by Ben Weiss, for the Call to Leap Team
Another big week in the books! Let's take a look at what happened this week in the market and what's coming up...
The market this week
We saw another strong week in the market, building on a few consecutive weeks of bullish uptrend. Most of the Magnificent 7 stocks had a strong showing, including AAPL which had a huge breakout performance following its Worldwide Developer Conference (WWDC) and news they'll be integrating AI into their digital assistant Siri. NVDA also started trading post-split (10:1) on Monday and didn't hold back from there. Often, stocks temporarily dip following a split as there can be a bullish surge before the split, leading to a sell-off afterwards. Well, NVDA kept "NVDAing" and had a monster +10% week despite (or maybe thanks to) the split. Let's see if it can maintain its momentum or if a sensible correction is in its future.
By the numbers, the S&P 500 (+1.69%) and Nasdaq (+3.54%) notched impressive gains, while the DOW 30 (-0.50%) and small-cap Russell 2000 (-0.30%) lagged behind. Smart Money (aka institutional investors) continues to invest more heavily in big tech companies. Notably, while big tech (the left side of the heatmap above) continues to show strength, other sectors in the S&P 500 including energy, utilities, and financial services lagged behind, creating somewhat of a gap.
The S&P 500 and Nasdaq set another round of record highs this week, further extending this bullish run dating back to mid-April, and more broadly since October 2023. Fresh all-time highs are certainly exciting, though I'll be watching very closely to see if these indices can continue their upward momentum or if a short-term pullback will be what the doctor ordered. As always, anything can happen in the market, however the case for the bulls continues to appear solid for now.
To the charts
SPY
In the S&P 500 (SPY), we saw continued strong bullish movement. I had been keeping an eye on the $533 level, corresponding to the recent all-time high from mid-May. This level successfully served as support as SPY was able to break out above.
I redrew my trading channel lines on this chart to give a more zoomed-out view. You can think of these diagonal lines in two sets. First, the solid upper and lower green lines are showing a well-defined up trend dating back to 2023, suggesting we may still have quite a bit more headroom to grow into before we reach the upper limit.
Alternatively, I noticed a shorter-term trading channel forming with this week's new high, shown with the dotted green line. While still overall bullish, this dotted line suggests we might see short-term resistance, possibly with movement back towards the well-tested $533 support level.
In this daily chart, I also added the RSI indicator (Relative Strength Index), showing SPY currently at 73. While not extremely overbought, any RSI over 70 typically suggests a bearish headwind due to overbought conditions. These charts make me cautiously bullish for the short term.
Meanwhile, as we discussed in a previous Market News & Outlook post, our bullish "cup and handle" pattern theory is panning out nicely. Let's see if the arrow continues north!
QQQ
The Nasdaq index (QQQ) also showed very bullish movement (maybe too bullish?). This week, the index re-tested the $460 support and then broke out further above. We now find QQQ right at the top of the longer-term upward channel I've drawn, suggesting potential resistance ahead.
RSI is significantly over extended for QQQ, at around 80 currently. With a greater tendency for volatility, the Nasdaq will often push about the RSI 70 overbought guidelines, especially during bullish runs, however QQQ has never gone above 85 in the ETF's 25-year history, so 80 is a pretty significant number to pay attention to.
In the news
Broad-er-com... Maybe looking to borrow some of that NVDA magic, semiconductor chipmaker Broadcom (AVGO) announced during their earnings call this week they will also be undergoing a 10:1 stock split, with shares trading at their new adjusted price starting July 15. Beating analysts expectations for both earnings per share (EPS) and revenue, the stock surged over 17% on Thursday.
Divide and conquer... Speaking of 10:1 stock splits, NDVA investors seemed to enjoy the stock split which went into effect on Monday. The new lower price will allow for a broader range of retail investors like us to access the stock and trade its options.
The 3 Musketeers... Oh by the way, NVDA is now valued at $3.24 trillion. While AAPL re-claimed 2nd place this week on the list of the world's most valuable companies, NVDA is "just" $50 billion shy of 1st place MSFT and $10 billion away from AAPL. The next closest on the list is GOOGL—over $1 trillion away.
Not so quick... Jerome Powell and the Fed Reserve had their every-6-week meeting and shared that they believe the economy continues to show real progress towards inflation. We received inflation data this week suggesting prices continued to cool significantly in May, however the Fed maintained their forecast of just one interest rate cut later this year. Steady as we go!
You got this! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. As always, let us know if you have any questions. 🙌🏻
-Steve & Ben
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