EB Weekly Market Recap Video
If you have not seen our newest weekend recording, it is now accessible HERE at YouTube.com.
Pattern – EB Weekly Market Report
It is a pattern of our Weekly Market Report that’s despatched to EB members each Monday. We additionally present a Each day Market Report (DMR) each Tuesday by means of Thursday and a fast market replace on Friday, however this Weekly Market Report is designed with the long-term in thoughts. I talk about many ideas on this report from week to week, and lots of of them have been the alerts we have used to maintain our members on the proper aspect of the marketplace for the previous a number of years, together with our suggestion to get out of the market early in 2022, simply earlier than the 28% cyclical bear market decline.
We even have a BIG members-only occasion tomorrow, discussing the present state of the market and what to anticipate over the following a number of months. Please contemplate signing up for our 30-day FREE trial and be a part of us for tomorrow evening’s occasion. You will get extra info and register for this free occasion by CLICKING HERE. Both approach, get pleasure from this Weekly Market Report.
Weekly Market Recap
Main Indices
Small and mid caps confirmed management final week. In actual fact, the IWM is outperforming all of our different main indices over the previous month and is second solely to mid caps over the previous 3 months. If we’re beginning one other upside transfer now, it’s going to be very attention-grabbing to see if small caps proceed to guide or if cash rotates again in direction of these massive cap development names.
Sectors
Communication companies (XLC) wasn’t the highest performer final week, however technically, the XLC does seem to have damaged its latest downtrend:
The value motion and PPO each look bullish and we noticed the RSI bounce off of the important thing 40 help stage. The bears are hoping that (1) the XLC fails to interrupt above short-term value resistance close to 81, and (2) the RSI fails to interrupt again up above 60. I consider neither will happen, however we have now moved right into a extra cautious historic interval, so we have to stay goal.
High 10 Industries Final Week
Do not rely out financials simply but. The total line insurance coverage ($DJUSIF) group is breaking out of a cup with deal with at present:
Backside 10 Industries Final Week
Client finance ($DJUSSF) did not have an excellent week final week, however was it the completion of an A-B-C correction sample? In that case, the 20-day EMA must be cleared to verify the potential begin of one other uptrend.:
The persistent destructive divergence indicated a attainable lack of momentum, which suggests the elevated probability of a decline. We have seen that decline fairly clearly.
High 10 Shares – S&P 500/NASDAQ 100
Backside 10 Shares – S&P 500/NASDAQ 100
Large Image
The month-to-month PPO continues to push increased and away from centerline help. That is indicative and in line with how the S&P 500 behaves throughout secular bull markets. Additionally, word that RSI 40 help checks have been profitable for the reason that monetary disaster in 2008/2009. That is one other signal that the secular bull market stays alive and kicking.
Each our 10-year and 20-year fee of change (ROC) panels present that highs throughout this secular bull market haven’t come near earlier secular bull market highs. It is telling me we nonetheless have a lot additional to go.
Sentiment
Let’s revisit the 253-day SMA of the fairness solely put name ratio ($CPCE). I wish to refresh everybody’s reminiscence as to what occurs to the S&P 500 when this sentiment indicator tops with readings exhibiting EXTREME worry:
Wager towards this chart at your individual threat. Personally, I consider that sentiment performs a a lot larger function in inventory market path than most folk give it credit score for. Each single main S&P 500 advance throughout this secular bull market has occurred with a major prime within the 253-day SMA of the CPCE. When this shifting common is falling, you wish to be on the lengthy aspect…..PERIOD! This does not imply there aren’t pullbacks. There merely aren’t pullbacks that morph into bear markets.
