Weekly Market Analysis: Recap and Forecast. The Week of September 3rd, 2024

market analysis Sep 19, 2024

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As the barbecues fire up for Labor Day, all eyes are on Employment Report this Friday. And for the Fed, the jobs market will be a critical factor over the coming months, as it decides how quickly to lower interest rates. Chair Powell has already signaled a 0.25% cut for the Sept. 18 meeting; the question now is how fast and how much more? Rate cuts are good news for stocks because that make equity more attractive relative to bonds. But there’s a still a risk that the labor market could cool too quickly at which we will see at August jobs report coming due to Friday. The only debate now appears to be whether the Fed may opt for a 50 basis-point at some point. Any weak reading from jobs report could trigger a more aggressive step.

After 2 years of tech rally which has been driving the overall market’s gain, it is running out of steam resulted in $NVDA stock dropped on blow-out quarter report last week. Besides, consumer spending has been rising faster than incomes and savings are getting depleted. Retailers reported mixed earnings season so far with warning sign that consumers are being stretched. Earnings on $DKS and $DLTR should tell us more about it this week.

It may be worthwhile to look at some statistics. Lately, the old saying, “Be careful what you wish for,” is surfacing on Wallstreet. In the average 10-month period between the last rate hike and first rate cut since 1989, the S&P 500 gained an average 15.5%. When including sector and sub-industry returns, in the 30 calendar days after the first rate cut since 1995, the S&P 500 only gained an average 0.4%, and 6-months after the first cut, the market gained a less enthusiastic average of only 5.4%. This time around, from July 26, 2023 through August 23, 2024, the S&P 500 rose 23.4%. So, what happened after the first cut assuming on Sept. 18 remains to be seen. This is sort of “buy the hypes and not so much on the news.”

The S&P500 and the Dow closed August right at all-time-high, with $SPY traded in $555-$565 range and $QQQ moved exactly how we projected. It traded under $478 and went back down $474 then $470-$468-$466 area. Currently, $SPY is in $560 to $565 range, a break over $565 ATM, it should go to $568-$570, then $573-$575. Under $559, $SPY would go down to its range support at $555-$553 again. Under $553, it may retest its 50sma support at $549-$448 area. $QQQ is in $470-$475 range. Over $476, it should trade to $480 and possible $485. Under $468, it may go down to its 100sma $462-$460 area.

This week, we have ISM manufacturing on Tuesday, Job Openings on Wednesday, ADP, Initial Jobless Claim, ISM services on Thursday, and of course the Employment Report on Friday that everyone will be eyeing for. We also have earnings on $ZS, $PD, $DKS, $DLTR, $AI, $DOCU, and $AVGO. We will look to capture volatility on the indexes and some good setups on earnings. September is a transition month to get ready for the Fall trades. So be ready! Namaste!!!

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