The weekly market reports include a stock market forecast and a capital market analysis. To access the full report, you must subscribe to Premium Articles, Weekly Premium Articles, or an All-in-One subscription.
Included in this weekly market report:
- Dubious strategic allocations.
- An inside stock market week.
- Reflexivity resumption?
- Is a carry trade implosion coming?
Weekly Summary (April 22–April 26, 2024)
- Stocks rebounded after better-than-expected earnings.
- Bond yields rose due to data showing persistent inflation.
- Precious metals fell, but crude oil rose on supply concerns.
- The US dollar index ended the week unchanged.
Despite a selloff in precious metals due to gains in energy and grains, the DBC ETF rebounded (+0.9%). Gold (GLD) fell 2% due to profit-taking after the recent rally. For the week, the U.S. dollar index (UUP) was unchanged. Gold (GLD) has outperformed the SPY ETF since 2022 by a wide margin, with a return of 26.7% versus 10.7%, respectively.
Large-cap stocks (SPY) rebounded 2.6% due to better-than-expected earnings from the technology sector. Tech stocks (QQQ) gained 3.9%. Small caps (IWM) were up 2.7% but are down 15.3% from their all-time highs. High beta large caps (SPHB) surged 4% due to risk-on. The low-volatility large caps (SPLV) were up 0.5%. The Dow Jones Industrial Average (DIA) ended the week up only 0.7%, primarily due to large losses in IBM (-8%) and INTC (-6.8%).
For the week, the magnificent 7 equal-weight index gained 5.8%.
NVDA surged 15.1%, and it is up 77.2% year-to-date. Only META dropped 7.9%. GOOGL jumped 11.6% to new all-time highs after the earnings release. With a large number of mega-caps, the odds of the stock market finding support because one of them outperforms are always high. This dynamic will remain in place until there is a severe deterioration in the fundamentals or an unexpected tail-risk event.
The TLT ETF trimmed weekly losses to 1% due to a rebound on Friday following the release of economic data, which showed no surprises on the inflation front. Since January 3, 2022, the TLT ETF has been down 36.3%, while large-caps (SPY) have gained 10.7%.
The technology sector (XLK) gained the most, by 3.8%. Year-to-date, the energy sector (XLE) is up the most, by 15.1%.
The real estate sector (XLRE) is down the most year-to-date, by 8.4%.
Two weeks ago, the stock market sold broadly, but gains in a few large-cap stocks prevented an accelerated decline. Last week, a sell-off in magnificent 7 stocks caused the broad market sell-off to accelerate, and the probability of a bear market to increase. This week, better earnings and a surge in magnificent 7 stocks raised the odds again for a resumption of the uptrend. Volatility will remain elevated amid rising economic and geopolitical risks.
Stock market forecast
The forecasting model generates well-defined entry and exit signals for the SPY ETF. The model does not forecast exact tops and bottoms, but the objective is to minimize losses due to large corrections and maximize gains in uptrends. For the last 32 years, the accuracy has been close to 100%. We describe the current signal, duration, and strength below.
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Specific disclaimer: This report includes charts that may reference price levels. If market conditions change the price levels or any analysis based on them, we may not update the charts. All charts in this report are for informational purposes only. See the disclaimer for more information.
Disclaimer: No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.
Charting and backtesting program: Amibroker. Data provider: Norgate Data
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