Weekly Market Analysis: Recap and Forecast. The Week of April 29, 2024

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In last week forecast, we said to embrace the market’s volatility and sure we did. We were prepared and took on the challenge with some great trades on $SPY, $META, $TSLA, $NVDA, and $TQQQ. Although, we could have made much more if we gave more room for volatility as the markets whipsaw. Once again, the magnificent-7 stocks were the main driver of market’s wild-swings. On Thursday, $META plunged after a tepid earnings guidance, then followed by the rally on Friday after GOOG and MSFT reported strong earnings.

Recent market volatility reflects rising concerns about a potential slowdown in corporate earnings growth among the highest-flying tech companies. Along with Tech earnings, inflation is another factor of market whiplash. Prices jumped again in March based on the Fed’s preferred PCE index released Friday, signaling that progress on cooling inflation has stalled. Last month, Jamie Dimon warned in his annual letter to shareholders that benchmark 10yr-Treasury yields could head to 8% or higher, in part due to inflationary pressures. On Friday, Treasury yields notched their fourth straight week of advances after carving out new 2024 highs in the previous session. The yield on the 10-year Treasury was 4.668%, while the policy-sensitive 2-year rate climbed to 4.998%. Higher yields eventually could derail the economy. However, investors seem to focus more on what the Fed will do. Markets are now pricing in only 1 interest rate cut this year, from 6 or 7 rate cuts at the beginning of the year. There probably will be more short-term swings than in a normal market, and likely will continue to be a factor until a clearer path to interest rate cuts emerges.

This week, markets could face more turbulence as the Fed takes center stage and Wall Street gears up to tackle another batch of Big Tech earnings reports. This is the busiest week of 1st quarter earnings season, as more than 175 S&P-500 companies are scheduled to report their earnings. Notable earnings this week are $AMZN, $AAPL, $AMD, $SMCI, $COIN, $SQ, $NET. We should have some good trades out of this group.

Also, we’ll have FOMC interest-rate decision and Chair Powell conference on Wednesday, expected to keep the federal-funds rate unchanged at a target range of 5.25% to 5.50%. At his post meeting press conference, Mr. Powell may describe plans to slow the pace of the Fed’s balance sheet reduction later this year. Then, apart from the Fed, investors will be paying attention to Friday’s jobs reports of non-farm payrolls and unemployment rate in April.

Both $SPY and $QQQ moved exactly like we projected last week. $SPY held $415 and traded to $510. And $QQQ held $414 and traded to $430. Currently, $SPY is in $500 to $510 range and right under its 50sma resistance at $511. If it can get back over this level, look to trade to $514-$415, then $518-$520. If it fails to hold $505, it may trade down to $501-$500, then retest the 100sma support the 2nd times at $495 area. $QQQ is now back above its 100sma of $425. If it can hold $430, look to trade to $436-$437 area where its 50sma resistance is. Over that, it may trade up to $440-$442. Rejected at $436 area or fail to hold $430, it may trade down to $425-$424, its 100sma support, then $420 again.

We’ll welcome another week of Tech earnings and market volatility and look to capture some great profits from these opportunities. Let’s embrace it with our gratefulness. Until then, have yourself a wonderful week of blessings. Namaste!!!