Last week, the stock market presented a mixed performance. Although all major indices recorded gains compared to prior week's closing levels, inflation concerns and Federal Reserve policy limited their performance.
Monday:
The week started with the major indices falling due to losses in mega-cap stocks, while awaiting key economic data and first-quarter earnings reports from big banks. The Dow Jones Industrial Average declined only 0.4% at its low, and the Nasdaq experienced a 1.3% loss at its session low before closing near flat. The Russell 2000 stood out as the best performer, gaining 1.0%.
Tuesday:
The market maintained its resilience as the major indices showed mixed results with the Russell 2000 outperforming its peers, gaining 0.8%. Some mega-cap stocks recovered from their session lows, but the market turned sharply lower about 30 minutes before the close, with Microsoft, Apple, and NVIDIA retesting their early session lows.
Wednesday:
The day began with a positive sentiment as investors assessed the Consumer Price Index (CPI) for March. The S&P 500 and Nasdaq posted gains of 0.6% and 0.9%, respectively, shortly after the open. However, early gains waned as mega-cap stocks rolled over and Treasury yields climbed off their post-CPI lows.
CPI Summary: Total CPI increased by 0.1% month-over-month, lower than the expected 0.3%, following a 0.4% rise in February. Core-CPI, excluding food and energy, rose by 0.4%, as expected, after a 0.5% increase in February. On a year-over-year basis, total CPI grew by 5.0%, down from 6.0% in February, marking the smallest 12-month increase since May 2021. Core-CPI was up 5.6% year-over-year, compared to 5.5% in February.
Thursday:
The stock market had a strong showing on Thursday, with gains from mega cap stocks and positive economic data contributing to the overall bullish sentiment. The major indices climbed throughout the session, with the S&P 500 reaching its highest level since February 15. While mega caps were responsible for a significant portion of the index level gains, the broader market also performed well. Bond yields rose as the stock market advanced, suggesting possible asset reallocation in Thursday's trade. Economic data released on Thursday included a decline in the Producer Price Index, an increase in initial jobless claims, and a build in weekly EIA Natural Gas Inventories.
Friday:
Friday's trade took a negative turn, with many stocks closing in the red despite early attempts to move higher. Positive Q1 earnings results from large banks like JPMorgan Chase, Citigroup, BlackRock, and PNC Financials helped the S&P 500 financial sector gain 1.1%. However, losses from mega cap stocks offset much of this support, driving index level weakness. The Dow Jones Industrial Average underperformed due to losses in Boeing and UnitedHealth. Investors reacted to remarks from Fed Governor Waller suggesting tighter monetary policy and the University of Michigan Consumer Sentiment Index showing a rise in inflation expectations. Economic data on Friday included a decline in total retail sales, lower import and export prices, an increase in industrial production, a rise in business inventories, and a preliminary University of Michigan Consumer Sentiment Index for April.
TECHS TLDR:
Key Resistance Comes into Focus Again On Thursday, bulls maintained their stronghold, pushing the S&P 500 closer to the critical multi-month resistance zone between 4185-4200 (continuous contract futures).
In recent days, the Nasdaq 100 index has also managed to hold support at previous resistance levels, leading overall market gains in the past few weeks.
This indicates a trailing demand from underinvested participants, aligning with the sentiment and positioning data themes we've been discussing – near-record put ownership, near-record short interest in index futures, and historically high cash holdings in professional fund portfolios.
Top performers included consumer discretionary, gold miners, banks, basic materials, and biotech sectors. On the other hand, real estate, energy, and transportation sectors lagged behind.
Monday:
Major indices fell due to losses in mega-cap stocks
Dow Jones declined 0.4% at its low, Nasdaq experienced 1.3% loss at session low
Russell 2000 outperformed, gaining 1.0%
Market awaited key economic data and Q1 earnings reports from big banks
Tuesday:
Mixed results for major indices; Russell 2000 gained 0.8%, outperforming peers
Some mega-cap stocks recovered from session lows
Market turned sharply lower 30 minutes before close, with Microsoft, Apple, and NVIDIA retesting lows
Wednesday:
Positive sentiment at open after assessing March CPI data
S&P 500 and Nasdaq posted gains of 0.6% and 0.9%, respectively, after open
Early gains waned as mega-cap stocks rolled over and Treasury yields rose
CPI Summary: Lower than expected total CPI increase (0.1% MoM), Core-CPI rose by 0.4% as expected, YoY total CPI grew by 5.0%, and Core-CPI was up 5.6% YoY
Thursday:
Stock market had a strong showing
Gains from mega cap stocks boosted main indices
Positive economic data contributed to bullish sentiment
S&P 500 reached its highest level since February 15
Bond yields rose as stock market advanced
Economic data: Decline in Producer Price Index, increase in initial jobless claims, build in weekly EIA Natural Gas Inventories
Friday:
Predominantly negative bias in stock market
Losses from mega cap stocks offset gains from the financial sector
Dow Jones Industrial Average underperformed due to losses in Boeing and UnitedHealth
Investors reacted to Fed Governor Waller's remarks on tighter monetary policy
Rising inflation expectations from University of Michigan Consumer Sentiment Index
Economic data: Decline in total retail sales, lower import and export prices, increase in industrial production, rise in business inventories, preliminary University of Michigan Consumer Sentiment Index for April
If you liked this content please click the ❤️ below and/or share this post.
SHAMLESS PLUGS
CLICK HERE TO CHECK OUT MY 2022 PREVIEW OPINION PACKET. OVER 80 PAGES OF CONTENT AND INFORMATION AVAILABLE HERE.
TOTALLY FREE Trading Packet!
Click here to get my packet that shows you how I traded $600 into $100K FOR FREE.
This packet will explain to you in depth how I trade and how I manage my risk.
I am happy to share this. Just use the code KPAKFRAUD at checkout and you will get it TOTALLY FREE. You will pay absolutely nothing.
Check out the latest episodes on my YouTube above.