Good evening. I’m here to remind you to not panic, as even though the S&P 500 fell over 4% at the beginning of the week, the market has returned back at the same level. All eyes will be on inflation data this week, which might impact the next FOMC meeting in September. 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

• $MU
Break below 86.80 🎯 81.49 & 76.97
• $SHOP
Break below 67.42 🎯 63.91 & 60.15
• $GOOGL
Break above 164.43 🎯 168.51 & 172.65
• $JPM
Break above 207.96 🎯 213.20 & 217.56
• $PLTR
Break above 30.44 🎯 31.91 & 33.65
• $COIN
Break above 204.44 🎯 223.03 & 239.90

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! Last week I mentioned that the last time the S&P 500 had its third straight red week, it was followed by a 13% move thereafter. Well, the market recovered all of the losses it had from the Friday to Monday open and is currently already up almost 5% from its lows. If we do get the $543 gap filled, the price has a high probability of at least re-testing the all-time highs.

Weekly Market Recap

Market Declines

A 1,000-point drop in the Dow caught investors off guard last week, but it's important to remember that such declines are not uncommon. The recent pullback, while aggressive, came after markets reached record highs. Even with the drop, the stock market is still up nearly 20% over the past year. Diversified portfolios have also benefited from bonds rallying as rates dropped, cushioning the impact of the stock market dip.

Healthy Market Pullbacks

Market dips, like the recent 1,000-point drop, are actually quite common, occurring about three times a year on average. While they can feel unsettling, it's essential to view them as a normal part of market behavior. Even more significant corrections of 10% or more happen roughly once a year. Recognizing the regularity of these events can help investors make level-headed decisions and reduce anxiety during market downturns.

Opportunities in Sell-Offs

Market sell-offs, while emotionally challenging, tend not to last as long as they might feel. The recent pullback was the third 5%-10% decline in the last year, with the previous two rebounding quickly. While we may see additional volatility, the current economic backdrop, including rising corporate profits and potential Fed rate cuts, suggests that a deeper market downturn is unlikely. Pullbacks often present opportunities for rebalancing and investing at more attractive prices.

Coming Up…

Last week started with one of the most aggressive sell-offs we’ve seen in a while, which eventually got bought up by investors, who are closely watching retail sales and two key inflation readings, PPI and CPI. On the earnings front, BABA, WMT, CSCO, JD, HD, and DE are expected to report this week.

Key Headlines We’ve Been Reading

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

• As DNC in Chicago nears, Kamala Harris has decided on running mate.
• Israel braces for biggest test of air defences from Iran-led attack.
• Starmer promises communities 'will be safe' after emergency meeting on UK riots.
• Takeaways from AP report on fear of repression in post-election Venezuela.
• Cryptocurrencies claw back losses as Ether ETF investors buy dip.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #33 | August 11, 2024

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