Introduction

The S&P 500 climbed 0.67% to 6,066.44 on February 10, 2025, marking its seventh-highest close of the year as optimism around economic resilience and sector rotation fueled gains.

Market Drivers and Economic Reports

The S&P 500's performance on Monday was shaped by a mix of geopolitical developments, corporate earnings, and economic data releases. Here are the key drivers that influenced the market:

1. Tariff Announcements and Trade Policy

President Donald Trump announced plans to impose a blanket 25% tariff on all steel and aluminum imports, alongside reciprocal tariffs targeting nations that tax U.S. goods. Despite these threats, markets reacted calmly, with many investors interpreting the statements as part of ongoing trade negotiations. Stocks of U.S. steel producers like Cleveland-Cliffs ($CLF +15%), U.S. Steel ($X +12%), and Alcoa ($AA +9%) surged on expectations of domestic industry benefits.

2. Strong January Jobs Report

The U.S. labor market continued to show resilience, with the unemployment rate dipping to 4.0% (a new post-pandemic low) and wage growth accelerating to 4.1% year-over-year from December's 3.9%. This robust data tempered expectations for Federal Reserve rate cuts, pushing the anticipated timeline for the next cut to July/September 2025.

3. Corporate Earnings Boost

Corporate earnings provided additional momentum:

• McDonald's reported a 4% rise in same-store sales despite missing profit estimates, lifting its stock by over 4%.

• Nvidia led tech gains with a 3% rally as AI infrastructure stocks rebounded.

• Monday.com soared over 25% after exceeding Wall Street's revenue and profit forecasts while unveiling plans to expand AI initiatives.

4. Sector Rotation and Oil Prices

Energy stocks outperformed as oil prices rebounded after a three-week decline, while technology stocks also posted strong gains driven by optimism around AI and semiconductor demand.

5. Bond Yields and Inflation Expectations

The 10-year Treasury yield rose slightly to 4.498%, reflecting tempered expectations for aggressive Fed easing amid strong labor market data. The New York Fed's inflation expectations survey showed no acceleration in short-term inflation outlooks, offering some reassurance to investors concerned about price pressures. Overall, Monday's market activity reflected investor resilience in the face of geopolitical uncertainty and optimism around corporate performance and economic strength.

Technical Analysis

Bull/Bear Case

Beautiful flag pattern forming with a strong range bound between 6,095 and 6,030. Those would be key levels to watch out for break or rejection to confirm the trends.

Key Takeaways & What’s Next

The S&P 500 continues to exhibit strong bullish momentum, closing at 6,066.44 on February 10, 2025, amid optimism about economic resilience and sector rotation. However, the market faces key levels and potential catalysts that could shape its trajectory in the coming days:

Key Levels to Watch:

• Support: Immediate support lies at 6,044 (Monday's low), with a more critical level at 6,000, a psychologically significant threshold. A breach below 6,000 could signal a deeper pullback toward the 5,700 level, which previously acted as strong resistance.

• Resistance: On the upside, the SPX must clear Monday’s high of 6,073 to target the January all-time high of 6,118.71. A breakout above this level could pave the way for a move toward the 6,200-6,250 range.

Upcoming Catalysts:

• Fed Chair Powell Testifies: J. Powell testifying at 10 AM EST tomorrow morning on economic outlook.

• Inflation Data: The January Consumer Price Index (CPI) report is due Wednesday and is expected to show a year-over-year increase of 2.9%. This data will provide crucial insights into inflationary pressures and their impact on Federal Reserve policy.

• Geopolitical Developments: President Trump’s proposed tariffs on steel and aluminum imports could introduce volatility, particularly if reciprocal measures are announced midweek as expected.

• Earnings Season: Continued earnings reports may influence sector-specific moves, with tech and consumer discretionary sectors remaining key drivers of market performance.

Closing Thoughts

Will J. Powell destroy the steady gains we have been observing in the market? Comment below your thoughts on where the markets are heading.

Introduction

The S&P 500 closed at 6,039.31 (-0.47%) on Wednesday, January 29, 2025, after the Federal Reserve paused rate cuts and tech earnings stirred volatility. The index fluctuated between 6,012.96 and 6,062.83 before settling lower, snapping a two-day winning streak.

Market Drivers and Economic Reports

The key market drivers for the S&P 500 on January 29, 2025 were:

1. Federal Reserve Decision: The Fed held interest rates steady, breaking a series of cuts that began in September 2024. This decision influenced market sentiment and raised concerns about the future path of monetary policy.

