Weekly Market Analysis: Recap and Forecast. The Week of April 22, 2024

 This is a weekly market recap, forecast and analysis available to subscribers of our Flash Options channel ONLY! Please sign up for Flash Option program or our MyCompass Pro + Flash Option Combo to access to all of our weekly forecast with discounted combo package.

It was another week of huge win for us in this Flash program. Based on last week forecast and our preparation for the move, we were able to capture some big wins throughout the week in $SPY, $SPX, $UNH, $NFLX, and particularly $TSLA and $NVDA were a wonderful ride along with their big drop.

 The markets ended Friday with the S&P 500 and the Nasdaq 100 falling for a 3rd straight week as technology stocks dropped sharply, with $SPY down 5.5% and $QQQ down 7.7% from their peaks on March 28. Equities investors got it right this year that economic growth remained strong, but the problem now is that the sentiment is already priced into stocks, and that yields in bond market were left to catch up. This month, we just saw as yields in the Treasury bond market accelerated has rattled stocks.

 These are a few challenges the stock market is experiencing that point to the scenario of rate stay high for longer:

1-- As bond yields spiked this month on fears that a robust economy is helping to keep inflationary pressures alive. The 2-yr Treasury is trading at about 5% implies just one cut in the fed-funds rate, by a quarter percentage point, over the next 12 months, according to some Wall-Street experts.

2-- So far, the economy has been resilient despite the Fed’s tightening monetary policy to lower inflation. GDP report is coming out on April 25, but all indications are showing that economic growth remains strong and stable.

3-- The initial jobless claims data show no signs of the U.S. labor market weakening. With the U.S. unemployment rate at a historically low level, consumers keep spending, adding to concerns about inflation.

4-- Meanwhile, we notice a rise in commodity prices, which is problematic for the Fed. Price of industrial metals such as copper, precious metals including silver and gold, some agricultural commodities and oil has been climbing up in the last few weeks. This would put upward pressure on inflation.

5-- In January, investors were pricing in 6-7 rate cuts in 2024, but as of last week, the federal-funds futures market are betting that the Fed may only do 1 or 2 rate cuts this year.

 Therefore, rate may stay high until there’s strong disinflationary pressure or weakness in the labor market. But as of now, many experts see that the macroeconomic data would align with the Fed not doing much this year.

 This week, we have Q1-GDP and Initial Jobless Claims on Thursday and PCE on Friday. If first quarter GDP remains strong, initial jobless claims stay low and PCE number is not cooling off, then that would reinforce the idea of rate stay high for longer. Some even consider the idea of the Fed may hike rate. If that idea is entertained by the Fed, then we would see a big spook on the stock market. Also, this week, all eyes may be on Tech Earnings featured by $TSLA, $META, $MSFT and $GOOG. We may have some good trades on these names.

 Last week, $SPY failed to hold $509 and traded passed our projection of $500 to $495. Currently, it is in $495-$500 range and is 3 points from 100sma support at $492. If it fails to hold this level, we may see it traded down to retest its 2022 high at $480 with a minor support at $485-$484. If $SPY can hold $495-$500 range and gets back over $501, it may climb back up to $504-$506. Over $506 to $510 area. $QQQ breached below its 100sma of $422.50 and traded to $415. However, it is temporarily oversold. It is currently in $415-$420 range. Over $422 again, look for it to bounce back up to $425 then $430. If $QQQ cracked below $413 again, it may come down and retest its 2022 high at $408 then $404 and $400.

 We’ll see if the market will bounce in the first couple days of this week from earning hopeful. Whichever way the market moves, we’re and want to be ready for it. Until then, have another great week with full of opportunities. Namaste!!!