Weekly Market Analysis: Recap and Forecast. The Week of June 3, 2024

Join us today to lock in Lifetime Membership Discounted price on all subscriptions. Offer ends on Father's Day, June 16. Use Coupon Code: GOOD4LIFE. This weekly market RECAP, FORECAST and ANALYSIS is available to subscribers of our Flash Options channel ONLY! Please sign up for Flash Option program or MyCompass Pro + Flash Option Combo and get access to all of our weekly forecast - A Compass to Navigate the Stock Market!

May is typically the second worst-performing month of the year. However, the S&P 500 index just booked its strongest May performance since 2020. It rose 4.8% in May, its strongest performance for the month since a 5.3% rise in 2009 as stocks were rallying off the financial-crisis low set in March after the financial crisis.  “Momentum leads price, and a strong May increases the odds of a possible summer rally,” according to some Wall-Street experts. One other notable bullishness is the Russell 3000 small cap index $RUA is flirting at its all-time-high. This is the 2nd longest uptrend streak since 1995. The AI hype is not only pushing the Magnificent 7 to uncharted territory, but also pulling other small caps along with it. That’s a good sign for the bull.

In addition, the period from May to November is historically the weakest for the market. Also, we are in an election year; and historically, the best election-year market performances tend to occur when the outcome of the race became relatively clear early in the race. And if it is a close-fought election and the winner is not clear until late in the race could put a damper in the market. As for now, we’re still too early to tell how the 2024 presidential race will be like. In addition, macroeconomic factors including inflation reports, jobs data, remarks by Federal Reserve officials and other events are going to drive market returns.

The Fed is in “public recess” until after the next FOMC meeting concludes on June 12th, so there’s no Fed-speak for traders to worry about for nearly the next two weeks. This week, we have May Manufacturing PMI and ISM on Monday, Service PMI and ISM on Wednesday, and Job and Employment data from Tuesday to Friday. Then CPI and PPI data will be released next week. 1st Quarter earnings season has concluded, though, we have some trades from earnings on $CRWD, $LULU, $DOCU, $DLTR.

Exactly how we projected last week, $SPY failed to reclaim $533 or got rejected at $530, it traded down to $525-$524 again, then below $524 to $520-$519 area. But it gained almost all back just in Friday afternoon. $QQQ failed to hold $455, it traded down to $450-$449, then dropped to $443 before it bounced and closed the week at $450. This week, $SPY is in $525 to $530 range. It needs to reclaim $531 and break over $533 again for a move to new high $535 then possible $539-$540 area. If it cracks below $524, it should trade back down to $520-$518 again, then possible $515 area. $QQQ is currently in $450-$455 range. Over $455, we may see it climbs to retest $460-$461 all-time-high again. If it can go over $461 then $464-$465. If it fails to hold $449, then it may drop back down to $445-$443 then $439-$438 area.

This summer may bring us some surprises, both in the stock market and world events that may have an impact to the financial market. Enjoy the summer but also be prepared to make some good moves on either direction. Until then, have a profitable June and a wonderful summer. Namaste!!!