2. Tech Earnings: Mixed reactions to major tech company reports impacted the market. While Meta (+4.37%) and Tesla (+2.37%) saw gains, Microsoft (-2.62%) declined. Nvidia continued to face pressure, contributing to market volatility.

3. Inflation Concerns: Fed officials expressed worries about potential inflationary pressures from proposed tariffs, although no new tariffs have been enacted yet. This uncertainty affected market sentiment.

4. Economic Data: Recent strong GDP growth (3%) and consumption figures (2.9%) from the previous week continued to influence market dynamics, as they suggested a robust economy that might not require further rate cuts.

5. Sector Performance: Despite the overall index decline, about 70% of S&P 500 companies saw gains, indicating a divergence between the index and its components.

Technical Analysis

Recap

After decent recovery from DeepSeek news, today ended up being a choppy day resulting from FED maintaining rates hold until further notice.

6,014 could be a key support zone for the coming trading sessions. It well aligns with having SPX above 6,000 psychological level.

Bull/Bear Case

6,014 on SPX marks a key support level for tomorrow’s session. The level aligning with EMA ribbon makes it a even stronger support zone that the markets can test before making past the resistance level at 6,064. The overall outlook looks bullish from the recent pullback.

Market Sentiment and Key Indicators

We still have a strong gap to close which may lead to market recovery to all time highs.

The volatility consolidation level as acted as magnet couple of time recently, however, 17.0 still marks a key level which the markets could re-test before making a lower move.

VIX approaching 15.0 level seems a reasonable move to form a structure.

Key Takeaways & What’s Next

Tesla Earnings:

Tesla's performance fell short of expectations, with earnings per share of $0.73 compared to the anticipated $0.75. The company's revenue came in at $25.71 billion, significantly below the expected $27.26 billion. Tesla's stock initially dropped 3.4% in after-hours trading but later recovered slightly. The company reaffirmed its commitment to producing more affordable vehicles, with new model production slated to begin in the first half of 2025.

Microsoft Earnings:

Microsoft reported strong results, with revenue reaching $69.63 billion, a 12% year-over-year increase and above the expected $68.78 billion. The company's earnings per share were $3.23, slightly surpassing the estimated $3.11. Microsoft's performance was driven by its focus on AI and cloud services, particularly through its partnership with OpenAI.

Meta Earnings:

Meta Platforms exceeded analyst predictions with revenue of $48.39 billion and earnings per share of $8.02. However, the company's first-quarter 2025 sales forecast of $39.5 billion to $41.8 billion fell below expectations. Meta's significant AI-related capital expenditure plans of $60-65 billion for 2025 have raised concerns among investors.

Upcoming Catalysts

• Economic Data: February CPI report, upcoming GDP and employment figures

• Earnings Season: Continued tech earnings reports, particularly Apple's and Intel’s results.

Watch Levels

• Support: 6,014

• Resistance: 6,064

Closing Thoughts

Will Apple’s earnings break the SPX out of its consolidation, or will tariff fears keep bulls in check? Share your take below!

Introduction

The S&P 500 (SPX) experienced a significant downturn today, closing at 6,012.28, down 1.5% amid concerns over China's progress in artificial intelligence. This sharp decline was primarily driven by a sell-off in technology stocks, particularly in the semiconductor sector.

Market Drivers and Economic Reports

Several key factors significantly impacted the market today, leading to a sharp downturn in tech stocks and the broader S&P 500:

1. Chinese AI Advancements: The release of an AI model by Chinese startup DeepSeek, which performs well against U.S. models (OpenAI, Gemini, Llama) at a lower cost, sparked concerns about U.S. competitiveness in the AI race. This development rattled investors and led to a sell-off in technology stocks, particularly in the semiconductor sector.

2. Tech Sector Vulnerability: The tech-heavy Nasdaq Composite experienced its worst day since 2020, falling 3.1%. This decline was largely driven by worries about the massive investments made by major U.S. technology companies in AI development and whether these investments will pay off in light of Chinese advancements.

3. Semiconductor Stock Plunge: Chipmaking giants like Nvidia and Broadcom saw their stocks drop by more than 11%, while the VanEck Semiconductor ETF (SMH) plummeted nearly 7%. This sector-wide decline reflects investor concerns about the future demand of hardware in AI.

4. Earnings Anticipation: The market's reaction was also influenced by the upcoming earnings reports from major tech companies. With Meta Platforms, Microsoft, Tesla, and Apple set to report later this week, investors are reassessing valuations in AI-related sectors.

5. Treasury Yields: The yield on the 10-year Treasury dropped to 4.55%, its lowest level in more than a month. This decline in yields typically indicates increased demand for safe-haven assets amid market uncertainty.

