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Stock Market Outlook
For The Week Of July 30th = Uptrend


    ADX Directional Indicators: Uptrend
    Price & Volume Action: Uptrend
    Elliott Wave Analysis: Mixed


The stock market outlook remains in an uptrend as we close out the month of July.

The S&P500 ($SPX) rose 1% last week.  No change versus key support levels; the index still sits ~5% and ~12% above the 50 and 200-day moving averages, respectively.

Technical analysis of daily SPX prices

2023-07-30-SPX Trendline Analysis - Daily

No change in signal for the ADX; a strong uptrend continues to unfold.  Price/volume also remains in an uptrend, with almost no distribution taking place over the past 5 weeks.

Technical analysis of daily prices

2023-07-30- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)

Both Elliott Wave counts show the market in the final stage of the recent rally.  A negative divergence in both the RSI(5) and the MACD are bearish near-term, though key support and resistance levels remain unchanged (4169 and 4632).


The NASDAQ 100 rebalance was a non-event, and doesn't appear to have significantly impacted the overconentration problem.  Per IBD:

Recapping last week's economic data releases, manufacturing PMI surprised to the upside (vs. estimates) but remains in a contraction with a reading of 49.  Services PMI fell to 52.4, which is the lowest reading in 5 months.

Describes the NASDAQ 100 special rebalance

Source: https://www.investors.com/etfs-and-funds/sectors/nasdaq-100-big-changes-hit-the-including-these-surprises/

The U.S. FOMC raised rates 0.25%, and will evaluate further hikes at the next meeting.

The "advanced" GDP estimate for Q2 came in much higher than expected, particularly versus the y/y comparison, which was interpreted as a sign of economic strength.

Rounding out the week, PCE came in at +3% y/y, while core PCE was +4.1%.  Both figures confirm the trends shown in CPI data; inflation continue to decline, but remains higher than the Fed target.

Another big week of earnings coming up, along with the latest jobs data:

Lastly, I received a question or two on the US Treasuries General Account.  Back in June, we discussed the unwind of "extraordinary measures" taken by the U.S. Treasury after we reached the debt ceiling.

Growth of US TGA since June 2023

U.S. Treasury Account - Weekly Average - 2023-07-30

As of July 26, the account average was ~$543.6 billion.  for reference, the balance on June 7 was $44.8 billion.   So the account was refilled quickly.  As suspected, the source of the funds was the critical variable. From an S&P500 perspective, price and volume trends remains positive over the same period of time, indicating that funds weren't coming from U.S. equity holdings.  

Best to Your Week!

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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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