Weekly Report | Sep 08, 2024 + PDD, AFRM, CAVA

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# 32

Stocks declined this week as concerns deepened over the Federal Reserve’s (Fed’s) ability to achieve a soft landing for the economy. August’s jobs report added to those worries, with weaker-than-expected nonfarm payroll numbers and significant downward revisions to the previous two months' data. Although the unemployment rate saw a slight decrease, the overall labor market data indicated further softening, reinforcing market expectations for multiple rate cuts by the Fed later this year. Investors also focused on the Institute for Supply Management’s (ISM’s) Purchasing Managers’ Indexes (PMIs), which showed manufacturing remaining in contraction while services stayed in expansion territory, as well as insights from the Fed’s Beige Book.

Overall Stock Market Heatmap

Sector Performance

Looking Ahead to the Upcoming Week

Looking ahead to next week, investors will closely monitor August’s Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data for confirmation that inflation is continuing to trend downward, as many expect. Other key reports will include consumer sentiment, small business optimism, and consumer credit data.

Economic Events

Earnings Event

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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

• Short Term (1-2 weeks): Bearish. SPY is likely to continue its decline toward $530, with potential further downside to $515.

• Medium Term (1-3 months): Bearish. The break below $550 suggests further weakness unless SPY can quickly recover this level.

• Long Term (3+ months): Neutral. While the long-term trend remains bullish, caution is warranted as the current correction could deepen if $530 fails to hold.

QQQ - Invesco QQQ Trust Series 1

• Short Term (1-2 weeks): Bearish. QQQ is likely to test support around $445, with further downside to $430 if the current momentum continues.

• Medium Term (1-3 months): Bearish. The break below $460 suggests further weakness unless QQQ can quickly recover this level.

• Long Term (3+ months): Neutral. The long-term trend remains bullish, but caution is advised as a deeper correction could unfold if support levels are broken.

IWM - iShares Russell 2000 ETF

• Short Term (1-2 weeks): Bearish. IWM is likely to test support around $205, with further downside to $200 if the current momentum continues.

• Medium Term (1-3 months): Bearish. The break below $212 suggests further weakness unless IWM can quickly recover this level.

• Long Term (3+ months): Neutral to Slightly Bullish. The long-term trend remains bullish, but a break below $205 could shift the outlook.

DIA - SPDR Dow Jones Industrial Average ETF Trust

• Short Term (1-2 weeks): Bearish. DIA is likely to test support around $400, with further downside potential if this level is broken.

• Medium Term (1-3 months): Neutral to Bearish. Continued weakness below $410 suggests a retest of $395 support.

• Long Term (3+ months): Bullish. The long-term trend remains intact as long as the price holds above $395.

VIX - Volatility S&P 500 Index

• Short Term (1-2 weeks): Bullish. VIX is likely to test resistance around $23-25, with a potential spike higher if market fears escalate.

• Medium Term (1-3 months): Bullish. If VIX sustains above $20, expect further volatility spikes toward $30+.

• Long Term (3+ months): Neutral to Bullish. As long as VIX remains above $15, the risk of further volatility spikes remains.

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Stock Watchlist for the Upcoming Week

PDD - PDD Holdings Inc. (Freebie)

Bullish Case:

• Short-term (1-2 weeks): A bounce from the $90 support level could see the stock test resistance at $100-105. If it breaks above this, it could signal a short-term recovery.

• Medium-term (1-3 months): A sustained rally would need to reclaim the $110-120 levels, but strong resistance is likely at these levels due to the previous breakdown.

• Long-term (3+ months): If PDD can hold above the $90 support and start building higher lows, it may eventually re-enter a long-term uptrend. A move back towards $130-150 would require a strong shift in sentiment.

Bearish Case:

• Short-term: If PDD breaks below $90, the stock could quickly fall to the next support at $75, marking a continuation of the downtrend.

• Medium-term: A failure to hold $90 would signal further downside risks, with potential targets in the $70-75 range. The stock is currently in a confirmed downtrend, and without any reversal signals, more downside is likely.

• Long-term: A failure to recover above $100-105 in the coming months would leave the stock vulnerable to further declines toward $60-70 if broader market sentiment deteriorates.

Options Opportunity

• Put Option: Consider buying puts if PDD breaks below $90, targeting a move to $75.

• Call Option: If the stock can reclaim $100-105, calls could target a rally toward $120, though this seems less likely at the moment.