6. Geopolitical Tensions: President Trump's threat of emergency tariffs on imports from Colombia, although later rescinded, added to market jitters and highlighted ongoing geopolitical risks.

Technical Analysis

Recap

We briefly made a new high on Friday 24th session and saw a huge flush today on the Chinese AI news. A bit of recovery suggests it was a overreaction by the market and we have a gap to fill.

Bull/Bear Case

We bounced off key EMA levels and are still in a strong bullish trend. With earnings season in progress, we may see market chop off in this range for a while before break above or below.

6,035 marks a key resistance level (from longer timeframe) for market to test. Alternatively we may gap up to that level and sell off entire day before running into FOMC meeting on Wednesday.

If we give up the pivot level of 5,998, we may retest the consolidation level at 5,978.

Market Sentiment and Key Indicators

A classic expansion and contraction of volatility observed today. the volatility consolidation level still marks as a key level which could be re-tested again before making a move to 17.0 level.

It may take significant efforts for markets to close the gap and allow VIX to rest at 15.0 level.

Key Takeaways & What’s Next

The S&P 500 is currently navigating a complex market environment, with several key factors influencing its near-term trajectory:

1. Boeing and Starbucks few of the many names reporting earnings tomorrow.

2. Markets will closely scrutinize earnings reports from tech giants.

3. FOMC meeting on Wednesday could bring in volatility.

4. Durable Goods Orders report at 08:30 AM EST.

5. CB consumer confidence report at 10:00 AM EST.

Closing Thoughts

As the market digests this new competitive landscape in AI, will we see a prolonged correction in tech stocks, or is this a buying opportunity for long-term investors? Share your thoughts in the comments!

Introduction

The SPX opened at 5,836.22, reached a high of 5,871.63, touched a low of 5,829.48, and ultimately closed at 5,842.91, gaining 0.1% for the day. The index's modest gain was supported by positive reactions to the PPI data, which showed wholesale prices rising slower than expected last month.

Market Drivers and Economic Reports

The S&P 500's modest gain on Tuesday, January 14, 2025, was primarily driven by the release of softer-than-expected Producer Price Index (PPI) data, which provided insights into wholesale inflation trends.

PPI Data

The December PPI report showed that final demand increased by 3.3% year-over-year, slightly below the experts' estimate of 3.4%. When excluding volatile food and energy sectors, the core PPI rose by 3.5%, significantly lower than the predicted 3.8%. This softer PPI print suggests that inflationary pressures at the producer level may be easing, potentially giving the Federal Reserve more flexibility in its monetary policy decisions.

Market Reaction

The softer PPI data initially boosted investor sentiment, as it hinted at the possibility of controlled inflation. However, the market's reaction was somewhat muted, with traders remaining cautious ahead of the more critical Consumer Price Index (CPI) report due the following day.

Treasury Yields

Despite the softer PPI data, Treasury yields remained relatively stable. The 10-year yield held steady at 4.79%, near its highest level in over a year. This suggests that while investors were encouraged by the PPI report, they are still maintaining a cautious outlook on inflation and interest rates.

Technical Analysis

Recap

As per the bear case discussed in our previous article, we gapped up on a bad PPI report and observed a selloff to gap fill and approach the lower trendline.

SPX was ranged bound from that point onwards and chopped for rest of the session.

Bull/Bear Case

The way the markets are moving, the most probably structure is shown in the image above on SPX hourly chart.

CPI report will add significant volatility to the market making extremely daunting to gauge the direction.

However, the outlook remains bullish considering a recent bounce from gap fill and markets holding the trendline despite volatility and choppiness.

Market Sentiment and Key Indicators

The purple region has acted like magnet previously and it did in today’s session as well. A clean close below the region is critical for the market to form an upward trending structure.

We have CPI data coming in the morning that could lead to chaos in the markets with same volatility as experienced today.

Key Takeaways & What’s Next

The S&P 500 is currently navigating a complex market environment, with several key factors influencing its near-term trajectory:

1. Technical Consolidation: The index has been consolidating in a tight range, forming a potential bullish coiling pattern near the 5,800 level. This compression could set the stage for a significant move in either direction.

2. Divergence in Market Breadth: While the cap-weighted S&P 500 appears bullish, the equal-weighted version shows signs of weakness. Only 38% of S&P 500 stocks are trading above their 100-day moving average, indicating underlying market fragility.

3. Economic Data Impact: Recent jobs data surprised markets, potentially reducing the chances of rate cuts in 2025. This has led to a reassessment of market expectations.

