Market Trader Report | May 12, 2024 + Stock Watchlist
What is included in this week's edition?
WEEKLY REVIEW: An overview of current market standing, fundamental matters with implications upon the market, and general sentiment regarding the major US indices.
LOOKING AHEAD: Key takeaways to consider as we look forward to the upcoming trading week.
MARKETS: A technical review of the major indices and commodities that represent the overall health of the market.
Market Trader by MyntBit
Issue# 19
Stocks maintained a relatively steady course this week, despite mounting concerns over stagflation, marked by dwindling economic growth forecasts juxtaposed with escalating inflation expectations. The University of Michigan’s Consumer Sentiment Index cast a shadow over stocks on Friday morning, revealing a significant drop in May's figures, falling well below consensus predictions.
Meanwhile, a series of Federal Reserve (Fed) speakers continued to reinforce the narrative of prolonged higher interest rates, emphasizing the Fed's commitment to maintaining patience and adopting a cautious stance towards interest rate adjustments.
In stark contrast to the current week's subdued activity, the upcoming week promises a flurry of data releases. Foremost among these will be updates on the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation for April. Additionally, investors will keenly await reports on retail sales, small business sentiment, and leading indicators, alongside updates on industrial production, business inventories, and developments in the housing market.
Weekly Market Review
This week saw gains across major indices. The S&P 500 encountered resistance at 5,200 on Tuesday but managed to close above that mark for the first time since April 9, resulting in a 1.9% increase for the week. The Nasdaq Composite saw a 1.1% gain, while the Dow Jones Industrial Average experienced a 2.2% uptick.
These movements brought the S&P 500 and Nasdaq Composite within 1.0% of their record closing highs. The broad advance was evident as the equal-weighted S&P 500 rose by 2.0% for the week, with all 11 S&P 500 sectors posting gains.
The utilities sector led the gains with a 4.0% increase, followed by the financial sector (+3.1%), materials sector (-2.6%), consumer staples sector (+2.3%), and industrial sector (+2.3%). The consumer discretionary sector was the only one to see a modest gain of less than 1.4%, closing 0.2% higher compared to the previous Friday.
The positive momentum from the post-FOMC rally, coupled with the drive to retest all-time highs for the S&P 500 and Nasdaq Composite, contributed to the upside moves this week.
Economic releases were sparse, with Friday's preliminary University of Michigan Index of Consumer Sentiment for May being the highlight. The report showed a drop to 67.4 in May (expected 76.5; prior 77.2) and a rise in year-ahead inflation expectations to 3.5% from 3.2%. Stocks responded with a muted, slightly negative reaction to the report.
In terms of earnings news, Walt Disney (DIS) and Uber (UBER) were notable mentions. Disney saw a 6.9% decline following its earnings report, while Uber dropped 3.2% on its earnings news.
Treasuries remained calm, providing support to equities. The 10-year note yield settled unchanged for the week at 4.50%, while the 2-year note yield saw a six basis points increase to 4.87%.
Weekly Performance Heatmap
Overall Stock Market Heatmap & Sector Performance
Looking Ahead to the Upcoming Week
The upcoming week promises a plethora of economic indicators, with a spotlight on inflation data. On Tuesday, Wednesday, and Thursday, respectively, markets await the release of April's Producer Price Index (PPI), Consumer Price Index (CPI), and import prices. Additionally, updates on retail sales, industrial production, and the index of leading economic indicators for the month are anticipated, alongside insights into small business sentiment and preliminary May regional business surveys from the New York and Philadelphia Fed districts.
The week's agenda also includes a flurry of housing market statistics, including housing starts, building permits, and homebuilder sentiment. In the central bank realm, Fed Chair Jerome Powell is scheduled to address an event hosted by The Netherlands’ Foreign Bankers’ Association.
China's economic landscape will come under scrutiny, with attention on industrial production, retail sales, money supply, fixed asset investment, and announcements regarding the one-year medium-term lending facility rate and volume from the People’s Bank of China. From Japan, focus will be on a preliminary reading of first-quarter gross domestic product (GDP), along with updates on industrial production and the Producer Price Index (PPI).
Elsewhere in the region, Australia will release labor market data and business confidence figures, while South Korea will unveil its unemployment rate and export prices.
In Europe, all eyes will be on the advance reading of first-quarter eurozone GDP, alongside finalized April Consumer Price Index (CPI) figures and May's ZEW expectations for economic growth. From the U.K., expect data on the labor market, including the unemployment rate, jobless claims, and weekly earnings. Meanwhile, Germany will provide an update on the ZEW index of current conditions.
Notable Earnings
Important Economical Events
Markets
Below are the levels for the upcoming week - updates will be provided on X (previously Twitter) throughout the week.
SPY - SPDR S&P 500 ETF Trust
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Support: $515, $520 | Resistance: $525
Following last week's volatility, the SPY exhibited a steady ascent, inching closer and closer to its all-time high.
QQQ - Invesco QQQ Trust Series 1
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Support: $430 | Resistance: $450
Once again, the QQQ observed a gradual and consistent rise towards its all-time high.
IWM - iShares Russell 2000 ETF
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Support: $200 | Resistance: $210
IWM and Small Caps demonstrated strength, marking a close above $200 and maintaining that level, with the next target set at $210.
DIA - SPDR Dow Jones Industrial Average ETF Trust
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Support: $390 | Resistance: $400
Dow showed resilience and gained strength, breaking above and maintaining the $390-$395 range. This movement suggests a potential advance towards the next target level at $400.
VIX - Volatility S&P 500 Index
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Support: $12 | Resistance: $15, $20
The VIX is still getting suppressed below $15 indicating a return to the subdued and less volatile market environment.
Stock Watchlist
AAPL - Apple Inc.
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Support: $180.42, $168.11 (GAP) | Resistance: $185.09, $187.00
After its earnings report, AAPL witnessed a price surge to $187.00, but recently, it has undergone some consolidation. It's worth monitoring the breakout of the key levels moving forward.
AMD - Advanced Micro Devices, Inc.
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Support: $150.61, $141.16 | Resistance: $157.70, 162.29
Among the SEMI stocks, AMD exhibited an early indication of weakness, experiencing a decline from $224 to $141. Following its earnings report, it gapped down, and now the critical levels above will determine its next direction.
SQ - Block, Inc.
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Support: $70.11, $65.69 | Resistance: $74.00, $76.50
SQ has been experiencing a steady decline, but after its earnings, it recorded an upward movement. Currently, it's consolidating within a range, awaiting a breakout to determine its next direction.
MRVL - Marvell Technology, Inc.
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Support: $67.52, $63.34 | Resistance: $70.00, $74.00
MRVL has been consolidating since the start of the year, both on the daily and weekly triggers, with these triggers now showing signs of curling up.
SMCI - Super Micro Computer, Inc.
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Support: $786.90, $700.00 | Resistance: $843.77, $910.84
Once a frontrunner among the Semi stocks, SMCI experienced exhaustion following the rally above $1000. Now, it's gradually declined, with critical levels of resistance looming above.
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