V-Shaped Recovery Complete, Key Levels to Watch Next Week
Technical setups had the expected continuation. Economic news has undoubtedly contributed to this positive market sentiment. What's happening ahead of NVDA earnings and potential rate cuts?
Corporate earnings remain robust as the most recent reports come in.
As of Friday afternoon, approximately 93% of companies in the S&P 500 have reported their results, according to FactSet. Out of these, over 78% have exceeded Wall Street’s forecasts.
During the week, the S&P 500 climbed nearly 3.9%, marking its strongest performance since November 2023. The Nasdaq saw an increase of 5.2%, while the 30-stock Dow gained 2.9%.
Following this week's rebound, the S&P 500 is now just 2% shy of its record high from mid-July. Recent data this week has helped calm a nervous market. Retail sales figures released on Thursday were significantly better than economists had predicted, and weekly jobless claims declined as well. These indicators suggested that recession fears, which triggered a global sell-off earlier this month, were exaggerated. Earlier inflation data has also raised optimism for a potential soft landing.
Nvidia emerged as a key winner in the technology sector this week, surging more than 18%, its fundamentals are strong as studied last Wednesday, and the post split price action is comparable to AAPL in 2020 and even AMZN and GOOG in 2022.
Technically speaking, price stayed above the S/R levels mentioned in the previous weekly compass as the reference for the bullish zone, even with room for volatility, price action moved far above them: SPX was above $5274 validating the bounce from the well mentioned $5110 level, NDX stayed above $18172, $DJI above $39208; all of them validating bullish setups after bouncing from critical support levels, VIX also stayed at the bullish zone indicated for indexes.
As usual, the setup analysis and S/R levels will be provided below, including SPX, NDX, IWM, DJI, AAPL, NVDA, MSFT, AMZN, GOOG, META, TSLA, GDX, SILVER, BITCOIN, DAX and NIKKEI, with the contextual indicators that have proven to be validators of bullish or bearish setups.
This edition highlights the critical annual price levels of the seven tech giants, particularly relevant given recent market volatility.
A comprehensive study analyzing the market's behavior during past Fed rate cuts and hikes will be released on Wednesday. This analysis will help to navigate what is expected to come in September and the current context.
While each market situation is unique, an no chart is replicated in the history of the market, certain technical patterns do recur. As demonstrated in the overextension analysis published in March, the recent rapid decline intersected with previously identified critical levels.
SPX