Weekly Market Analysis: Recap and Forecast. The Week of March 25, 2024

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Thank you everyone for giving me a week off to hide out from Powell’s spooky podium. Although, it turns out he is Wall Street hero now, after last week dovish press conference. Investors no longer seem worried about the Fed keeping interest rates “higher for longer,” despite a strong run up in equities and other risky assets since last November. All major U.S. stock indexes posted their biggest weekly gains in months on Friday, 2 days after Fed Chairman Powell kept three rate cuts on the table for this year but spelled out a cautious path out of restrictive monetary policy territory.

As mentioned last week that this could be a pivotal week for the market, and we may see the trend will set in from April to the fall. A resilient U.S. economy hopes for interest rate cuts and the craze in artificial intelligence stocks have fueled the market rally. The past five years, the S&P 500 index booked 21 declines of 5% or more and five corrections of at least 10%, according to Dow Jones Market Data. This year so far, we have not seen either category yet. Is this a higher for longer, and stronger for longer market? It’s remained to be seen. For now, we’ll go with our theory of the pivotal time as mentioned above.

This week is a short week with market closes on Friday in observance of Good Friday. And the BEA will release the PCE report for February, the Fed’s preferred measure of inflation. Thus, we won’t see the market reaction to PCE numbers until Monday. Also, $FDX delivered surprise earning resulted from cost cuts and expected 2025 margin growth. So for the time being supplies and product movement are stable, at least, there’s no sign of macro effect for now.

The $SPY and $QQQ closed the week at new high, just right above our weekly PT’s of $520 and $445 respectively, after breaking to new high then pulled back. Now, $SPY wants to hold above $520 and trade to $524-$525. Over $525, we may see $529-$531. Under $519, it may pullback down to $516-$515. $QQQ if holding over $444-$445, it can trade to $449-$452 then $455-$457. Under $444 to $440-$439.

In addition, if the consensus is rate cuts are coming and it seems lately that no economic data has been a catalyst for selloffs, at least nothing yet, then stocks may continue to climb the “ladder of FOMO.” We may see the rotation into Mid and Small caps stocks, including the Russell 2000. Just a heads up. In the meantime, have an enjoyable short trading week and make some green. Namaste!