Good evening. Stocks surged in the first half of 2024, by positive economic data and potential Fed rate cuts. Mega-cap tech, utilities, and gold excelled, while volatility and small-cap equities lagged. Historically, strong first halves lead to strong full-year returns. 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

• $META
Break below 496.65 🎯 483.91 & 474.99
• $DAL
Break above 48.60 🎯 49.94 & 51.19
• $AMD
Break above 167.87 🎯 172.55 & 178.29
• $SHOP
Break above 67.66 🎯 69.51 & 71.58
• $XOM
Break below 113.91 🎯 111.64 & 109.59
• $UBER
Break above 73.82 🎯 75.82 & 78.28

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! The S&P 500 failed to push above the all-time highs last week even with a tempting move on Friday morning, a lot of sellers came in right after. Yes, it’s starting to look like a failed bullish setup, but as long as the $543 zone is holding, it could try to go for the highs again.

Yearly Market Recap

Stock Market Gains

The first half of 2024 saw the stock market, specifically the S&P 500, book a 15% return, one of the best starts in 35 years. Historical data shows that such strong starts often lead to above-average full-year returns. While the outlook remains optimistic, further gains might be more moderate, supported by potential Fed rate cuts and rising corporate profits. It is recommended for investors to remain cautiously optimistic and prepared for more moderate gains in the second half of the year.

Low Volatility

As you probably noticed, volatility has been notably low in 2024, with the VIX index hitting its lowest levels since 2019, and the largest market pullback being just over 5%. This calm market environment may not last, as the election comes close and potential economic slowdowns could lead to more market fluctuations in the second half. However, these pullbacks are seen as temporary and could present buying opportunities, given the overall positive economic fundamentals and the likelihood of Fed rate cuts.

AI-Driven Rally

Enthusiasm around AI has driven significant gains in mega-cap technology stocks, with the "Magnificent 7" leading the charge. Despite high valuations, the long-term impact of AI on economic growth and corporate profits is expected to be significant. While the tech sector may continue to perform well, other sectors are likely to narrow the lead in the second half. Small-cap equities, which underperformed in the first half, may see a revival if interest rates decline and economic growth accelerates, supported by easing Fed policies.

Coming Up…

As you probably know by now, this week will be the start of the second half of 2024, but it might be a little slow when it comes to volatility, as the U.S. stock market will be closed on Thursday for the July 4th holiday. Important economic releases this week include the ISM manufacturing PMI and the nonfarm payrolls report for June. On the earnings front, there are no major earnings expected to report this week.

Key Headlines We’ve Been Reading

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

• Who will be Trump's running mate? A look at the VP shortlist.
• Nike bets its China comeback on Michael Jordan’s new $1,000 high-tops.
• Julian Assange leaves court ‘free man', ending 14-year drama.
• HSBC taps metaverse to win business from India’s rich diaspora.
• NFL hit with jury verdict in ‘Sunday Ticket’ antitrust trial that could reach $14.1 billion.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #27 | June 30, 2024

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