the BLS released April CPI data, showing that Core and Headline figures eased slightly in April. Market reaction was bullish on renewed expectations for interest rate cuts.

This week kicks off with a Sunday speech from five (!) speeches from Federal Reserve officials; one Sunday afternoon from Chairman Powell, and 4 Monday morning from Bostic, Barr, Waller, and Jefferson.  Then Tuesday is more of the same, with eight (!!) more speeches!

FOMC minutes from the last meeting get dissected Wednesday afternoon, and Durable Goods Orders for April hit the wires on Friday.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.