Weekly Report | Aug 11, 2024 + PYPL, ENPH, APP
Weekly Report | Aug 11, 2024 + PYPL, ENPH, APP
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# 30
The recent surge in volatility intensified last week as weaker-than-expected economic data raised concerns about a potential recession, triggering a selloff in equities and driving fixed-income yields sharply lower. Contributing to the volatility was the Bank of Japan's rate hike decision, alongside growing geopolitical tensions and election-related uncertainties. Although the week was light on economic data, investors closely scrutinized the available reports. Notably, a larger-than-expected decline in initial jobless claims helped fuel a market rebound, leading to the S&P 500 Index’s best day in nearly two years. The Institute for Supply Management (ISM) Services PMI showed resilience, while consumer credit data pointed to a more cautious consumer approach.
Overall Stock Market Heatmap
Sector Performance
Looking Ahead to the Upcoming Week
Looking ahead, markets will be focused on next week’s Consumer Price Index (CPI) and Producer Price Index (PPI) inflation reports, along with retail sales, to gauge the economy's trajectory and implications for monetary policy. Other important releases will include consumer sentiment, small business optimism, and various updates related to business and housing.
Economic Events
Earnings Event
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
Bullish Case:
A sustained recovery above 540 would indicate that the SPY could challenge the recent highs around 565.
The significant volume during the recent decline could suggest that much of the selling pressure has been absorbed, allowing for a potential recovery.
Bearish Case:
The "Shooter" patterns on both daily and weekly charts are concerning and suggest that the upside may be limited.
Failure to break above 540 could lead to a retest of the 520 support level, and potentially lower towards 510.
Trend
Short Term (1-2 weeks): Cautiously Bearish. The "Shooter" pattern and the struggle to regain the 540 level suggest potential downside risk. Watching the 520 support is crucial.
Medium Term (1-3 months): Neutral to Bearish. If SPY fails to recover above 540 in the short term, a deeper correction could unfold towards 510 or lower.
Long Term (3+ months): Neutral. The long-term uptrend is still intact, but recent volatility and bearish signals could indicate a period of consolidation or correction before a new leg higher.
QQQ - Invesco QQQ Trust Series 1
Bullish Case:
The presence of a "Hammer" pattern on the daily chart suggests a potential reversal after the recent decline, especially if the price can sustain above the 450 level.
The immediate support around 440 has held, indicating that buyers are stepping in at these levels.
Bearish Case:
The previous "Shooter" patterns and the failure to reclaim the 476 level suggest that there may still be downside risk.
The overall trend on the weekly chart shows that the price is still within a correction phase, with lower highs and lower lows.
Trend
Short Term (1-2 weeks): Cautiously Bullish. The "Hammer" pattern is a positive sign, but the price needs to break and hold above 450 to confirm this reversal. A move back towards 476 is possible if momentum picks up.
Medium Term (1-3 months): Neutral. While the recent bounce is encouraging, the broader trend remains corrective. A break above 476 could shift this view to bullish.
Long Term (3+ months): Neutral to Bullish. The long-term uptrend could resume if the price stabilizes above 476, but the current correction phase needs to play out.
IWM - iShares Russell 2000 ETF
Bullish Case:
If the price can hold above the 200 support level, there is potential for a bounce back towards the 210-215 range, especially if accompanied by increasing volume.
Bearish Case:
The "Shooter" pattern near the highs and the failure to maintain higher levels suggests that there may be further downside risk.
A break below 200 could lead to a sharper decline, possibly towards the next support level around 190.
Trend
Short Term (1-2 weeks): Neutral to Bearish. The immediate trend suggests caution, especially if the 200 support level is breached.
Medium Term (1-3 months): Neutral. The price needs to stabilize above 200 for any meaningful recovery. Otherwise, further downside towards 190 is possible.
Long Term (3+ months): Neutral. The longer-term trend remains uncertain, with potential for both recovery or further declines depending on macroeconomic conditions and market sentiment.
DIA - SPDR Dow Jones Industrial Average ETF Trust
Bullish Case:
The recovery from 390.18 on both daily and weekly charts indicates that this level could act as a strong support.
If the price can sustain above 395 and push towards 400, there is a potential for a gradual recovery towards the 412 resistance level.
Bearish Case:
The "Shooter" pattern near the 431.57 level on the weekly chart suggests that any upside may face significant resistance.
If the price falls back below 390.18, it could signal further downside, potentially towards the 370 level.
Trend
Short Term (1-2 weeks): Neutral to Slightly Bullish. The recent recovery suggests a potential short-term move towards 400-405, but with caution due to the proximity to resistance.
Medium Term (1-3 months): Neutral. The price needs to establish a clear direction, with 390.18 as the key support. A break above 412 would turn the outlook more positive.
Long Term (3+ months): Neutral to Bearish. The longer-term trend faces challenges unless the price can break above 412 convincingly. A failure to hold 390.18 could lead to further declines.
VIX - Volatility S&P 500 Index
Bullish Case:
If the market continues to experience uncertainty or further sell-offs, the VIX could attempt to retest higher levels, particularly around the 25-30 range.
The "Shooter" pattern, however, suggests that the immediate bullish momentum might be fading.
Bearish Case:
The "Shooter" pattern on both daily and weekly charts is a bearish signal, indicating that the VIX may continue to drop towards support levels at 15 or even 10 as market volatility decreases.
If the broader market stabilizes, the VIX is likely to revert to its lower range.
Trend
Short Term (1-2 weeks): Neutral to Bearish. Expect the VIX to stabilize or decline towards 15 if market conditions improve.
Medium Term (1-3 months): Bearish. The VIX might continue to move lower as the market digests the recent volatility spike, returning to more normalized levels.
Long Term (3+ months): Neutral. The VIX typically remains subdued unless there are significant market shocks. A return to the 10-15 range is probable unless new volatility catalysts emerge.
Last Week's Watchlist
CRM - Salesforce, Inc.
CRM broke below the Short Entry level and came close to the downside target. This will be removed from the list.
ORCL - Oracle Co.
ORCL broke below the Short Entry level and came close to the downside target. This will be removed from the list.
AAPL - Apple Inc.
AAPL hit the downside target. This will be removed from the list.
GOOGL - Alphabet Inc.
GOOGL came close to hitting the downside target. This will be removed from the list.
ONON - On Holding AG
ONON came close to hitting the downside target. This will be removed from the list.
Stock Watchlist for the Upcoming Week
PYPL - PayPal Holdings (Freebie)
Bullish Case:
Short-term: A sustained move above $64.72 could lead to a test of the $67 resistance. If the price breaks above $67, the next target could be in the $70-$72 range.
Medium-term: A breakout above $67 on a weekly closing basis could lead to a more sustained rally, potentially targeting the next major resistance around $72.
Long-term: Holding above $58 on pullbacks and breaking $67 could signal the end of the downtrend and the beginning of a new bullish phase.
Bearish Case:
Short-term: If the price fails to break above $67 and reverses, a retest of the $58 support is likely. A break below $58 could lead to further declines.
Medium-term: Continued failure to break above $67 could keep the stock in a sideways to downward trend, particularly if broader market conditions weaken.
Long-term: Sustained weakness and a break below $58 would likely lead to further bearish momentum, possibly targeting the mid-$50 range.
Options Opportunity
Call Option: Consider a call option targeting the $67 resistance, with an expiration of 1-2 months, especially if there is confirmation of a breakout.
Put Option: If the stock fails to break $67 and shows signs of reversal, a put option targeting $58 could be considered.