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Stock Market Outlook
For The Week Of April 28th =


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


The stock market outlook remains in a downtrend, though the SPX looks poised to test that signal this week.

The S&P500 ($SPX) rallied 2.7% last week, and is now just ~0.5% below the 50-day and ~9% above the 200-day moving average.

Technical analysis of daily SPX prices

SPX Technical Analysis entering the Week of Apr 282024

The ADX signal is bearish, but the positive direction indicator was on the rise last week and could crossover with a little more bullish price action.

Price/volume still shows a correction in place, despite a constructive week on the bullish side.  The SPX looks likely to test the 50-day moving average this week, after putting in a potential rally start on Monday (4/11).

Be on the lookout for an upside follow-through (+1.25% on high trading volume) during the next 4 to 11 trading sessions (4/26 - 5/7).  What you don't want to see are distribution days, particularly within 3 days of the rally start.  Unfortunately, the SPX rally attempt also had one of those on day 3.

On-balance volume remains in correction territory, but could retest the trendline soon, similar to the other signals.

Weekly price performance of S&P500 sector ETFs

Within U.S. equities, all major sectors were green last week.  Technology ($XLK) and Discretionary ($XLY) outperformed the index, thanks to large gains from Alphabet ($GOOGL), Microsoft ($MSFT), and Tesla ($TSLA); more on those results below.  Materials and Healthcare underperformed ($XLB and $XLV, respectively).

Equities were also the best asset class last week, rallying 2.7%. Gold led to the downside, falling 2%.

Weekly price performance by asset class


Despite disappointing economic data, at least for those still clinging to hopes of rate cuts, Magnificent 7 earnings reports stole the show last week.

The first (i.e. "advance") estimate of Q1 GDP came in well below expectations, showing a slowdown in growth and an increased in inflation (i.e. stagflation environment).  This release showed the large role government spending played in keeping the U.S. economy out of a recession.

PCE for March came in higher than expected as well.  And you know it's bad (i.e. hawkish) when talking heads switch their focus to justifying why the Federal Reserve doesn't need to raise rates, rather than the number of cuts this year.

PCE (y/y) Actual     Prior     Expected
Headline +2.7% +2.5% +2.6%
Core +2.8% +2.8% +2.6%

March Durable Goods orders were higher than expected, but February numbers were revised down, so this release had limited market impact.

On the earnings front, about 1/3 of the S&P500 reported with some interesting surprises along the way.  Tesla ($TSLA) started things off with a miss on both revenue and earnings.  That didn't stop investors from sending the stock price higher, closing 12% higher the next day.

Alphabet ($GOOGL) beat revenue, crushed earnings estimates, announced a $70 billion stock buyback and it's first dividend of 0.20/share.  The stock price ended the next session up over 10%.

Microsoft ($MSFT) beat revenue and earnings estimates.  The stock price gapped higher pre-market, but sold off most of Friday's session, meeting resistance at the 50-day moving average and end the day up less than 2%.

Meta Platforms ($META) beat revenue and earnings estimates, but the stock price was crushed.  Apparently, investors were unhappy with lower revenue forecast and higher capital spending plans.

More earnings this week, as well as jobs data and the latest FOMC rate decision on Wednesday.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
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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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