Weekly Market Analysis: Recap and Forecast. The Week of July 22, 2024
Sep 19, 2024This weekly market RECAP, FORECAST and ANALYSIS is available to subscribers of our Flash Options channel ONLY! Please sign up for Flash Option program or MyCompass Pro + Flash Option Combo and get access to all of our weekly forecast - A Compass to Navigate the Stock Market!
The S&P 500 SPX fell Friday for a third straight day, closing at its lowest value since the start of July, its worst week since April as its information-technology sector dropped 5.1%, with $NVDA clocked in weekly loss of 8.8%. The Nasdaq shed 3.7%, meanwhile the Dow Jones and Russell 2000 finished the week higher. Signs of easing inflation boosted investors’ confidence that the Federal Reserve may start lowering interest rates in September, sparking a rotation from Big Techs into interest-rate sensitive and small-cap stocks in sectors such as financials, real estate, utilities, industrials and materials, with financial sector posted the biggest gains over 10% followed by Utilities, consumer discretionary and industrials, all booked in 7.9%.
Inflation and labor market have been “cooling,” and GDP has shown a slowdown make some Wall-Street experts believe that the Fed will cut its interest rate in September. Meanwhile, the market volatility index VIX jumped last week to over 16.52, finishing the week 32.5% higher from the previous week, marked its biggest weekly increase since March 2023, a sign that investors are bracing for an increasingly bumpy ride.
Uncertainty surrounding the election may also be making some investors nervous, as stock and bond valuations will need to be evaluated based on the winner’s policies. And we know that the market doesn’t like uncertainty. It however seems to react positively of a foreseeable victory by either candidate. Until then, we should expect market volatility continues.
Historically, the stock market tends to see a 10% pullback on average about every 10 and a half months or so, and the S&P 500 hasn’t seen a 10% drawdown since rallying from its October 2023 low. Another fun fact, according to Factsheet Data on the stock market performs in the three months leading up to Election Day on Nov. 5. In the last 100 years, from 20 of 24 election outcomes, the market has predicted with the incumbent tending to win when the market rose and losing when it fell.
The market moved like we stated in our forecast last week. $SPY held $559-$560 support early in the week and made a new high at $565, before it came down and cracked below $559 traded passed our $554 level to $550. $SPY closed the week right under $550. If it can get back over $550, look to trade to $553, $556.50, then possible $559-$560. If it gets rejected at $553 or under $548, it may continue to drip down to $544, then $541-$540 area. $QQQ failed to hold $495 support last week and traded passed our $490 PT and $483 PT to close the week at $475. Currently $QQQ is 5 pts above its 50sma support of $470. Holding above $475, it may go back up to $480 then $485 and $487-$490. If it fails to hold $475, it may go down to $470-$469 then bounces back up.
This week we will have service and manufacturing PMI numbers on Tuesday, an estimate on economic growth in the 2nd quarter, with the BEA scheduled to release its estimate of GDP on Thursday. And a reading on inflation in June from the Fed’s preferred gauge, the PCE price index, is due out on Friday. Also, the first 2 of the Magnificent 7, $TSLA and $GOOG will report their earnings on Tuesday after market close.
We’ll pay attention on long-bond yields move that can give us signal how investors react to Biden news, and we’ll be focusing on some earning trades, the indexes and sectors that may benefit from the “Trump Trades,” such as financial, crypto, and energy. Have a fantastic week everyone. Namaste!!!
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