Good evening. Stocks surged and the S&P 500 saw new all-time highs even with a holiday-shortened week. Investors will be closely watching the inflation numbers for June this week to determine where the markets go from here. 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

• $AMD
Break above 174.55 🎯 180.58 & 187.24
• $MRNA
Break above 122.12 🎯 128.81 & 135.37
• $TSLA
Break below 242.46 🎯 234.25 & 218.06
• $SHOP
Break above 67.66 🎯 69.51 & 71.58
• $XOM
Break below 111.64 🎯 109.59 & 108.18
• $NVDA
Break above 130.78 🎯 136.33 & 140.76

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! The S&P 500 made new all-time highs again last week, pushing all the way up to the $555s. It doesn’t look like there’s much stopping the price from going even higher this week, as the next strong resistance zone isn’t until the $560s. We have a big week ahead of us, as you’ll read below, so make sure to take those external events into factor when analyzing the S&P 500 this week.

Weekly Market Recap

Economic Contraction

The ISM monthly reports for June showed that both the U.S. manufacturing and services sectors have fallen into contraction, with readings below 50. The manufacturing sector has struggled for some time, being in contraction for 19 of the last 20 months, while services, which account for over 70% of GDP, are showing signs of softening after a period of strength. This trend suggests that U.S. economic growth could cool to below-trend levels of 1.5% to 2%, potentially indicating a soft landing, which would be favorable for markets despite the slowdown.

Labor Cooling

The U.S. labor market is beginning to cool from its previously strong position, with job openings and quits rates declining and the June nonfarm jobs report showing 206,000 new jobs, slightly above expectations but below previous months. The unemployment rate increased up to 4.1%, the highest in 26 months, yet still below long-term averages. Labor supply has improved with rising labor force participation and immigration, while demand has moderated, leading to higher unemployment rates and moderated wage growth. This gradual softening is seen as another positive, balancing the labor market without causing a collapse and supporting lower inflationary pressures.

Inflation Moderation

As mentioned above, a cooling economy and labor market may help moderate inflation, with last week's data showing declines in the prices paid indexes for manufacturing and services, and wage growth cooling. But, the upcoming consumer price index (CPI) report will be closely watched for further signs of easing inflation. With both inflation and labor market trends softening, the Federal Open Market Committee (FOMC) may be inclined to start a rate-cutting cycle, with a September rate cut probability rising to 72%, potentially leading to up to two rate cuts this year.

Coming Up…

Fed Chairman Powell will be testifying in front of the Senate and the House, this Tuesday and Wednesday respectively. Important economic releases this week include the CPI and PPI inflation for June. On the earnings front, Pepsico, JP Morgan Chase & Co, Delta Airlines, Wells Fargo, and Citi are expected to report this week, with the banks officially launching this earning season on Friday.

Key Headlines We’ve Been Reading

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

• Trump asks judge to delay his classified docs case following Supreme Court immunity ruling.
• Steve Ballmer, who was once Bill Gates’ assistant, is now richer than his onetime mentor.
• Farage plots path to power with Trump-style takeover of Britain’s Tories.
• Fed rate cut delay won’t hold back global easing.
• Deadline nears for Boeing decision on proposed MAX agreement.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #28 | July 7, 2024

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