Market Update 7/24/2024
Latest recap:
Sector Rotation & Big Tech Earnings Impact
Flash PMI Updates & More Earnings
Market Sentiment: Neutral Position Remains But Could Fall Too!
S&P 500 Levels - S: 5500 or 50MA; R: 5600 or 20MA
MY BULL/BEAR RATIO: BEARISH BIAS
Blog Update:
Dear Valued Subscribers,
I hope you are all doing well. I wanted to share an important update with you regarding the TradeWiserMarkets blog updates. Due to an increase in my investment service activities, I am finding it challenging to keep up with providing daily free updates.
Going forward, free updates will remain available but will be posted less frequently and primarily during key market events - and I am sure we will get a lot by end of this year! This change will allow me to focus on delivering high-quality content that truly matters.
I appreciate your understanding and support during this transition. Your engagement means a lot to me, and I’m committed to continuing to provide valuable insights to help you navigate the markets.
Thank you for being part of this journey.
Warm regards,
Oliver Reiche
Here are my swing trade ideas for today:
LONG: UUP 0.00%↑
SHORT QQQ 0.00%↑ SMCI 0.00%↑
Sector Rotation & Big Tech Earnings Impact
We are seeing a sector rotation as institutional investors move out of technology stocks and into value stocks, such as basic materials. This shift suggests that Wall Street is preparing for potential turbulence, with an expected Federal Reserve rate cut in September. Such rotations often signal weaker tech earnings but stronger basic material earnings, as evidenced by recent updates from Tesla and Google. The anticipation of the rate cut has supported a market rally, especially in rate-sensitive sectors like small caps and industrials.
Tesla's earnings report missed expectations across the board, with revenue, margins, and net income all falling short. CEO Elon Musk's less optimistic guidance reflects the challenges of high inflation and an impending recession. In this environment, consumer discretionary stocks like Tesla are particularly vulnerable as consumers prioritize essential spending.
Alphabet, also known as Google, had mixed results. They beat top and bottom-line expectations but missed revenue targets for YouTube. This decline in YouTube revenues is a warning sign to investors that the growth story for Alphabet may be shifting. This could accelerate sector rotation out of high-growth tech stocks into undervalued sectors.
Prior to these two mega cap stock earnings, we already had Netflix’s recent earnings showed positive results in subscriber growth, thanks to measures like addressing password sharing and introducing ads. This reinvention appears to be working well for now.
More than 20% of S&P 500 companies have reported their second-quarter earnings, with 80% topping expectations, according to FactSet data.
Overall, the market lacks momentum, and the NASDAQ is seeing a decline due to the sector rotation and mixed earnings reports. Next week will be crucial with the Federal Reserve meeting on July 31st and earnings reports from Amazon, Apple, Microsoft, and Meta, which will be critical in determining the market’s direction.
Flash PMI Updates & More Earnings
Today, we will receive Flash PMI updates on manufacturing and services, which will provide insight into how producers and consumers in the U.S. are faring. This data serves as another indication for the Federal Reserve, one week prior to their meeting, to assess whether the economy is performing well or continuing to deteriorate due to high inflation and a weakening economic outlook. Additionally, there will be other earnings reports today, but none from the major tech sector, meaning they will have less impact on overall market performance.
Market Sentiment
Live S&P500 Futures - Pre-Market Analysis
As of now, the S&P 500 Futures are trading below both the nine-day and 20-day moving averages, indicating a bearish short-term outlook. The impending death cross between the 9MA and 20MA suggests potential acceleration to the downside.
Additionally, a bear flag pattern is forming and playing out, which could push the target price near the 50MA (approximately 5,460) by the end of next week, with current price levels around 5,560. Support may be found at the 50MA level, but several indicators (CRSI, MACD, stochastic slow, and TTM squeeze) are pointing to further downside as bearish momentum gains strength and the RSI weakens.
On a daily timeframe, a bearish head and shoulders pattern is forming, suggesting that even if support is found near the 50MA or the 5,500 level, there is potential for further decline over the next few months. Overall, the outlook for today and into next week appears very bearish. Traders should be aware of these signals and prepare accordingly.
Levels to watch S: 5500 or 50MA; R: 5600 or 20MA
Pro Bullish:
New ALL-TIME-HIGHs!Bullish momentumAbove the daily
9MA, 20MA, 50MA, 100MA, 200MAAbove the weekly 9MA, 20MA, 50MA, 100MA, 200MA
Above the monthly 9MA, 20MA, 50MA, 100MA, 200MA
9/20MA daily goldencross
9/50MA 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 Second Quarter of 2024
Price Target: 5,100-5,200 ACHIEVED (Wall Street Consensus for 2024!)
Price Target: 5,500 ACHIEVED (Oppenheimer Wall Street Bank)
Price Target: 5,600 ACHIEVED (Goldman Sachs Wall Street Bank)
Price Target: 5,700 ACHIEVED (Fundstrat's Tom Lee)
Blow-Off Top Target: 6,136
Pro Bearish:
Potential of a BEARISH “DOUBLE-TOP"/M-TOP” reaction
Potential Bearish Head and Shoulders pattern
Slowing bullish momentum / Bearish momentum
Weekly negative divergence
Unprecedented market breadth with more than 35% concentration in mega cap stocks
Market is rolling over (likely!)
Bearish downtrend channel / Bear Flag
Long-term trendline break confirmed!
Wall Street’s 5100 price target for the year 2024 already achieved!
Wall Street’s 5200 price target for the year 2024 already achieved!
Wall Street’s 5500 price target for the year 2024 already achieved!
Wall Street’s 5600 price target for the year 2024 already achieved!
Wall Street’s 5700 price target for the year 2024 already achieved!
Market sentiment was at euphoria levels in March/June, and now it has reached similar levels again in May and July.
Below the weekly 9MABelow the daily 9MA, 20MA,
50MA9/20MA daily deathcross9/50MA daily deathcross20/50MA daily deathcrossGeopolitical Risk: Middle East Crisis / Ukraine Crisis
Currency Risk: Japan’s Yen Currency, US-Dollar crisis looming/happening
RETEST PT: 5,100 - 5,500
MY BULL/BEAR RATIO: BEARISH BIAS
Thanks for reading my newsletter!
Have a happy trading day!
Seeking Exclusive Investment Ideas?
Upgrade to a Premium Subscription!
Exclusive Short-Term Trade Ideas: Get access to handpicked trade recommendations, designed for short-term gains using options. Ideal for those looking to capitalize on quick market movements.
Monthly Investment Ideas: Gain access to exclusive, carefully selected long-term investment opportunities each month. Ideal for individual investors and asset managers seeking to expand their portfolios with strategic, growth-oriented assets.
Direct Chat Access: Let me know if you may have any questions or comments, for example, regarding trade or investment idea!
Upgrade to our Premium Subscription today. Save tíme and level up your trading and investment game right now. Cancel at any time.