Weekly Market Analysis: Recap and Forecast. The Week of May 13, 2024

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As mentioned last week, employment data didn’t trigger alarm bells; instead, stocks rallied as investors penciled in a “Goldilocks” scenario, with the economy running neither too hot nor too cold, that would be welcomed by Fed policymakers. The markets closed last week just a few points from all-time high. That makes this week Inflation Readings potentially being the year’s most consequential. In March, the CPI edged up to $3.5% yearly rate from 3.2%, with energy and housing cost helped pushing it higher. We keep hearing the Fed says it is data-dependent; in lemon term, every time there is data release, it is a potential market move. We should be ready to capture some great volatility trades.

This week, they will release PPI number first and CPI the next day, which are on Tuesday and Wednesday respectively. Weekly Initial Jobless Claims on Thursday and U.S Leading Economic Indicators on Friday. Most S&P500 companies already reported 1st Quarter earnings, making a 5.4% average growth rate year over year, the highest since 2nd quarter of 2022. Notable earnings this week are $HD, $WMT, $DE, and $BABA, which should tell us how consumers are doing. The Fed is looking for consumer spending and the economy to cool down, besides the job growth reported in previous week.

Like we projected, the $SPY held $512 and traded exactly to $520-$521 area and the $QQQ held $436 and traded to $442 aera. We notice that the VIX is back below 13. It went straight down from over 20 three weeks ago; while both the S&P and the Nasdaq are flirting at their all-time highs. If $SPY can hold $519.50-$520, it may trade to test that high at $523.50-$524.50 area. If it can break over $525, that is a break-out and can trade to $529-$530. If it goes below $519, look for it to trade down to $514-$513 to its 50sma support again. Under that level, may take it down to fill the gap below at $505 area. $QQQ holding over $440, it may retrace back to $446 then $449-$450 to test all-time high. Over $450 is also a break-out for the Nasdaq and we should see $455-$460. If it fails to hold $440, it should trade down to $436, its 50sma support. Under that level, it may go to $427-$425 to fill the gap below.

This week is a very important week with PPI & CPI data retails data. We should have some great opportunities for quick and profitable trades. We’ll focus on the indexes, our FAANG’s and possible $HD & $WMT trades. Come and be prepared! In the meantime, enjoy your Spring and flowers in May. Namaste!!!