Stock Market Outlook
For The Week Of March 31st =
Uptrend

ADX Directional Indicators: Uptrend
Price & Volume Action: Uptrend
On Balance Volume Indicator: Uptrend

The S&P500 ($SPX) rose 0.4% last week, ending Q1 with a gain of 10.8%.  The index sits ~4% above the 50-day moving average, and ~14% above the 200-day moving average.

SPX Technical Analysis entering the Week of Mar 31 2024

All three signals show an uptrend in place.  Institutional selling picked up last week, although volume remained below average.

In terms of sector performance, Real estate ($XLRE) claimed the top spot last week, after being the worst sector two weeks ago.  Energy ($XLE) was a close second.  Technology ($XLK) underperformed last week.

S&P Sector Performance for Week 13 of 2024

For the quarter, the $SPY ETF was up 11%, slightly more than the actual index.  Communications ($XLC) topped the gainers for the quarter, rising ~13% (+2% vs. the SPY).  Capital flows were not kind to Real Estate ($XLRE), which dropped ~1.5% for the quarter.  That's a -12.5% loss versus the overall index.

From an asset class perspective, "commodities" were the best in Q1, albeit with a very large range of performance.  Bitcoin, livestock, and oil were the best performers, while industrial materials and agriculture lagged. 

In second place was U.S. equities (i.e. $SPX), again with some variation by sector as discussed above.  Then came gold, bond funds, and finally the US dollar.  All in all, this breakdown is typical of a "nominal expansion", or economic growth (+GDP) with rising prices (+inflation).

COMMENTARY

The third and final GDP revision showed the US economy grew 3.4% in Q4 of 2023, slightly higher than the 3.2% reported in the second estimate. Consumer spending was revised higher, which isn't surprising given "sticky" inflation data.

Government spending continues to contribute a large portion of GDP, increasing 4.6% year over year and showing now signs of slowing.  This may be on reason that asset prices and economic data behaved like it's a nominal expansion (rising growth and rising inflation), while consumers "felt" that conditions are more recessionary (falling growth and rising inflation).

During the trading holiday on Friday, PCE data was released.  Thankfully, there were no surprises as changes were inline with expectations.

This week is all about jobs, with JOLTS and NFP releases, as well as several speeches by Fed officials (including another one from Powell on Wednesday).

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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