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  3. Stock Market Outlook - 2024-02-11

Stock Market Outlook
For The Week Of
February 11th = Uptrend

INDICATORS

    ADX Directional Indicators: Uptrend
    Price & Volume Action: Uptrend

ANALYSIS

The stock market outlook shows an uptrend in place, as U.S. equities continue notching all time highs.

The S&P500 ($SPX) gained 1.4% last week (again).  The index sits ~5% above the 50-day moving average, and 12% above the 200-day moving average.  Since bottoming on October 27, the market has only encountered 1 losing week and rallied ~24%.  Impressive, to say the least.

Technical analysis of daily SPX prices

2024-02-11-SPX Trendline Analysis - Daily

No surprise; no change in the signals this week:  both ADX and price/volume signals show an uptrend in place for the S&P500.  Trading volume has declined slightly since the start of February; not ideal conditions when hitting new, all-time highs, but not a signal to sell either.

COMMENTARY

The S&P500 breached 5,000 for the first time last week.  While there's nothing "fundamentally" significant about that level, fund managers have been using it for hedging strategies in the options market.

Earnings season is winding down, but that doesn't mean the fireworks are over.  Artificial intelligence story / semiconductor manufacturer ARM holdings ($ARM) beat estimates after the close on February 7th and the stock price gapped up ~23% overnight.  On the 8th, the stock rallied another 34% intraday, before cooling off a bit at the end of the day.  From the close on the 7th to the close on the 8th, the stock ended up (literally) ~48% higher.  Investors are hoping that price action bodes well for the more widely held stock of Nvidia ($NVDA), which is set to report in a little over a week (Feb 21).

Not every company was so successful; well known names like Paypal($PYPL), Pinterest ($PINS) and Snapchat ($SNAP) were punished for perceived weakness in their financials (revenue, earnings, and/or guidance).

Looking ahead, the latest CPI figures are released on Tuesday, which will once again fire up pundits about the rate cuts.  If inflation comes in higher than consensus, expect some selling pressure on equities.  A lower than consensus data point probably propels U.S. stocks higher.  Later in the week we get retail sales, PPI, and consumer sentiment.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don't, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics



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Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

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