Weekly Market Analysis: Recap and Forecast. The Week of August 26, 2024

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On Friday, Fed Chair Powell delivered his most explicit message yet to Wallstreet that “the time has come for lower interest rates,” prompting them to seek for which parts of the markets still have room to run since many have priced in September rate cut. All major indexes ended Friday near record high, with $SPY 3pts away from its all-time-high. That’s a 10% rebound from its August 5th low. It was short of victory lap for the Fed after 2 years of battling through inflation and uncertainty, for a move toward a soft landing without pushing the economy into a recession. It’s certainly something for the Fed to celebrate and so as for Wallstreet. Now the next thing for them is to focus on the “real economy,” which is the labor market. That’s why we’ve been seeing the market fluctuates big lately on employment data. Therefore, any sharp deterioration in the labor market from now could derail the market rally.

For fixed-income strategy, with the Fed plans to cut rate, investors may want to lock in bond yields while they still can and some mortgage-backed securities in the $9 trillion U.S mortgage bonds with government backing at yields still over 5%.

This week, a major item on the calendar is earning from AI-darling $NVDA, which is due on Wednesday after the bell that could help boost some excitement for other mega-cap tech stocks. According to Wallstreet’s experts, with “growth scare” sentiment exists, Tech earnings this quarter could be the most important tech earnings in year, particularly this week earnings is “the most important week for the stock market this year.” $NVDA earning’s expectation is high and Wallstreet demands $NVDA to carry AI and techs to move higher. In addition, we will hear from several other Fed speakers throughout the week, get revised GDP data for the second quarter and weekly jobless claims on Thursday, and review the personal-consumption expenditures (PCE) price index for July on Friday.

Last week, the market moved exactly how we projected. $SPY broke over $555, it traded to $560 and closed its gap of $560-$563. $QQQ also went over $475 and traded to $485, but it not yet goes into its gap of $488 to $496. Now, they form Cups and Handles on the daily. This week, if $SPY can hold $560 and break over $563, it should retest all time high at $565 and possible break over it and trade to $570 as new ATH. If it fails to $559, it may trade back down to $555 then $550. Similarly, if $QQQ holds $480, it may trade to $485 and break over $488 to go into the gap to $490 and $495-$496. Rejection at $485 again or under $478 it should go back down retest 50sma support $474-$475 again. Under $474, we may see consolidation to $470-$468-$466, then filled the small gap below at $463.50.

We’ll be watching closely where the market going from here after Chair Powell has revealed rate cut is on the table for trades on our $QQQ and Tech stocks; and possible trades on Earnings such as: $NVDA, $CRWD, $CRM, $AFRM, $ADSK, $DELL, $MRVL, and retailers like $ULTA, $LULU, $CHWY and others. Let’s close the last week August strong and with profit “enhancement.” Have a wonderful week everyone. Namaste!!!