Good evening. The S&P 500 ended up only 1.4% on the week after a less volatile week than we got used to this August. Market performance following initial rate cuts has often been positive, so maybe those bigger gains are waiting for us after that September FOMC meeting. 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

• $TSLA
Break below 210.66 🎯 201.38 & 191.76
• $DAL
Break above 41.50 🎯 42.70 & 43.91
• $AMD
Break above 162.04 🎯 169.80 & 177.55
• $UBER
Break above 74.60 🎯 76.86 & 79.20
• $META
Break below 515.95 🎯 502.30 & 488.92
• $AMZN
Break below 173.99 🎯 170.10 & 165.85

KV’s S&P 500 Analysis

KV here with your weekly SPY levels! The S&P 500 did not move much last week, hence why the levels are very similar for this upcoming week as well. Buyers have been holding up the price, so a break of all-time highs is still in play if there’s enough demand this week. With NVDA reporting earnings, volatility should be expected to increase as it’s currently the S&P 500’s third-largest holding at 6.20%.

Weekly Market Recap

Fed Rate Shift

The Federal Reserve’s Jackson Hole symposium hinted at upcoming rate cuts, with Chair Powell’s comments indicating a shift in focus from solely battling inflation to also addressing employment concerns. Although no immediate policy changes were made, the Fed is expected to begin cutting rates, possibly as early as September, as inflation shows signs of easing and the labor market softens.

Gradual Cuts Expected

Unlike previous cycles, the anticipated rate cuts are expected to be gradual, with the Fed likely implementing small, 25-basis-point cuts. This approach reflects the Fed's strategy to ease off restrictive policies rather than stimulate a struggling economy. The Fed's decisions will be heavily guided by incoming economic data, aiming to maintain stability without triggering a recession, unlike past aggressive rate-cutting periods.

Market Optimism Ahead

While markets have partially priced in these expected rate cuts, there’s potential for further gains, especially if the Fed successfully navigates a soft landing. Historically, rate cuts have boosted market performance, though short-term volatility is expected. Investors should be prepared for fluctuations but can remain cautiously optimistic about the longer-term outlook as the Fed transitions to a less restrictive monetary policy.

Coming Up…

Important economic releases this week include Inflation and GDP data. On the earnings front, NVDA, CRWD, CRM, CHWY, and AFRM are expected to report this week.

Key Headlines We’ve Been Reading

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

• Kamala Harris accepts the Democratic presidential nomination.
• Apple’s first made-in-India iPhone pro models coming this year.
• Walmart’s $3.6 billion JD.com sale fuels China tech slump.
• Crowded Bitcoin derivatives bets spur warning of ‘Short Squeeze.’
• The biggest diamond in over a century is found in Botswana — a whopping 2,492 carats.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #35 | August 25, 2024

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