Good evening. As we go into the last month of the second quarter of 2024, investors wait for May’s nonfarm payrolls, one of the Fed’s dual mandates for keeping a strong economy. Here are the top stocks to watch this week and what’s moving the markets.

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Top Stocks & Setups To Watch This Week

• $AMZN
Break above 179.32 🎯 183 & 186.27
• $NVDA
Break below 1064.69 🎯 1015.20 & 974
• $ABNB
Break above 147.87 🎯 150.01 & 153.20
• $V
Break above 274.49 🎯 278.54 & 282.38
• $AAPL
Break above 193 🎯 196.38 & 199.62
• $RBLX
Break above 34.34 🎯 35.95 & 37.34

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! Even though the S&P 500 ended the week in the negative for the second week in a row, there was significant buyer pressure on Friday. The price is back at the all-time high range, which to me is a natural area, so it will be a wait-and-see situation going into this week, especially with multiple economic data announcements.

Weekly Market Recap

Resilient Market

Stocks faced challenges last week with rising interest rates and inflation, which hurt market performance despite inflation readings meeting expectations. Disappointing corporate earnings also played a role. While the focus this year has been on potential Fed rate cuts and AI, surprising market dynamics have emerged. For instance, 2024 has seen minimal pullbacks, with the largest being only 5.5%. This is rare, as only four years in the past 40 have had smaller pullbacks, highlighting the market's resilience despite numerous uncertainties.

Equities Outperform

Despite high short-term yields, cash and CDs have underperformed compared to equities. Short-term interest rates have reached their highest in two decades, attracting investors to 5% yields in bonds and CDs. However, since 2-year Treasury yields surpassed 4.5% in October 2022, the stock market has gained over 50%. Even with yields peaking at 5.21% seven months ago, stocks have returned 23%. This illustrates that while high yields in low-risk investments are tempting, equities have provided significantly better returns, underscoring the importance of maintaining long-term investment strategies.

Utilities Surpass Tech

In a surprising twist, utilities have outperformed technology stocks recently. While tech and growth stocks led 2023's gains, the market's leadership is now broadening. This shift was anticipated in the 2024 Outlook, which predicted that laggards would catch up as economic cycles advanced. Consequently, utilities, energy, financials, industrials, and health care have shown strong performances. Despite tech stocks still achieving impressive earnings growth, the broader market participation indicates a healthier and more balanced bull market. With ongoing economic strength and potential Fed rate cuts, markets may continue to grow, but with occasional fluctuations.

Coming Up…

There’s a raft of economic data in the US this week, including multiple PMI data and JOLTs Job Openings, but that’ll be a prelude for investors to the May nonfarm payrolls report on Friday, one of the Fed’s preferred inflation metrics. On the earnings front, we’ll hear from companies such as Crowdstrike, Lululemon, and DocuSign.

Key Headlines We’ve Been Reading

This is what’s caught our eye over the past 7 days.

• Private credit lures $100 billion fund seeing sticky inflation.
• The FTSE 100 is headed for its worst run since August.
• Pound at highest on euro since before 2022.
• China considering ‘record fine’ for PwC over Evergrande.
• Trump Jury Has ‘Mountain of Evidence’ to Consider, DA Says.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #23 | June 02, 2024

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