Rotation/Intermarket Evaluation
This is the most recent have a look at our key intraday ratios as we observe the place the cash is touring on an INTRADAY foundation (ignoring gaps):
QQQ:SPY
First, a fast reminder. Whereas this chart is known as “@SPYQQQ”, it is truly the QQQ divided by the SPY. When this line is rising, it means the QQQ is outperforming the SPY (“threat on” setting). When it is falling, it means the SPY is outperforming the QQQ (“threat off” setting). We have clearly been in a downtrend as cash has rotated in direction of defensive- and value-oriented shares. The previous few days, this has modified and you’ll see the strains turning increased. The important thing to a sustainable upside transfer would be the continuation of this ratio to the upside.
IWM:QQQ
On an intraday foundation, small caps (IWM) have carried out properly over the previous a number of months. However gaps haven’t labored of their favor, which is why small caps have trailed the QQQ and SPY year-to-date and over the previous 6 months. In my view, the gaps are disguising the underlying strengthening of the IWM. Time will inform if I am appropriate or not.
XLY:XLP
The XLY hasn’t carried out nice vs. the XLP, however opening gaps are masking the true image, which I consider is that discretionary shares are secure relative to staples shares – at the very least in 2024 to this point.
Key Sector/Trade Charts
Maybe the most important trade group chart to indicate you proper now’s semiconductors ($DJUSSC). We all know this group can mild a fireplace underneath a secular bull market rally and we’re seeing a breakout of the latest downtrend/consolidation:
Nothing ensures us increased costs forward, but when I had my choose of 1 trade group to interrupt out, it would be this one. The PPO is now testing its centerline from beneath, which generally is a problem. However we have already seen a transfer above key trendline resistance and each shifting averages. Technical enchancment is obvious.
Commerce Setup
Since starting this Weekly Market Report in early September, I’ve mentioned the long-term commerce candidates beneath that I actually like. Typically, these shares have glorious long-term observe data and lots of pay good dividends that largely develop yearly. Solely in very particular circumstances (exceptions) would I contemplate a long-term entry right into a inventory that has a poor or restricted long-term observe document:
- JPM
- BA
- FFIV
- MA
- GS
- FDX
- AAPL
- CHRW
- JBHT
- STX
- HSY
- DIS
- MSCI
- SBUX
- KRE
- ED
- AJG
Needless to say our Weekly Market Reviews favor these extra within the long-term market image. Due to this fact, the record of shares above are shares that we consider are safer (however nothing is ever 100% secure) to personal with the long-term in thoughts. Almost all the things else we do at EarningsBeats.com favors short-term momentum buying and selling, so I needed to offer a proof of what we’re doing with this record.
I haven’t got any additions to record “long-term” record right now.
Trying Forward
Upcoming Earnings:
Q1 earnings are underway and accelerating. I’ve recognized what I consider are key firms that may report this week, with their respective market caps in parenthesis. That is NOT a listing of ALL firms reporting this week, so please you’ll want to test for earnings of any firms that you just personal or add. Any firms in BOLD signify shares in considered one of our Portfolios:
- Monday: VRTX ($103 billion), PLTR ($50 billion), MCHP ($48 billion)
- Tuesday: DIS ($207 billion), ANET ($82 billion), TDG ($71 billion)
- Wednesday: UBER ($143 billion), ABNB ($102 billion), SHOP ($93 billion)
- Thursday: RBLX ($24 billion), AKAM ($15 billion)
- Friday: ENB ($77 billion)
Key Financial Reviews:
- Monday: None
- Tuesday: None
- Wednesday: None
- Thursday: Preliminary jobless claims
- Friday: Might shopper sentiment
Historic Knowledge
I am a real inventory market historian. I’m completely PASSIONATE about finding out inventory market historical past to offer us extra clues about possible inventory market path and potential sectors/industries/shares to commerce. Whereas I do not use historical past as a main indicator, I am at all times very conscious of it as a secondary indicator. I like it when historical past strains up with my technical alerts, offering me far more confidence to make explicit trades.