4. Upcoming Catalysts: Investors should closely monitor the Consumer Price Index (CPI) data release, as it could significantly impact market direction and Federal Reserve policy expectations.

5. Support and Resistance Levels: Key support for the S&P 500 lies around 5,800, while resistance is established near 5,870. A break above this resistance could open the path to the 6,000 level.

Closing Thoughts

As we wrap up today's market analysis, it's clear that the S&P 500 is at a critical juncture. The index's modest gain today, despite the softer PPI data, highlights the cautious sentiment prevailing in the market. Investors seem to be holding their breath, waiting for tomorrow's CPI report to provide clearer direction.

We'd love to hear your thoughts on today's market action and your expectations for tomorrow's CPI report. Do you think we're on the verge of a breakout, or are you anticipating a potential pullback? Share your insights in the comments below.

Introduction

The S&P 500 defied early losses to close higher on Monday, ending at 5,836.22, up 0.16% despite a tech-driven selloff that weighed on the Nasdaq. This resilience in the face of rising Treasury yields and growing doubts about Federal Reserve rate cuts showcases the index's strength heading into a crucial week for economic data.

Market Drivers and Economic Reports

Stocks

1. Tech Sector Weakness: The Nasdaq closed lower as technology stocks faced selling pressure, partly due to rising Treasury yields. This sector rotation out of growth stocks impacted the broader market.

2. Defensive Sectors Outperform: Healthcare and energy sectors showed strength, helping to offset losses in technology and contributing to the S&P 500's slight gain.

3. Magnificent Seven Mixed Performance: While these stocks have been key drivers of market performance, their influence was mixed today. Some faced selling pressure, while others held up, reflecting the market's current uncertainty.

4. Small-Cap Underperformance: Small-cap stocks, as represented by the Russell 2000, have been underperforming due to concerns about higher borrowing costs. This trend continued today, highlighting the divergence between large and small-cap stocks.

Upcoming CPI Data

All eyes are on the Consumer Price Index (CPI) report scheduled for release on Wednesday, January 15, 2025.

This crucial inflation indicator could significantly impact market sentiment and Federal Reserve policy expectations. Investors are keenly awaiting this data to gauge the trajectory of inflation and its potential influence on future interest rate decisions.

Q4 Earnings Season Kickoff

The fourth quarter earnings season is set to begin, with major banks leading the charge. Wall Street analysts project an impressive 8% year-over-year increase in earnings per share (EPS) for the S&P 500 in Q4.

This optimistic outlook is further supported by Goldman Sachs strategists, who note that actual S&P 500 EPS growth has historically exceeded consensus forecasts by an average of 4 percentage points per quarter over the past 11 quarters.

Technical Analysis

Recap

As discussed in the previous article, we filled the gap from November 2024 and are back in the swing zone.

Bull/Bear Case

We filled the gap from november and had a strong close. This trend could follow up tomorrow where we could meet our first resistance at 5,867.

Alternatively, we could gap up to the resistance level pre-market and sell off for the rest of the gap retesting the lower trendline.

Market Sentiment and Key Indicators

We have PPI data coming in the morning that could elevate the volatility in the market. This could give an opportunity for VIX to retest the trendline before heading lower.

If the PPI numbers contribute to strong bearish sentiment, we may go back to the trendline and close in the 21 level range.

A close below the volatility consolidation level is important for the markets to rally upwards.

Key Takeaways & What’s Next

1. Inflation Data: All eyes are on Tuesday’s Producer Price Index (PPI) report and Wednesday's Consumer Price Index (CPI) report, which could significantly impact market direction. Economists anticipate the December CPI might show stalled progress on inflation, with potential increases in gas, food, vehicle, and shelter costs.

2. Earnings Season Kickoff: Major banks, including JPMorgan Chase, Goldman Sachs, and Bank of America, are set to report earnings this week. These results could provide insights into the financial sector's health and broader economic trends.

3. Fed Speakers: Several Federal Reserve officials are scheduled to speak before the blackout period ahead of the late-January meeting. Their comments could offer clues about the Fed's stance on future rate cuts.

4. Technical Levels: Watch for the S&P 500's ability to hold above the 5,820 level. A break above 5,850 could signal further upside potential.

5. Sector Rotation: The divergence between the S&P 500 and tech-heavy Nasdaq suggests a potential shift from growth to more defensive sectors. This trend may continue if inflation concerns persist.

Closing Thoughts

The next two weeks of January will experience volatility in the market due to various events. Watch out for PPI and CPI reports this week to help gauge market sentiments and direction.

