Market Update 4/2/2024
Latest recap:
Stagnation Ade?
Rates, Gold, USD and VIX up
Market Sentiment: Sentiment remains bullish
S&P 500 Levels - S: 5260 or 10MA; R: 5323, BLOW-OFF TOP 2024: 6136
MY BULL/BEAR RATIO: NEUTRAL BIAS
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Stagnation Ade?
Well, talk about a plot twist! This certainly wasn't an April Fools' joke – the ISM Manufacturing PMI, long anticipated to reaffirm the U.S. producers' nearly 1.5-year recessionary trend, completely flipped the script. Clocking in at a robust 50.3, this figure didn't just catch market players off-guard; it sent shockwaves across trading floors, hinting that maybe, just maybe, we've turned a corner and the U.S. economy is shifting back into expansion gear.
But here's the rub for traders: this isn't exactly the news they were crossing their fingers for. It's giving off vibes that the Federal Reserve might have hit the nail on the head, and perhaps we're not staring down the barrel of a hard landing after all. And to add salt to the wound, this survey's thrown a wrench in the popular belief – one that 56% of traders were betting on – of an imminent rate cut come June, especially following Friday's inflation report, which was right on the money.
This week, all eyes are on the jobs report. If job-related data lines up with forecasts or, heaven forbid, underperforms, it could tilt the scales towards early rate cuts, giving the stock market a much-needed lift. However, with the Biden administration at the helm in an election year, there's a sneaking suspicion that the job numbers might get a little... let's say, 'beautified.' Should that happen, those early rate cut hopes could vanish into thin air, taking the stock market's bullish zest with it, just as we're gearing up for earnings season.
Rates, Gold, USD and VIX up
The markets faced a whirlwind day, marked by unexpected turns following the positive manufacturing survey news. Initially, the markets had kicked off with significant gains, but the release of the report at 10 am ET sparked a surprising shift. Instead of bolstering investor confidence, the upbeat manufacturing data seemed to cast a shadow of doubt, leading to a gradual fading of the morning's gains as the day wore on.
What was particularly striking in yesterday's market activity wasn't just the pre-opening spike in futures markets (likely caused by the $152 bn reverse repo drain that boosted the markets/futures) but also the simultaneous surge across multiple indicators at the release of the manufacturing survey. Interest rates spiked, the USD strengthened, and even the VIX – the market's barometer of volatility – jumped. Usually this means no good things to come and that traders have to be ready for more volatility to come in the very near term.
But when looking at the economic release calendar, traders may get an understanding if the spike in rates, the USD and the VIX was real or just a quick reaction to the positive manufacturing survey.
If you ask me, the daily 10y rates chart tells me that things are looking bullish and we are on the cusp of breaking out. If I am right, whatever news is coming in the very short-term, the market may not like it.
The main events in this week will be Fed Chair Powell’s speak on tomorrow and the March’s big payrolls report due Friday.
Market Sentiment
We remain in the greed area moving towards extreme greed. Buyers of dips are still rewarded.
Live S&P500 Futures - Pre-Market Analysis
No ATH overnight at this time!, increasing the odds for a bearish day.
The current price is still in the range between 5260 and 5323 which is certainly not a bearish thing by itself. However, the key is the daily 10MA - right now it appears the 10MA is acting as support. As long as the support holds, the odds are increasing for a bullish day otherwise we are paving the way for a long overdue market pullback.
Warning remains despite ATHs!
The bearish shift is imminent due to seven BEARISH factors conditions:
Wall Streets initial price targets for 2024 have already been achieved!
Market cycle is at extreme euphoria!
Tightening of market conditions by raising rates, oil and the USD
Sharebuyback blackout period until the end of April
Bank of Japan’s ended in March the decade long zero interest rate policy
Regional banking crisis in the US imminent again!
Geopolitical shock events (e.g. Ukraine) that could cause sudden turmoil
Levels to watch S: 5260 or 10MA; R: 5323, BLOW-OFF TOP 2024: 6136
Pro Bullish:
New ALL-TIME-HIGHs!Bullish momentumAbove the daily 20MA, 50MA, 100MA, 200MA
Above the weekly 10MA, 20MA, 50MA, 100MA, 200MA
Above the monthly 10MA, 20MA, 50MA, 100MA, 200MA
10/20MA daily goldencross
20/50MA 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)
Blow-Off Top: 6,136
Pro Bearish:
Market at risk to roll over
Bullish momentum weakening
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 at EUPHORIA level
Below the daily 10MA….?
Below the daily 20MAWeakening bullish momentum / Bearish momentum likelyPotential bearish M-Top / Douple-Top pattern forming on the dailyGeopolitical Risk: Middle East Crisis and Ukraine Crisis
Currency Risk: Japan’s Yen Currency, US-Dollar crisis looming
MY BULL/BEAR RATIO: NEUTRAL BIAS
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