by Ben Weiss, for the Call to Leap Team
Happy (official) start of summer, everyone! The grill by the pool isn't the only thing heating up this week—bears beware, the bulls keep on bull-ing!
Let's take a look at what happened this week in the market and what's coming up...
The market this week
We saw another positive week in the market, with all 4 major indices notching gains, led by the Dow 30 having its best week since May. While recent darlings AAPL and NVDA both took breathers this week, most of the remaining Magnificent 7 megacaps and nearly all market sectors had at least modest advances. With summer earnings season about a month away, broadly bullish sentiment seems to be in command for the time being. Familiar names continue to jockey for position in the neck-and-neck-3-horse-race for the world's MVC (Most Valuable Company). MSFT, AAPL, and NVDA continue to trade ranks like playing cards, with MSFT pulling ahead this week, but only $230 billion separates the 3 companies. Pocket change, right? For perspective, all of PepsiCo is worth $230 billion. 🤔
By the numbers, the S&P 500 (+0.75%) and Nasdaq (+0.39%), Dow 30 (+1.61%), and small-cap Russell 2000 (+0.09%) all gained ground this week, with the S&P 500 and Nasdaq each registering new all-time highs midweek.
Fresh all-time highs are certainly exciting, though I'll continue to watch closely to see if these indices can continue their upward momentum with earnings season approaching or if a short-term pullback is what the doctor ordered. 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 continued strong bullish movement, nearly touching the $550 level for the first time. The index established a new higher high and higher low recently, a confident bullish indication.
I've drawn my trading channel lines on this chart to give a more zoomed-out view. You can think of these diagonal lines 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 noticed a midway trend line shown with the dotted green line that can be traced back into 2023, serving over time as both support and resistance. While I'm still overall bullish, this dotted line suggests we might see short-term resistance, possibly with movement back towards the well-tested $531 support level.
Adding a few indicators to the daily chart, we can see a few potentially short-term bearish clues to keep an eye on:
[top graph] The stock price is pushing up against the top of the Bollinger Band, though it has backed off some in the most recent trading days.
[middle graph] RSI (Relative Strength Index) peaked at 78 on Tuesday and currently sits at 72, still in overbought territory. While not extremely overbought, any RSI over 70 often suggests a bearish headwind.
[bottom graph] MACD (Moving Average Convergence Divergence) remains above the zero line but appears to potentially be cresting and beginning to slide back down, a potentially bearish reversal indication.
While no indicator is a guarantee of future performance, these charts make me cautiously bullish for the near term.
QQQ
The Nasdaq index (QQQ) also showed continue bullish momentum, piercing and re-testing the upper green channel line I've drawn. Will QQQ face resistance at the top of this channel and pull back towards the middle, or will momentum carry it higher like we saw last summer (the purple box)?
Similarly to SPY, indicators for QQQ are suggesting cautious optimism with hints of a potential short-term bearish "cooling off":
QQQ pulled back from the top Bollinger Band in the last 2 days of trading but is nonetheless in the top region.
RSI remains overextended for QQQ, though it has come back down closer to the "overbought" threshold of 70.
MACD looks to have peaked and is close to crossing beneath the signal line, further suggesting a bearish reversal.
In the news
Seeking shelter... The US national median home price set a new historic high in May at nearly $420,000, up nearly 6% from last year, though this number may be deceivingly skewed higher due to an increased number of high-end property sales.
Interestingly, nearly 1 in 3 home sales were done in all cash, as mortgage rates remain elevated around 7.5% for a 30-yr fixed loan. After all, mortgage does come from French meaning "death pledge".😉
Well that's deflating to hear... The Bank of England announced the UK has successfully managed to tame headline inflation under its goal of 2% annual increase, a major milestone. Policymakers did not indicate they would be making an immediate interest rate cut, however cuts have not been ruled out for later in Q3 of this year.
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. 🙌🏻
-Steve & Ben
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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."