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Potential Short Term Weakness Ahead
Happy Sunday Investors. I have gotten some feedback to clarify what terms and technical analysis I present in this newsletter. I plan on releasing a blog post in the near future describing what I look at what I am referring to with my acronyms. This post will give insight on how you can digest my weekly analysis. Be on the lookout for this soon.
MARKET RECAP
Wild Week Threatens a Downward Trend Shift
SPY Daily Chart
This week the market experienced its fair share of ups and downs. We gapped down big on Tuesday with Tesla leading the way dropping about 5%. It was looking as if the S&P 500 was going to rebound strongly on Thursday until Minnesota Fed President Neel Kashkari suggested there may actually be no rate cuts at all this year if inflation progress stalls. This led to a nasty midday reversal that saw the markets dipping about 2% leading to SPYs second close below the 21 ema since October.
The market finished the week with the March jobs report, crushing expectations with 303,000 new jobs added, and unemployment dropping to 3.8%. The markets erased Thursday’s losses to close right at the 8 ema. The markets are doing everything they can to stay afloat and continue this incredible bull run that we have seen for the last 6 months.
The reality is that we almost never see runs like this. At some point the technical trends will break down and we will see some slight downward movement, thats just how the market goes and we can’t go up forever. At this point it is hard to believe the accuracy of the jobs report, nearly every month we react strongly to whatever data they throw at us just for them to significantly revise the numbers weeks later without the general public knowing.
As we sit on the 8 ema heading into next week, keeping an eye on these key moving averages will give us some solid insight into what direction we will head for the next few weeks until the bulk of earnings season picks up.
TRENDWATCH
Uber Closing in on a Moving Average Wedge
This week I will be keeping my eye on UBER. First I love this stock, as one of the newest members to the S&P 500 I believe that it has tons of potential to grow with the direction that our generation is headed as it benefits both gig workers and consumers. Right now it is stalling on its upward movement and wedging just between the 50 ma and the shorter term 8 and 21 exponential moving averages. Depending on where it heads this week we may see it break higher or trend lower in the short term.
Last Weeks Trend: AMD
Last week I pointed out AMD in my trendwatch to see how it would react to the 50 day moving average. It broke down technically as the 8 and 21 ema both crossed the 50 day moving average. I expect some weakness over the next few weeks in result of this trend shift.
In the News
💻 Google is in talks to acquire marketing software company Hubspot, sending both stocks higher this week.
🚗 Tesla stock fell over 6% this week as larger automotive companies catch up in the EV race.
UPCOMING WEEK
Major inflation reports for March will be released this week. This data will give us good insight to what rate cuts we can expect from the Fed this year. This data is also key to how we will react to sitting right on the 8 ema heading into the week.