by Ben Weiss, for the Call to Leap Team
Happy Mother's Day weekend, everyone! I hope your families have a wonderful time doing whatever brings you joy 💙 And if you're looking for something memorable until Sunday brunch, just look up! Much of the US will be experiencing a once-in-a-lifetime display of the aurora borealis (aka Northern Lights) as far south as Florida. Crazy!
To everyone looking up to their mothers or to the night sky, have a safe and fun weekend! Now let's take a look at what happened this week and what's coming up...
The market this week
The markets logged another positive, bright green week, building on upward momentum dating back to a bullish reversal 3 weeks ago. The Dow Jones notched 8 consecutive winning days and its best week of 2024 so far. The S&P 500 was close behind, finishing the week at $5222, or less than 1% below its all-time high back in March. Will the bulls succeed in pushing the market through to a new all-time high, or will we find technical resistance at that March high water mark and see the market retrace back down? Let's stay tuned!
As always, we'll be careful and thoughtful in our investing outlook moving forward. Historically, May to October have been lower-performing months for the market, lending to the old adage "sell in May and go away." At CTL, Steve and I follow the dollar cost average approach and try not to "time the market" and its ups and downs, however we shouldn't be surprised if we see a bit of slow down ahead. Overall, I'm with many investors in being bullish for the remainder of 2024, but we'll pay attention to the market trends and use the various tools in our options trading toolbox as needed.
By the numbers, the S&P 500 (+1.56%), DOW 30 (+1.94%), Nasdaq (+0.82%), Russell 2000 (+0.55%) all posted respectable gains for the week. The Dow in particular is once again approaching that vaunted $40,000 level—an arbitrary number mathematically, but a significant psychological barrier for investors. Let's see if this recent bullish rebound continues or stalls out as we work through May and into the summer months.
To the charts
SPY
This week's price action picked up where last week's left off. Over the last 3 weeks, SPY has been forming a new upward sloping channel (in green). Interestingly, I see this channel narrowing or "consolidating", not surprisingly with it coming to a point close to that $525 all-time high from March. It'll be very interesting to see how the index decides to break out of this consolidation. While still moving higher in price, the index has seen progressively lower average daily trading volume, further hinting at potential resistance ahead.
Lastly, I've included the RSI or "Relative Strength Index" at the bottom of the chart. RSI is a momentum indicator, that can provide us clues about whether a stock or index is oversold (30 or below is a potential bullish signal) or overbought (70 or above is a potential bearish signal). With an RSI of 62 (circled in yellow), SPY has more room to grow but is approaching potentially overbought territory. This data certainly does not guarantee a bearish downturn coming up, but is another clue we can use to build our short-term outlook thesis.
QQQ
Like on the daily chart for SPY, we saw continued signs of a bullish trend for QQQ. The index managed to find enough upward momentum to push through the $435 resistance level we were watching last week and now appears to be headed to test the $445 level or all-time high around $450. As I've drawn the upward trending channel in green, QQQ also appears to be consolidating like SPY. While the RSI is a tick lower than SPY's at 59, following the Nasdaq's steep selloff in early April, it is trending north towards the RSI 70 overbought zone as well.
In the news
Let's all just take a breath, shall we?... It was a refreshingly light news week. Major earnings season is now behind us with NVDA's hotly anticipated earnings announcement not scheduled for two more weeks. Next week, we'll get a fresh batch of consumer and wholesale pricing data, which will add more color to the inflation picture and whether we'll see interest rate cuts later this year. It's unclear if Federal Reserve Chairman Jerome Powell will speak next week, but you can bet investors will be listening if he does pick up a microphone.
Did you know?... Some countries, including Japan, have instituted negative interest rates in the past as a means to stimulate economic activity and discourage people and businesses from saving and hoarding cash? Can you imagine having to pay to deposit money into a bank instead of receiving interest?
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
Friendly reminders from Steve and Ben:
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💪💰 Do you have the power?...Based off the great recommendation from Steve and lots of folks in the CTL community, Ben recently signed up for budgeting app Empower to get a better dashboard picture of all his various accounts and has been really been enjoying how easy it is to use. If you'd like to give Empower a try, click here to check it out!
Let your money work harder for you...
I'm also getting about 5% APY by having my cash sit in my Fidelity account as I sell my cash-secured puts. Here's the link if you're interested in getting started!
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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."