KEY
TAKEAWAYS
- Dow Jones Industrial Common closes above 40,000 for the primary time
- Commodities similar to silver, copper, and gold are transferring larger
- Volatility stays low, indicating buyers are complacent
It made it! The Dow Jones Industrial Common ($INDU) closed above 40,000 for the primary time, one other report shut for the index. What an thrilling week!
And most of that pleasure got here in the previous couple of minutes of the buying and selling week. We’ll take it. After a number of weeks of torpid exercise within the inventory market, the optimism is again.
CHART 1. DOW JONES INDUSTRIAL AVERAGE CLOSES ABOVE 40,000. Buyers might be searching for the upside momentum to proceed subsequent week.Chart supply: StockCharts.com. For academic functions.
A Recap of Inventory Market Exercise
The inventory market regained its mojo on Wednesday, when inflation knowledge got here in cooler than anticipated. It then took a little bit of a breather on Thursday and, for probably the most half, on Friday, however the previous couple of minutes of the buying and selling day did reinject some optimism, which is uncommon for end-of-week buying and selling. The inventory market bought what it needed, reacted, after which determined to get a head begin on the weekend.
Subsequent week, buyers might be targeted on searching for upside follow-through. Now that rate of interest hikes are off the desk and it appears to be like like cuts will occur someday this 12 months, buyers have renewed their confidence within the inventory market.
The CBOE Volatility Index ($VIX) continues to be low, additional confirming that buyers are complacent. $VIX is near its December 2023 lows, when buyers’ confidence in equities reignited following the October 2023 lows.
CHART 2. DAILY CHART OF THE VIX. The VIX is near its December lows, coinciding with the time buyers renewed their confidence after the pullback in October.Chart supply: StockCharts.com. For academic functions.
Whereas equities have trended towards the upside, commodities have additionally damaged out. The each day chart of the Invesco DB Commodity Monitoring Index Fund (DBC) reveals the index has damaged out above a downward trending channel, suggesting that the pullback in commodities could also be behind us.
Commodities are inflation-sensitive, and, on condition that inflation could also be cooling, commodities could also be breaking out of the flag sample you see within the chart under.
CHART 3. COMMODITIES BREAKING OUT. Commodities are additionally exhibiting energy as they escape from a flag sample.Chart supply: StockCharts.com. For academic functions.
Copper and silver costs soared on Friday, and gold appears to be like prefer it’s on its solution to revisit its all-time highs. Silver noticed a major breakout on Friday. It is value trying on the chart of iShares Silver Belief ETF (SLV) to get a way of the breakout magnitude.
CHART 4. SILVER SEES SIGNIFICANT BREAKOUT. The iShares Silver Belief ETF (SLV) has damaged above its 2021 excessive. How a lot larger can it go? The following resistance is at round $35.Chart supply: StockCharts.com. For academic functions.
SLV has damaged out above its February 2021 excessive. The worth motion on Friday means that value will proceed larger subsequent week. The following resistance stage may very well be the 2012 highs, which is round $35, so there’s room for upside motion in SLV. If you wish to get in on the silver rally, opening a place in SLV could also be one thing to think about. Nevertheless, you’ll want to establish your cease losses earlier than getting into a commerce. Though SLV appears poised to maneuver larger, something can reverse the transfer. Ensure you’re comfy with the danger/reward ratios.
SLV is nicely above its 20-week exponential transferring common, and the Proportion Value Oscillator (PPO) reveals that momentum is rising. If the pattern continues, then SLV might see a powerful rally. It has been some time since silver bought some love.
And There’s NVIDIA
Subsequent week ought to be fascinating. The spotlight is NVIDIA’s earnings—the corporate reviews on Wednesday after the shut. Analysts estimate earnings to return in at $5.57 and revenues at $24.57 billion. If NVIDIA (NVDA) beats, it may very well be an enormous catalyst for the markets to maneuver larger. However the fear can be if NVDA misses expectations. A draw back transfer can be of a a lot larger magnitude than an upside transfer. NVDA has had a major impression on the inventory market’s efficiency, so nearly each investor might be tuned in to the information after the shut on Wednesday.
Finish-of-Week Wrap-Up
- S&P 500 closes up 0.12% at 5,303.27, Dow Jones Industrial Common up 0.34% at 40,003.59; Nasdaq Composite down 0.07% at 16,685.97
- $VIX down 3.46% at 11.99
- Greatest performing sector for the week: Expertise
- Worst performing sector for the week: Industrials
- Prime 5 Giant Cap SCTR shares: MicroStrategy Inc. (MSTR); Vistra Vitality Corp. (VST); Tremendous Micro Pc, Inc. (SMCI); Robinhood Markets (HOOD); Vertiv Holdings (VRT)
On the Radar Subsequent Week
- Earnings from Nvidia (NVDA)
- Fed speeches
- April Present Dwelling Gross sales
- New Dwelling Gross sales
- Might Michigan Shopper Sentiment
Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.
Jayanthi Gopalakrishnan is Director of Web site Content material at StockCharts.com. She spends her time developing with content material methods, delivering content material to teach merchants and buyers, and discovering methods to make technical evaluation enjoyable. Jayanthi was Managing Editor at T3 Customized, a content material advertising company for monetary manufacturers. Previous to that, she was Managing Editor of Technical Evaluation of Shares & Commodities journal for 15+ years.
Be taught Extra
