by Ben Weiss, for the Call to Leap Team
Welcome to June, everyone! Let's take a look at what happened this week in the market and what's coming up...
The market this week
After a couple choppy weeks on the market, we saw a return to the bullish uptrend this week. Most of the Magnificent 7 stocks were up respectable (or massively...looking at you, NVDA). The S&P 500 and Nasdaq set new all-time highs this week, seeming to shake off the uncertainty from last week.
By the numbers, the S&P 500 (+0.94%), DOW 30 (+0.23%), and Nasdaq (+1.59%) gained noticeably throughout the week, while the small-cap Russell 2000 (-2.68%) trended sharply lower as Smart Money seemed to prefer investing in larger companies.
With a fresh set of record highs, I'll be watching very closely to see if the market can continue to accelerate upwards with conviction. As always, anything can happen on the market, however the case for the bulls continues to appear solid.
To the charts
SPY
In the S&P 500 (SPY), we saw a strong bullish reversal from last week, re-establishing the positive momentum dating back to late April. Last week, I had been keeping an eye on the $533 level, corresponding to the recent all-time high from mid-May. SPY was able to pierce this level and then use it in turn as support in the following days. With the new breakout combined with a bullish MACD crossover (circled in yellow), I wouldn't be surprised to see the S&P 500 continue bullish progress next week. Let's see!
As we discussed in last week's Market News & Outlook post, our bullish "cup and handle" pattern theory seems to be panning out nicely.
Lastly, I wanted to sketch a new, more macro set of bullish channel lines that were further confirmed by the new "higher low" established last week. Despite the healthy selloff in April (about -6% correction), the index appears to be obeying the longer-term bullish trend dating way back to November 2023 and continuing northbound.
QQQ
The Nasdaq (QQQ) had a similar bullish reversal this week. Like with SPY in April, we saw a bearish correction from QQQ in April. This week, the index broke out above the previous all-time high at $460, which may also serve as support coming up, helping QQQ to push higher. Let's stay tuned!
Additionally, we saw a bullish crossover on the MACD indicator, where the teal MACD line has crossed above the orange signal line (inside the yellow circle).
Similarly to SPY, I drew longer-term trading channels for QQQ that line up nicely dating back to Q4 2023. Unlike with SPY, it looks like QQQ is currently sitting much higher up within this trading channel. I'm curious to see how much higher QQQ could rise before it finds potential resistance against the top channel bound.
In the news
No cap, megacap... With NVDA's surge in price this week leading up to its highly anticipated 10:1 stock split this weekend, the company surpassed AAPL to become the 2nd-most valuable company in the US by market capitalize, sitting above $3 trillion in market value. Crazy! 🤯
Take it down a notch, please... The European Central Bank cut interest rates on the continent for the first time since 2019, lowering from 4% to 3.75%. The bank's officials felt that their economy has made sufficient progress towards tackling high inflation to begin easing interest rates. This could act as a stimulus for the region's stock market as hoarding cash becomes a bit less worthwhile. Could the US be next to lower rates later this year? Many experts believe the second half of 2024 could bring one or maybe even two rate cuts from the US Federal Reserve.
Now hiring... US jobs data was announced on Friday, with the 272,000 additional jobs coming up much higher or "hotter" than anticipated. Hot jobs reports are often a confusing double-edged sword: we want the economy to be prosperous and growing, demanding new jobs to be filled. However, adding too many jobs too quickly can suggest a hotter-than-desired economic climate where inflation could persist longer than the Federal Reserve would prefer. Further complicating the equation, unemployment came in higher than last month, ticking up to 4%.
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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