by Ben Weiss, for the Call to Leap Team
We've got earnings season in front of us, fresh (good) inflation data behind us, and an amazing community of wealth builders here by our sides. 💙
Let's take a look at what happened this week in the market and what's coming up...
🆕📣 P.S. For any members new to the CTL community, Steve and I will be hosting our Welcome Live Chat this Tuesday, July 16. We'll explore all the benefits of premium membership and answer your questions. Check out the event details. We'll see you there!
The market this week
We saw another broadly bullish week, though much of those gains were in small and mid-cap companies, like in the Dow 30 and Russell 2000 indices. The Nasdaq 100 and many of the big tech companies had a relatively flat week, as investors appear to rotate some capital over to the "little guys", who've been lagging behind the gains from the bigger players in the market. Among large caps, standouts including AMD, AAPL, and LLY broke away and had outsized gains for the week.
We officially kicked off earnings season this week with large banks like Chase, Wells Fargo, and Citi reporting their performances and outlooks. We could certainly see some fireworks over the next few weeks--household names like Netflix (NFXL) and American Express (AXP) reporting this coming week. As is often the case, earnings season could act as a major catalyst. Can major earnings accelerate this bull market further, hopefully lifting both small and large companies alike with the rising tide?
The S&P 500 touched a new high of $5,650 while the Dow 30 impressively surpassed the $40,000 level for only the second time ever--extra impressive because the Dow tends to be a slower, steadier mover made up of "defensive" stocks. The Russell 2000, representing the smallest 2000 companies in the US, had the biggest jump among these indices.
By the numbers, the S&P 500 (+0.76%) and Nasdaq 100 (-0.31%) were mixed while the Dow 30 (+1.55%) and small-cap Russell 2000 (+5.39%) saw the biggest gains.
Fresh all-time highs are certainly exciting, though I'll continue to watch closely to see if these indices can continue their upward momentum through and after earnings season or if a short-term pullback lies ahead. As always, anything can happen in the market, however the case for the bulls continues to appear solid for now.
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To the charts
SPY
In the S&P 500 (SPY), we saw neutral-to-bullish movement. You can view the diagonal channel lines I've drawn in two sets:
First, the solid upper and lower green lines are showing a well-defined up trend dating back to 2023, suggesting we may still have quite a bit more headroom to grow into before we reach the upper limit.
Alternatively, I've drawn a midway trend line shown with the dotted green line that has served over time as both support and resistance. This week, this dotted line went from acting as resistance to now acting as support, as SPY broke above and retested the line multiple times. This is a bullish sign, in my eyes.
RSI (Relative Strength Index) remains elevated at 73 within overbought territory (above 70) but not extremely.
While no indicator is a guarantee of future performance, these indicators keep me cautiously bullish for the near term. I'll be watching closely!
QQQ
The Nasdaq index and QQQ retraced down somewhat this week, after hitting a new higher high at the top dotted line and retracing back down to the top solid line. QQQ may be butting up against some overdue resistance. Will QQQ obey resistance at the top of this channel and pull back towards the middle dotted green line, or will momentum carry it higher like we saw last summer? We have lots of Nasdaq company earnings coming up to keep an eye on.
RSI retreated to 65 to close the week, nicely below overbought territory above 70. This could allow the Nasdaq a bit of headroom to grow again after some red-hot weeks lately.
In the news
Cool for the summer... We received very encouraging cooling inflation data this week! For the first time since May 2020 (before pandemic-era hyperinflation began), consumer prices fell lower from the previous month.
For months now, we've discussed how the rate of increase of prices has been coming down--in other words, prices one month "increased at a slower pace" than they did the prior month.
You can think of this like hitting the gas pedal in your car and accelerating quickly, then letting off the pedal completely. You'll still continue to speed up for a second or two before you start to slow down, even if you aren't speeding up as fast anymore.
Well, last month the CPI (Consumer Price Index) actually had negative growth--meaning prices on average were actually less than they were in May. In other words, your car's speed is actually slowing down now. Now, this index is a combination of many goods and services consumers buy so specific items like food and rent prices may have ticked up slightly, but other items like gas prices dropped significantly. On average, this lower CPI number is further evidence the US economy is pacing in the right direction to tackle inflation and lower interest rates later this year.
Earnings seasons kicks off... Major banks like JP Morgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) announced earnings this week, as the first wave of reports for the Q2 earnings season. All three banks exceeded expectations for earnings per share (EPS) and revenue, while JPM shone the brightest, beating EPS expectations by 4% and revenue by 20%.
Despite these successes, the banks expressed concerns over lower profits from interest income and anticipated losses ahead from customers unable to pay back their credit balances.
BOLO!... Be on the lookout for upcoming earnings announcements this week, including NFLX, AXP, and United Health Group (UNH). .
You got this! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. As always, let us know if you have any questions. 🙌🏻
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The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article do not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article. "Call to Leap may earn affiliate commissions from the links mentioned. Call to Leap is part of an affiliate network and receives compensation for sending traffic to partner sites such as ImpactRadius, CardRatings, MyBankTracker, and more."