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We’re closing out this week on the seventh consecutive crimson weekly bar on the SPY weekly chart. Phrases like massacre are being thrown round, and there’s undoubtedly some ache on the market. Particularly, small caps, that are an excellent barometer for risk-taking urge for food amongst fairness buyers, are taking a beating.
SPY weekly chart
Seeking to the day by day chart of the S&P 500, this week’s worth motion has been fairly decisively bearish however nonetheless raises some questions concerning the integrity of the present downtrend sample:
I crudely drew out the swing sample in a crimson marker on the chart and marked the important thing low with a white arrow. The issue right here is that following a pullback from the important thing low (white arrow), there’s potential failure close to the lows, with the worth starting to show round with the most recent inexperienced bar.
If this market can’t make a brand new worth low, it clearly places a query mark on the present downtrend sample and could be an indicator of weakening conviction from the bears.
Chart of the Week
It’s not a chart this week, however a snippet from a Bloomberg article:
The momentum funds are starting to closely rebalance into vitality and out of tech, which might mark a turning level for each sectors. As we all know, vitality provide is constrained globally with out a convincing turnaround level within the close to future.
With the mix of fee hikes and inflation creating the potential for a stagflationary financial backdrop, most of the unprofitable and fewer viable tech firms could possibly be left for lifeless as funds proceed to rebalance their books.
Final Week’s Information
It’s typically been a gradual information week, with most merchants specializing in the bear market forming greater than particular person firm or financial information. Nevertheless, a number of issues occurred.
- Extra drama in Elon Musk’s Twitter (TWTR) takeover. He’s angling for a decrease acquisition worth due to bot conduct on Twitter, claiming that the variety of bots lively on Twitter is much larger than Twitter disclosures counsel.
- The Twitter board is combating this and claiming that Musk signed a contract which they intend to carry him to
- Twitter (TWTR) inventory is presently at a ~40% low cost to the deal worth of $54.20
- The US Senate is introducing a invoice which could power conglomerates like Google and Meta (Fb) to divest from their promoting companies.
- Huge field retailers took a beating in earnings this week. Goal dropped 25% on weak earnings and steering, and plenty of are harping on the truth that the corporate expects gas prices to considerably enhance. The identical is true of Walmart (WMT), which took a 20% haircut following equally disappointing earnings, steering and growing gas prices.
Earnings Subsequent Week
Earnings season is in its final innings with the overwhelming majority of S&P 500 firms having reported already. To date, 76% of S&P 500 parts have beat EPS expectations and 67% have beat income expectations.
We acquired a shakeup within the massive field retailer area final week with the massacre in shares like Goal (TGT) and Walmart (WMT). Quite a few retailers like Greatest Purchase are reporting this week, and the market is already talking. Greatest Purchase (BBY) is already down 13% on the week earlier than they’re even scheduled to report.
Monday, Might 23:
Tuesday, Might 24:
- Greatest Purchase (BBY)
- Intuit (INTU)
- AutoZone (AZO)
- Nordstrom (JWN)
Wednesday, Might 25:
- Nvidia (NVDA)
- Dick’s Sporting Items (DKS)
- Williams Sonoma (WSM)
Thursday, Might 26:
- Alibaba (BABA)
- Greenback Basic (DG)
- Greenback Tree (DLTR)
- Baidu (BIDU)
- Macy’s (M)
Friday, Might 27:
- Huge Heaps (BIG)
- Cover Progress (CGC)
Financial Knowledge Coming Subsequent Week
Whereas it’s a tainted victory for deflationists, they lastly acquired some whimpering of a knowledge level of their favor. YoY CPI got here in for the month of April at 8.3% in comparison with the 8.5% in March. It’s fairly insignificant, sure, but it surely’s definitely price noting that the pattern has slowed down, at the very least for now.
This coming week is fairly delicate for incoming financial information.
Tuesday, Might 24:
Wednesday, Might 25:
Thursday, Might 26:
- Preliminary and persevering with jobless claims
- Pending dwelling gross sales
Friday, Might 27:
- PCE inflation report
- College of Michigan Shopper Sentiment
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