by Ben Weiss, for the Call to Leap Team
We made it, everyone! Summer is (unofficially) finally here. I want to wish the CTL community a very safe and sunny holiday weekend. And a heartfelt thank you to all who have served and sacrificed in any way, big or small, to protect our freedom to celebrate the holiday however we like.
Let's take a look at what happened this week on the market and what's coming up...
The market this week
We saw mixed results on the market this week, with the S&P 500 and Nasdaq indices setting new all-time highs. The Magnificent 7, led by NVDA and their blockbuster earnings results, carried much of the weight, while other sectors including Finance, Commercial Services, and Energy broadly lagged behind. The gains, nonetheless, marked the 5th consecutive week of positive trending for the market, even though the Dow Jones closed under $40,000 for the week after finally climbing above that major marker for the first time last week. The S&P 500 registered a fresh high water mark at $5,340 on Thursday (thanks, NVDA!) before settling back down some to close out the week.
By the numbers, the S&P 500 (-0.01%), DOW 30 (-2.30%), Nasdaq (+1.31%), Russell 2000 (-1.28%) showed more indecision than consensus, as each index (except for small cap Russell 2000) is sitting near its respective all-time highs. I'll be watching closely to see if the market can shake off this mixed week and resume marching upward with conviction. As always, anything can happen on the market, however the case for the bulls appears solid thanks to continued strong earnings from many companies across a variety of sectors.
To the charts
SPY
This week's price action on SPY clearly deviated from the last few weeks' clear bullish progression. We saw a very tall candlestick on Thursday following NVDA's outstanding earnings announcement (the yellow arrow). High trading volume at market open carried SPY to a new all-time high in the morning before sharply selling off in the afternoon, leaving NVDA as one of the few remaining winners for the day. In fact, the Dow Jones had its worst day of 2024 on Thursday.
SPY appears to have found upward resistance around the $533 level and has retraced slightly back down to retest the $525 level, which was our all-time high back in March. Often, but not always, firm resistance can turn into firm support, so I'll be interested to see if that $525 level will serve as a solid wall and encourage SPY to climb further upward next week.
QQQ
Unlike on the daily chart for SPY, we saw more convincing signs of a continued bullish trend for QQQ. The Magnificent 7 and Big Tech continue to show strength through earnings season, and lead the broader market in gains. The index broke through the $450 level last week, corresponding to the former all-time high back in March, and has since continued to climb higher towards $460. Take note, however, the RSI or "Relative Strength Index" remains hovering right at the 70 level, hinting at a potential overbought environment if the climb continues higher.
Here we see a direct comparison of SPY vs. QQQ dating back to the larger bull run that kicked off in October 2023. While both indices have made very impressive returns in just over 6 months, we can see the tech-heavy Nasdaq has had the edge on the broader S&P 500 index nearly throughout, except for the heavy, sudden correcting selloff in the first half of April.
In the news
New kid on the block... NVIDIA (symbol: NVDA) may be the newest member of the Magnificent 7 to rise to stardom, but the company isn't bowing down to any of its more established Big Tech peers. The company announced earnings on Wednesday evening—a highly anticipated event—and single-handedly shook the US market on upon open on Thursday morning. NVDA beat earnings per share (EPS) expectations by 9% and revenue expectations by 6%, bringing in over $26 billion in revenue last quarter—a 262% jump from the same quarter last year. Investors cheered these massive results, sending the stock up 12% to over $1060. NVIDIA has now passed Google in market cap size at $2.6 trillion, and stands behind only Apple and Microsoft as the 3rd largest company in the US, by market capitalization.
Big news: The company also announced a 10:1 stock split effective June 10. This is great news for potential new investors who've wanted to buy shares but were unable or unwilling with such a high share price. With the share price closer to $100 starting in a few weeks, trading options on NVDA will also become much more affordable and accessible, as each contract controls 100 shares equaling about a $10,000 investment instead of $100,000.
Check out the chart below showing NVDA's performance compared to the broader S&P 500 index dating back to the start of the recent bull run in October 2023. Talk about explosive growth! In fact, the company's stock has soared 25x in the last 5 years.
Into the Ether... Cryptocurrencies also had an exceptionally strong week following the news that the US Securities & Exchange Commission (SEC) approved the rollout of "spot ETFs" for Ether, which is the second largest cryptocurrency only behind Bitcoin. Following Bitcoin spot ETFs receiving approval in January this year, this new slate of crypto ETFs expands access for investing in Bitcoin and Ether to a broader pool of institution and retail investors, as you no longer have to own the currency itself outright. While this introduction of new funds doesn't make Ether, Bitcoin, or cryptocurrency in general any less speculative or risky of an investment, the crypto sector could see a bullish surge with new buyers knocking at the door.
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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