Good evening. With potential Fed rate cuts later this year, market expectations indicate a 60% chance of a September cut. 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

• $COIN
Break above 235.03 🎯 245.10 & 256.62
• $V
Break below 273.66 🎯 270.34 & 266.50
• $AMD
Break above 167.87 🎯 172.55 & 178.29
• $AMZN
Break above 191.70 🎯 195 & 198.50
• $GOOGL
Break above 180.85 🎯 184 & 187
• $META
Break below 492.96 🎯 483.91 & 476.99

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! And yes, the S&P 500 did create new all-time highs this past week as well. But, it’s important to note the weekly candle that is currently showing seller pressure at these levels. The $550 zone is strong on the sellers’ side, and that was obvious with the price action of the last two trading days. Currently, we’re waiting on this rising wedge setup to see which way it is going to break.

Weekly Market Recap

Consumer Fatigue

The Federal Reserve's pause in rate hikes has left a mixed economic landscape, with previous tightening measures still affecting the economy. Despite a rising stock market and housing prices driving household net worth to new records, signs of consumer fatigue are emerging. Cooling demand could help moderate inflation, potentially leading the Fed to cut rates later this year. However, the benefits of rising wealth are not equally distributed, with low-income consumers facing increased financial pressure.

Wealth Effect

Consumer sentiment remains low despite positive economic indicators such as record-high U.S. stocks, strong GDP growth, and low unemployment rates. The University of Michigan Consumer Sentiment Index fell to a seven-month low in June, reflecting pessimism about personal finances and business conditions. This disconnect between solid macroeconomic data and consumer sentiment is largely due to the lingering effects of inflation. While inflation has slowed, prices have risen significantly since 2020, disproportionately affecting low-income households who spend a larger share of their income on essentials.

Spending Caution

Retail sales data for May showed slower growth, indicating that consumers are becoming more cautious with their spending. Although consumption growth is slowing, it is seen as a normalization rather than a severe downturn. Rising stock market and housing prices continue to provide a wealth effect, supporting spending even if incomes do not change. However, the benefit of rising wealth is unevenly distributed, with low-income consumers under increasing pressure from high interest rates and rising debt delinquency rates. Despite these challenges, the overall economic expansion and bull market are expected to continue, supported by diversified investment strategies.

Coming Up…

As we go into the last trading week of Q2, investor optimism is still very high, mainly driven by a boom in AI stocks like Nvidia. Diversification remains crucial to managing risk as the Fed's easing cycle approaches, with key economic releases this week including PCE inflation data and consumer confidence. On the earnings front, companies such as Micron, Nike, FedEx, and Walgreens Boots Alliance are expected to report this week.

Key Headlines We’ve Been Reading

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

• Bill Gates says he’s ready to plow billions into a next-gen nuclear plant being built by his startup.
• Disney gets approval for Deadpool & Wolverine release in China.
• Millionaires on the move: Where are the world's rich migrating to in 2024?
• Trump dwarfs Biden in latest fundraising numbers in show of political force after felony convictions.
• The deadly flesh-eating bacteria currently spreading in Japan, explained.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #26 | June 23, 2024

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