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Stock Market Outlook
For The Week Of June 30th =


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


The stock market outlook shows an uptrend in place for U.S. equities.

The S&P500 ($SPX) dropped 0.1% last week, so the index remains ~4% above the 50-day moving average and ~8% above the 200-day moving average.

Technical analysis of daily SPX prices

SPX Technical Analysis - June 30 2024

All three indicators (ADX, On Balance Volume and Institutional activity) remain bullish. Friday's reversal came with abnormally high trading volume, showing institutions were very active.

The energy sector ($XLE) outperformed last week, followed by Communications ($XLC).  All the other sectors were down, with Utilities leading the way again ($XLU).

Weekly price performance of S&P500 sector ETFs

A third week of leadership from Oil, although somewhat muted at +1.2%. The hits just keep on coming for Bitcoin, losing another 6.7%, for a 3 week drop of roughly -16%! That's a good reminder of the volatility associated with Bitcoin, as well as crypto an asset class. Price performance resembles that of a commodity (like oil or wheat), and is why it's still not an appropriate store of value for most investors. Gold and the dollar have been almost perfectly correlated over the past 2 weeks, each remaining essentially flat.

Weekly price performance by asset class


Although the $SPX reached a new all time high on Friday morning, the rest of the session should give investors pause. A rejection of the high for the day, coupled with abnormally high trading volume, suggests aggressive selling by market participants. While end of month/quarter/half rebalancing may be the driver, keep an eye on the distribution day count for signs of more selling over the next week or two.

The final Q1 US GDP figure showed a gain of 1.4%, dropping significantly verses Q1 2023 (+2.2%).

Meanwhile, May PCE data was inline with estimates and showed a slight decline year over year.

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

For the week ahead, ISM releases June manufacturing PMI data on Monday.  Federal Reserve Chairman Powell speaks on Tuesday, just ahead of May JOLTs data, followed by June ISM Services PMI and FOMC minutes on Wednesday.  And finally, June NFP/ unemployment data comes out Friday morning.

Trading-wise, a short week due to Independence Day.  U.S. markets will trade for a half-session on Wednesday, close on Thursday, then resume trading on Friday for what is likely to be a low volume day.

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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