Market Update 4/29/2024
Latest recap:
The Pullback Of 2024 - April To May [Bounce time!]
Crazy Week Ahead: Month-End Closing & Fed meeting!
Japan’s Currency Interventions Are Causing Higher U.S. Rates!
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!]
April month will be ending on Tuesday so we are turning into May with the Fed press release and conference on Wednesday!
Traders, this week wont be for anyone - there will be so much volatility spikes coming into both sides that may cause maximum confussion along with the unnormal mass of data updates (see section “Crazy Week Ahead: Month-End Closing & Fed meeting!”).
So what is in the cards now and how should traders position themselves? During Fed weeks, traders usually are doing better when staying on the sidelines until the Fed Day is out of the way. This would mean to stay on the sidelines until Thursday morning.
If you cannot wait until Thursday then do at least until the Fed Day on Wednesday - from the market opening until the close comes a lot of action due to the earnings effect from Tuesday (at the opening) and the earnings effect for the releses on Wednesday (after the bell).
And for the traders that do not want to wait at all, there is certainly a chance of the markets moving higher by the Fed Day and month-end closing. But remember, we do not have a clear signal now but some possible scenarious that i have outlined in the “Pre-Market Analysis” section.
Japan’s Currency Interventions Are Causing Higher U.S. Rates
Even though the US market provides a mass of catalysts in this week, we have to pay attention to overseas events, especially from the one country that is holding up to $1.2 trillion of US Treasuries: JAPAN!
And it looks like Japan’s YEN currency is about to collapse!
Why is this important to the US market?
Well, Japan recently shifted its monetary policy from a decades long of negtive interest rates (hardcore stimulus) to a small increase into the possitive area to fight rising inflation. The problem: The increase, even though its not more negative, is so small that traders/investors believe Japan’s central bank is not doing enough to fight inflation and because of this are escaping the YEN currency - the BoJ on the other hand cannot effort to increase it even more as it would implode the economy.
But however, the foreign investor effect of escaping the YEN currency is basically having the same effect as if the BoJ would do more rate hikes as the YEN is strenghtening and because of this risking to chooke its own economy.
Thats why we often see news that the YEN often softens when it was reported that the YEN started to spike as the central bank of Japan (BoJ) was intervening like this morning.
And here is the problem to the US markets: When the BoJ needs to intervene its YEN currency, it must sell US dollar, so US treasuries, to buy yen, so Japan treasuries. And this my friends, is causing always rates in the US to spike!
When rates do spike, it is a bad thing for US equities, especially when inflation roars back as the real rate is getting closer to 3% (nominal rate on the 10y minus inflation) that often signals a dramatic crash is coming - something that has been also outlined by the famous Wall Street Analyst “Hartnett” from Bank of America!
Crazy Week Ahead: Month-End Closing & Fed meeting!
Its one of those week where market participants will get everything the market has to offer within a single trading week, starting from economic data updates on the consumer to labor market updates and manufacturing performance.
On top of that we also have the Fed meeting that will be ending in the famous Fed day on Wednesday with the press release at 2pm and press conference with Fed Chair Jerome Powell at 2:30pm.
Lets say it so - the outcome of the Fed Day is going to lead the market direction over the next 5-6 weeks (Fed meeting in June 2024).
Besides masss of economic updates and the Fed meeting, almost 1,000 earnings will be reported in this week as well with the highest concentration between Tuesday and Thursday.
Surely, there are a tons of companies that we could discuss about but if we were about to chose the top 2, then its going to be the Amazon earnings Tuesday and Apple earnings on Thursday.
In this week, majority of big tech companies will report earnings which could potentially result into another leg lower (pullback resumption) as major short-term catalysts are out of the way then.
Market Sentiment
Despite the recent market bounce, traders remain skeptical!
Live S&P500 Futures - Pre-Market Analysis
The current price of the S&P500 is between the 10MA and the 20/50MA.
Although we are experiencing the resurrection of the bullish momentum, we are still moving in a downtrend channel and recently triggered a bearish deathcross on the 20/50MA which are acting as resistance.
In other words, everything is now possible: In my opinion, the major resistance level is now at 5180, slightly above the 20/50MA. If the S&P manage to get above the 5180 resistance, we are likely off to new ATHs.
However, if we are failing to get above it and get rejected, we are likely resuming with the market pullback in the downtrend channel.
Levels to watch S: 5104 or 10MA; R: 5180 or 20MA/50MA
Pro Bullish:
New ALL-TIME-HIGHs!Bullish momentumAbove the daily 10MA,
20MA, 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
Bearish downtrend channel
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 10MABelow the weekly 10MA
Below the daily 20MA
Below the daily 50MA
10/20MA daily deathcross
10/50MA daily deathcross
20/50MA daily deathcross
Weakening bullish momentum / Bearish momentumPotential 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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Have a happy trading day!
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