Market Update 4/19/2024
Latest recap:
Pullback Of 2024 - April To May [Bounce time?!?!]
Netflix earnings review & next week outlook
Market Sentiment: Fear is still here!
S&P 500 Levels - S: 4980 or 100MA; R: 5060; MY NEW PULLBACK PT: 4808
MY BULL/BEAR RATIO: BEARISH BIAS
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The Pullback Of 2024 - April To May [Bounce time?!?!]
When I was giving a market update yesterday, I was discussing the scenario of a short term relief bounce that could last from intraday into next week.
Looking at the price behaviour yesterday, we can take away two important observations:
The S&P500 has somehow defended its critical 5000 level.
The S&P500 spiked at the opening for the first 2 hours but then faded all gains into the close near the 5000 level
These two observations are a classical characteristic of a market that is rolling over. Unlike in an uptrend where dips are usually bought up to “ride the trend” to the upside, traders do the exact opposite in a downtrend where every rally/spike/bounce is sold in expectations the downtrend to continue.
As of this, there is a high probability the markets to continue its downtrend and to take out support levels that are currently intact.
For example, the 5000 support level of the S&P500 was taken out briefly overnight in the futures market when it was reported by mainstream media that Israel attacked Iran to revenge from the Iranian attacks from last Saturday on Israel. While everbody expected Israel to strike Iranian nuclear facilities, it appears that it was limiting its scale that did not strike, for example, any such kind of facilities.
As soon as it was clear that the strike was “not so powerful” as everyone expected, the initial shock was almost entirely reversed as like nothing else has happened.
And this is just a snapshot analysis from the S&P500 index. Certainly, there were world wide reactions to observe where prices of oil, gold and treasury rates were spiking while Asian markets that were open were tumbling. However, most of them have somehow recovered from the initial shock as well.
Interestingly, Bitcoin, the new liqudity measure, started to spike after the news were out, leaving up the question if central bank interventions were made in order to avoid a more severe damage?
Does this now mean the worst is left behind us and we are racing off to new all time highs? Well, I dont think so due to the current market observations and geopolitical tensions.
The markets still needs to adjust the miserable rate cut outlook (from 6 rate cuts to maybe 0 rate cuts), the spiking prices in oil and rates and in fact the situation in the Middle East. Consequently, we are better off staying on the short side right now (sell the rallies) or completely on the sidelines.
Netflix earnings review & next week outlook
Netflix was reporting earnings in the after hour yesterday. As the first big tech company, it was reporting strong earnings from the past quarter beating estimates but projecting a weaker revenue guidance for the next quarter.
And this is what it is all about to traders - the past is good but the future is more important and based on this, netflix is not more an attractive growth stock to stay invested in. Thats the most important message for short-term traders.
But for long-term investors there is even more bad news: On the one hand, the company finally managed succesfully to crack down on password sharing which resulted in tremendous opportunity costs over the last years. On the other hand however, the paid subscriber growth base is lagging because of that issue. In other words, the password sharing issue from the past was for Netflix a blessing and a curse at the same time - with password sharings, Netflix has become very popular and turned some ghost customers into paid subscribers from time to time. All of that is now gone with the password sharing crackdown. And here is the thing: Because the subscriber growth is a critical key metrics of Netflix business model that Wall Street analysts are following the most, the management announced during the earnings call that “it would no longer report paid memberships starting next year”.
Of course the management gives some reasonable arguments why they decided to do that step but analysts are well aware that this only means the company is expected lower revenues not only for this quarter but maybe even way beyond that to come which is a clear red flag to investors as the growth story may have come to an end!
When looking for key events in the coming week, we have first of all a mass of earnings releases from Tuesday to Thursday around where mega cap stocks like Tesla, Meta and Microsoft will be reporting earnings.
Around the same period, we will get economic data updates on the consumers, manufacturers, inflation and the overall pulse of the economy (GDP). One key metric is going to be the Core PCE inflation report, one week ahead the almighty Fed meeting. Speakiong about the Fed meeting, this is the reason there will be a black out period of Fed speakers next week!
Market Sentiment
Market fear is here and is even getting worse, traders are not more buying dips but rather selling rallies!
Live S&P500 Futures - Pre-Market Analysis
The critical support between 5000-5060 has been cracked and is now acting as resistance.
Although the S&P is currently rallying following the quick and dirty dip to the first pullback level at 4980/100MA, the bearish crossover of the daily 10/50MA and in fact that the rally has not managed to get above 5060 resistance, is suggesting that we may revisit 4980 today or next week again as the bearish momentum is still strong. Dont fall in love to the upside!
By the way, my first pullback target has basically hit - and I believe we have more room to the downside over the next 2-4 weeks, so the next pullback target is near 4808!
Levels to watch S: 4980 or 100MA; R: 5060; MY NEW PULLBACK PT: 4808
Pro Bullish:
New ALL-TIME-HIGHs!Bullish momentumAt the daily 20MAAbove the daily 100MA, 200MA
Above the weekly
10MA, 20MA, 50MA, 100MA, 200MAAbove the monthly 10MA, 20MA, 50MA, 100MA, 200MA
10/20MA daily goldencross10/50MA daily goldencross20/50MA daily goldencross
20/100MA daily goldencross
50/100MA weekly goldencross
Strong Fourth Quarter of 2023
Strong First Quarter of 2024
Strong January Month of 2024
Strong February Month of 2024
Strong March Month of 2024
Price Target: 5,100-5,200 ACHIEVED (Wall Street Consensus for 2024!)
NEW Price Target: 5,500 (Oppenheimer Wall Street Bank March Update)
NEW Price Target: 5,700 (Fundstrat's Tom Lee April Update)
Blow-Off Top: 5,500-6,136
Pro Bearish:
Market is rolling over
Long-term trendline break confirmed!
Weak April month
Wall Street’s 5100 price target for the year 2024 already achieved!
Wall Street’s 5200 price target for the year 2024 already achieved!
Market Sentiment was at EUPHORIA level
Below the daily 10MA
Below the daily 20MA
Below the daily 50MA
10/20MA daily deathcross
10/50MA daily deathcross
Weakening bullish momentum / Bearish momentum
Potential bearish head and shoulders pattern
Geopolitical Risk: Middle East Crisis / Ukraine Crisis
Currency Risk: Japan’s Yen Currency, US-Dollar crisis looming/happening
PULLBACK PT: 4,808-4,980
MY BULL/BEAR RATIO: BEARISH BIAS
Thanks for reading my newsletter!
Have a happy trading day and weekend!
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