Market Trader Report | May 19, 2024 + Stock Watchlist
Market Trader Report | May 19, 2024 + Stock Watchlist
What is included in this week's edition?
WEEKLY REVIEW: An overview of current market standing, fundamental matters with implications upon the market, and general sentiment regarding the major US indices.
LOOKING AHEAD: Key takeaways to consider as we look forward to the upcoming trading week.
MARKETS: A technical review of the major indices and commodities that represent the overall health of the market.
Market Trader by MyntBit
Issue# 20
Stocks continued to rally this week, bolstered by economic data that reinforced expectations for a potential Federal Reserve (Fed) rate cut later this year. The primary influence on market sentiment was the release of April’s Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data. The CPI report showed a gradual slowdown in inflation, while the less favorable PPI data was deemed less significant. Other economic indicators, such as retail sales, the Leading Economic Index, housing starts, building permits, the National Association of Home Builders (NAHB) Housing Market Index, and industrial production, fell short of consensus estimates. Looking ahead to next week, investors will focus on S&P Global’s Purchasing Managers’ Indexes (PMIs) for manufacturing and services. Additional key updates will include the Federal Open Market Committee’s (FOMC’s) May meeting minutes, new and existing home sales, and durable goods orders.
Weekly Market Review
Stocks rallied this week as economic data aligned with market expectations regarding Federal Reserve policy, leading to declines in interest rates. Major indices hit new record highs both intraday and at closing, with the Dow Jones Industrial Average surpassing 40,000 for the first time.
Key economic reports included April’s Consumer Price Index (CPI), which showed year-over-year disinflation, with total CPI decreasing to 3.4% from 3.5% and core CPI to 3.6% from 3.8%. This followed three hotter-than-expected CPI readings and recent reports indicating persistent price pressures, raising concerns about prolonged Fed restrictions.
The April Producer Price Index (PPI) report preceded the CPI data, revealing hotter-than-expected headline inflation, with total PPI up 0.5% month-over-month and core PPI up 0.3%. However, significant downward revisions to the previous month’s readings tempered market reactions.
Fed Chair Powell described the data as "quite mixed" during a discussion at the Foreign Bankers' Association's annual meeting.
Meme stocks saw a resurgence following a post by "Roaring Kitty" on X, his first in three years. GameStop (GME) and AMC Entertainment (AMC) surged 27.2% and 51.2%, respectively, driven by speculative buying.
In corporate news, Dow component Home Depot (HD) faced a negative response to its earnings report due to disappointing sales activity at the home improvement retailer.
Weekly Performance Heatmap
Overall Stock Market Heatmap & Sector Performance
Looking Ahead to the Upcoming Week
The upcoming week's main event will be the release of S&P Global’s May PMIs for the manufacturing and service sectors on Thursday, preceded by the FOMC’s May 1 meeting minutes on Wednesday. Other significant reports include durable goods orders, the finalized May consumer sentiment from the University of Michigan, the Chicago Fed’s National Activity Index, and new and existing home sales. Fed Chair Jerome Powell is also scheduled to speak at the Georgetown Law commencement ceremony.
In the auction space, the U.S. Treasury will issue $32 billion in 10-year Treasury Inflation-Protected Securities (TIPS) and 20-year bonds.
Internationally, China will update its one- and five-year loan prime rates. Japan will release preliminary May Jibun Bank PMIs, along with national CPI, core machine orders, the Tertiary Industry Index, and the trade balance. The Bank of Korea will hold a policy meeting and release data on PPI, business surveys, and consumer confidence. Australia will provide updates on consumer confidence and preliminary May PMIs.
In Europe, the focus will be on the initial release of May PMIs, as well as updates on consumer confidence and the trade balance. The U.K. will publish data on CPI, the Retail Price Index, consumer confidence, retail sales, and house prices. France will report on manufacturing confidence, while Germany will release PPI and finalize first-quarter GDP figures.
Additionally, G7 finance ministers and central bank officials will convene in Italy.
Important Economical & Earnings Events
Markets
Below are the levels for the upcoming week - updates will be provided on X (previously Twitter) throughout the week.
SPY - SPDR S&P 500 ETF Trust
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Support: $525, $520 | Resistance: $530, $535
Given the recent strength and new all-time highs, SPY is likely to continue its upward trend. Based on current momentum and historical data, SPY could reach around $535 in the short term.
QQQ - Invesco QQQ Trust Series 1
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Support: $450 | Resistance: $460
It was a strong week for QQQ and tech stocks as they broke out and reached a new all-time high. QQQ could reach around $460 in the short term.
IWM - iShares Russell 2000 ETF
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Support: $200 | Resistance: $210
IWM and small caps showed strength but have not yet reached a new high for the year, remaining the lagging segment of the market due to persistently high interest rates.
DIA - SPDR Dow Jones Industrial Average ETF Trust
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Support: $395 | Resistance: $400, $405
Dow exhibited strength and reached a new all-time high, indicating a bullish outlook on the longer-term timeframe.
VIX - Volatility S&P 500 Index
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Support: $12 | Resistance: $15, $20
The VIX's suppressed levels below $15 and ending the week under $12 highlight a low volatility environment as we approach the typically calm summer months. This suggests that the market is stable and investors are not expecting significant disruptions in the near term.
Last Week's Watchlist
AAPL - Apple Inc.
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AAPL did break above the upside target. AAPL is likely to continue its gradual rise, potentially reaching towards the upper end of its 52-week range ($199.62) in the coming months.
AMD - Advanced Micro Devices, Inc.
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AMD has shown strong performance recently, driven by positive news and technological advancements. Given the current momentum and market sentiment, AMD could reach around $170 in the short term.
SQ - Block, Inc.
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Square Inc. (SQ) faced a week of choppy trading, indicating indecision among market participants. Monitoring key support and resistance levels, trading volume, and technical indicators will be crucial for understanding potential future movements.
MRVL - Marvell Technology, Inc.
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Marvell Technology Inc. (MRVL) has broken out on the upside, indicating strong bullish momentum. The breakout is supported by high trading volumes and the stock's movement past key resistance levels.
SMCI - Super Micro Computer, Inc.
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SMCI broke on the upside as well.
Stock Watchlist
TSLA - Tesla, Inc.
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Support: $169 - $170 | Resistance: $187 & 198
TSLA is likely to see continued growth in the near term, potentially aiming for the higher end of its recent trading range around $200.
META - Meta Platforms, Inc.
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Support: $460, $427 | Resistance: $482, $510
Meta Platforms Inc. (META) has shown strong bullish momentum, breaking through key resistance levels and supported by high trading volumes. Positive earnings reports and strategic updates have further fueled investor confidence. META is likely to maintain its upward trajectory in the near term, potentially reaching towards the upper end of its 52-week range ($531.49).
ARM - Arm Holdings plc.
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Support: $109, $104 | Resistance: $118, $126
ARM is expected to recover from its recent dip and potentially aim for higher prices, moving towards the upper end of its recent range around $130 in the short to medium term but be careful as the week closed weak.
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