Market Update 4/25/2024
Latest recap:
The Pullback Of 2024 - April To May [Bounce time Over?]
Microsoft Earnings & US GDP In The Focus Today
Market Sentiment: Fear remains, so stay cautious!
S&P 500 Levels - S: 5104 or 10MA; R: 5180 or 20MA/50MA
MY BULL/BEAR RATIO: NEUTRAL BIAS
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The Pullback Of 2024 - April To May [Bounce time Over?]
Yesterday the markets continued further to bounce/rally, primarily driven by worse than expected durable goods economic data, especially the core version. The decline in core durable goods, the more important reading, suggests that the slowdown in business acitivities continues.
And as it is for all the “bad economic data”, it was good news for equities as it would suggest the Federal Reserve to think about cutting rates in 2024 again to save the economy from a reccession.
The market pullback that has started 1.5 weeks ago, is also primarily driven by the fear that inflation is coming back according to the latest CPI update that came in higher for the third time in a row in this year. Inflation fears are also resulting in higher rates on the long-term rate end as investors are avoiding to buy bonds.
Because the Fed is not running the typical QE program that would make it to jump in as the last resort buyer to artificially lower long-term rates, the US government is highly dependend on sovereigns outside the US.
Japan which was usually the largest buyer of US treasuries has started to dial back purchasing US bonds since it initiated a monetary policy shift recently from QE to QT! The second largest holder after Japan is China!
Coincidentially, Secretary of State Antony Blinken arrived in China on Wednesday where he is expected to “issue a strong warning to Chinese leaders about the country’s support for Russia’s efforts to ramp up weapons production as the war in Ukraine continues.” So much for the official statement. On the other hand however, I believe he is also holding inofficial talks with the Chinese to ask China to ramp up US treasury purchases again over the short-term.
Current charts of US treasury yields are suggesting that more pain is to come in the near term as rates are about to breakout to 5% - which would be the knockout for equities and would force the Fed to emergency bailout!
Yesterday when Meta reported earnings, the expectations were that the stock will skyrocket based on the stellar earnings it was providing. But I mentioned already yesterday that the stock has run up into its earnings too hard and that all the good news were already priced in. Basically, Meta was the exact opposite of Tesla’s stock performance going into earnings.
While Tesla skyrocketed on bad earnings (priced in) but promising guidance (positive surprise effect from Elon comments), Meta’s stock plummeted in the after hours by 11% despite stellar earnings (priced in). Meta CEO Zuckerberg was giving a lower than expected revenue guidance that send the stock downwards, marking it the end of a growth story over the short-term.
Because Meta is a heavy championship, major indices took a noise dive in the after hours and are seeking for stabilization. The trading sessions by Friday with lot of economic data updates and MICROSOFT earnings will tell if the market will start to resume its pullback or not one week ahead of the Fed meeting!
Microsoft Earnings & US GDP In The Focus Today
Today we will get some more economic updates on the US GDP (Q1/2024), unemployment claims and home sales.
Because equities need “bad news” that forces the Fed to initiate rate cuts, any bad news will be cheered up by the markets when data will be released. Market participants will keep an eye on the US GDP release - as long as the growth rate remains positive, it is not projecting a recession in the first half of 2024 anytime.
At the end of the trading session today, we will get another batch of earning reports but the most important will be that one from mega cap stock and big tech company “MICROSOFT”. Unlike its big tech competitors, Microsoft is the one company that has always delivered outstanding results. Its the company that integrated the famous AI-App “Chat GPT” in its business model and generates recurring income for services on its MS office products, cloud services and hardware sells. Nothing really wrong with this stock, it deserves where it is standing now.
However, the sentiment has shifted in the markets with investors looking now even for the smallest negative thing in an earnings report to decicde whether to dump it or not. Growth stocks have become so overbought that any downtick in revenue guidance will be punished hard, see Meta from yesterday. How goes Microsoft, how goes the stockmarket into Friday!
Market Sentiment
Despite the market has been rallying since 2 trading sessions, there is no sentiment improvement. Traders be aware!
Live S&P500 Futures - Pre-Market Analysis
The current price of the S&P500 is back below the 10MA which is usually a very bearish signal, indicating the market pullback to continue.
If the S&P500 is not able to get back above the 10MA today and if the 20/50MA will deathcross, then we have a clear signal for more selling to come!
As long as there is no clear signal, I remain neutral.
Levels to watch S: 5060 or 10MA; R: 5104 or 10MA
Pro Bullish:
New ALL-TIME-HIGHs!Bullish momentumAt the daily 20MAAbove the daily
10MA, 100MA, 200MAAbove 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
20/50MA daily deathhook
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: NEUTRAL BIAS
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