Good evening. The stock market had its second red week, but another big week awaits investors, with the top two holdings of the Nasdaq 100 reporting earnings and the FOMC interest decision happening as well. 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

• $UBER
Break below 62.63 🎯 59.98 & 57.58
• $TSLA
Break above 226 🎯 239.20 & 246.38
• $NFLX
Break above 660.64 🎯 675.58 & 690.65
• $NVDA
Break above 119.95 🎯 124.69 & 132.84
• $MU
Break above 114.04 🎯 117.21 & 123.03
• $CAT
Break above 356.45 🎯 365.20 & 372.62

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! The S&P 500 finally pulled back to the $540 zone we have been talking about for a while now and also filled the gap from mid-June. Even though we have been down-trending lately, we are in neutral territory where the best thing is to look for a reaction outside of this zone. Plus, we have another big week ahead of us, as you’ll read below, with FOMC interest-rate decision and unemployment rate numbers coming out, while at the same time, the mega-tech earnings continue to report.

Weekly Market Recap

Ongoing Market Rotation

The recent stock-market rotation has seen small-cap and value sectors outperform mega-cap technology, caused by cooling inflation and potential Fed rate cuts. With inflation surprising to the downside and expectations of 2 to 3 rate cuts by year-end, this shift may continue. The broadening of earnings growth beyond tech and a valuation rotation towards more reasonably priced sectors also support this trend. While economic growth may soften, a "soft landing" scenario with continued positive growth could sustain the broadening market leadership.

Political Uncertainty

The unexpected political shift, with President Biden endorsing Kamala Harris for the presidency, has tightened the race against former President Trump. This change has increased election uncertainty, potentially raising market volatility in the coming weeks. Historically, markets experience increased volatility ahead of elections, which then subsides as uncertainties clear. This pattern suggests that while short-term fluctuations may occur, they do not typically impact the long-term macroeconomic backdrop, allowing investors to focus on fundamental opportunities.

Supportive Fundamentals

Despite recent market and political volatility, the fundamentals remain strong, with the U.S. economy showing resilience. Q2 GDP growth exceeded expectations at 2.8%, driven by solid consumption. As inflation cools and the Fed prepares to cut rates, the outlook for equities remains positive. Investors are encouraged to use any volatility to diversify and rebalance portfolios, focusing on quality investments in large-cap and mid-cap U.S. equities. Sectors like industrials and utilities are likely to benefit from the broadening market leadership, and opportunities may arise to dollar-cost average into equities and bonds, aligning with long-term financial goals.

Coming Up…

Another big week ahead of us with important economic releases this week including the FOMC meeting and nonfarm payrolls report for July. On the earnings front, AMZN, AMD, META, MSFT, AAPL, SOFI, INTC, PYPL, QCOM, PFE, COIN, MCD, ROKU, BA, SQ, XOM, CVX, MARA, and RIOT are expected to report this week.

Key Headlines We’ve Been Reading

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

• How $20 billion debt restructuring deal eases Ukraine’s wartime economy.
• How Kamala Harris’ warp-speed campaign launch has changed the 2024 race.
• Tech rout deepens in Asia as Morgan Stanley says take profits.
• Trump complains about fund transfer helping Harris’ presidential campaign.
• Porsche cuts forecasts due to alloy shortage, shares fall.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #31 | July 28, 2024

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