Beneath you will discover the following two weeks of historic knowledge and tendencies throughout the three key indices that I observe most carefully:
S&P 500 (since 1950)
- Might 6: -35.12%
- Might 7: -37.30%
- Might 8: +58.06%
- Might 9: -41.62%
- Might 10: -13.57%
- Might 11: -50.36%
- Might 12: +18.78%
- Might 13: -7.49%
- Might 14: -20.15%
- Might 15: +9.23%
- Might 16: +11.47%
- Might 17: -18.79%
- Might 18: -13.84%
- Might 19: -25.73%
NASDAQ (since 1971)
- Might 6: -57.65%
- Might 7: -58.48%
- Might 8: +76.53%
- Might 9: -53.65%
- Might 10: -17.03%
- Might 11: -19.11%
- Might 12: +33.12%
- Might 13: -16.95%
- Might 14: +13.42%
- Might 15: +35.21%
- Might 16: +52.22%
- Might 17: -36.99%
- Might 18: -9.09%
- Might 19: -42.21%
Russell 2000 (since 1987)
- Might 6: -85.09%
- Might 7: -95.97%
- Might 8: +77.52%
- Might 9: -36.57%
- Might 10: +1.29%
- Might 11: -50.24%
- Might 12: +0.46%
- Might 13: -84.43%
- Might 14: +10.37%
- Might 15: +29.02%
- Might 16: +20.18%
- Might 17: -23.07%
- Might 18: +82.33%
- Might 19: -41.25%
The S&P 500 knowledge dates again to 1950, whereas the NASDAQ and Russell 2000 info date again to 1971 and 1987, respectively.
This is a fast historic evaluation of the S&P 500 throughout Might since 1950:
- Might 1-5: +29.94%
- Might 6-25: -12.10%
- Might 26-31: +37.27%
Ultimate Ideas
The bulls took benefit of a bullish historic week (Might 1-5) and we noticed a pleasant rally to shut out the week. We’re now significantly better positioned to deal with any short-term promoting and, fairly truthfully, aren’t removed from breaking out on a few main indices/sectors/trade teams. I really like the VIX falling again down beneath 14 after bouncing over 16 on Wednesday and Thursday. In fact, the VIX topped above 19.50 in April, remaining just under what I contemplate to be a key stage of 20.
Listed here are a number of issues to contemplate within the week forward:
- Financial Reviews. There are solely two significant financial reviews out all week – preliminary jobless claims and shopper sentiment and each of these shall be out within the second half of the week.
- Earnings. There are fewer and fewer market-moving earnings reviews out this week. ABNB and UBER are massive caps and can give us a glance into the well being of the patron, however in any other case we’ll be getting a lot of small cap and mid cap firms quarterly reviews.
- Curiosity Charges: The ten-year treasury yield ($TNX) seemingly topped final week. It had an opportunity to interrupt above a key space of yield resistance from 4.65%-4.70%. It did make one shut barely above 4.70%, however that now seems to have been a false breakout. The query this week, after dropping 20-day EMA help final week, is can the TNX cling onto key yield help from 4.39% all the way down to 4.30%. If the TNX continues falling, it might be good news for the small cap IWM.
- Semiconductors ($DJUSSC): In my view, that is an important trade group throughout a secular bull market and it seems the group is breaking above a 2-month downtrend line. Let’s examine if we affirm this breakout, or if it seems to be a head pretend.
- Commodities. Can power (XLE) maintain 50-day SMA help? Can gold ($GOLD) soar again above its 20-day EMA? Can supplies (XLB) get previous final Wednesday’s excessive and shut there?
- Progress vs. Worth. Progress shares have been downtrending vs. worth shares for a lot of the previous 2-3 months, however Might by means of August is traditionally the very best 4-month interval of the complete 12 months for development shares relative to worth.
- Historical past. We actually have simply began at present a difficult historic interval for shares, from Might sixth by means of Might twenty fifth.
Suggestions
If you would like to share your ideas on our Weekly Market Report, optimistic or destructive, you’ll be able to attain us at “help@earningsbeats.com”.
Completely satisfied buying and selling!
Tom