Comment below your thoughts below on the Jan outlook.

Introduction

The S&P 500 (SPX) experienced its worst drop since mid-December, sliding 1.5% to close at 5,827.04 on Friday, January 10, 2025. This sharp decline was triggered by an unexpected surge in hiring, which dampened hopes for early interest rate cuts by the Federal Reserve. Most sectors saw losses, with only Energy, Health Care, and Communications showing slight gains

Market Drivers and Economic Reports

The robust employment data led to a surge in Treasury yields, with the 10-year yield reaching 4.75%, its highest level since November 2023.

This increase in yields exerted pressure on rate-sensitive sectors, notably real estate, which was among the hardest hit.

In the technology sector, Nvidia's shares dropped 4% amid reports of potential new restrictions on advanced chip sales by the Biden administration.

Other major tech companies, including Apple, Microsoft, Amazon, and Alphabet, also saw their stock prices decline.

Conversely, Delta Air Lines experienced a rally of over 6% after surpassing earnings forecasts, and Walgreens saw a 15% surge following positive earnings results.

Despite these individual gains, the overall market sentiment was bearish, driven by fears that the Federal Reserve might maintain elevated interest rates longer than previously anticipated to combat persistent inflation.

This outlook has led investors to reassess their expectations for monetary policy in 2025, contributing to increased market volatility.

Technical Analysis

Recap

We broke the trendline and the closed below liquidity zone. This outlook is extremely bearish as we are in gap fill zone and the only thing holding is 200 EMA where its currently resting.

Bull Case

We are forming a strong supporting trendline and we may get a bounce towards the upper trendline.

Bear Case

On a 4 hour chart, we may form a bearish candle to form structure and lead to fill the gap. We have couple of support in that zone for the price to lead there.

Market Sentiment and Key Indicators

Volatility has been choppy for the past two days and VIX is currently resting in a zone where we had strong wicks forming from previous multiple candles.

This rejection zone if respected, we can head downwards. However, the trendline may prevent closing below the volatility consolidation zone. Any weakness in volatility may help us retest 17.00 level.

Key Takeaways & What’s Next

• The unexpected surge in hiring has dampened hopes for early interest rate cuts, causing a shift in market sentiment.

• With the Q4 2024 earnings season about to kick off, corporate results will be crucial in determining market direction. Strong earnings could help offset rate cut concerns

• Markets may open with continued pressure from Friday's jobs report. Watch for any stabilization attempts around key technical levels.

• Economic data releases or corporate news on tuesday that could provide further insight into the strength of the economy and its implications for monetary policy.

Closing Thoughts

Given the sudden shift in narrative, we may see increased volatility in the coming days as market participants reassess their positions and expectations. This could present both risks and opportunities.

What's your take on Friday's market action? Do you see this as a buying opportunity or the start of a larger pullback? Share your thoughts in the comments below.

Introduction

The SPX opened lower but gradually climbed throughout the session, reaching a high of 5,925.37 before settling at 5,918.25. The index gained 9.22 points or 0.16% for the day. Energy stocks led the charge, with the S&P 500 Energy Index rising 2.2% year-to-date, outpacing all other sectors.

Market Drivers and Economic Reports

The ADP National Employment Report released on January 8, 2025, showed private sector employment increased by 122,000 jobs in December 2024, falling short of the expected 139,000 addition.

This indicates a deceleration in job growth, reflecting a cooling labor market. Key highlights include:

• Goods-producing sectors added 10,000 jobs, while service-providing sectors contributed 112,000 positions.

• Manufacturing declined for the third consecutive month, losing 11,000 jobs.

• The healthcare sector emerged as a significant contributor to job creation in the latter half of 2024.

Annual pay growth slowed to 4.6% year-over-year, the lowest since July 2021, while job-changers saw a 7.1% increase. This slowdown in wage growth could potentially ease inflationary pressures.

The Federal Reserve's December meeting minutes, released on January 8, 2025, revealed growing concerns about inflation and the potential impacts of President Trump's policies. Officials expressed apprehension regarding:

• The effects of potential shifts in immigration and trade policies on the U.S. economy.

• Upside risks to inflation, attributed to recent higher-than-anticipated inflation figures.

As a result, the Fed has adopted a more cautious approach towards interest rate reductions. The central bank now projects only two rate cuts in 2025, down from the four forecast in September. The federal funds rate is expected to be at a median level of 3.9% by the end of 2025, higher than previously anticipated.

These economic indicators and policy shifts have led to a recalibration of market expectations. Investors have scaled back their expectations for Fed funds rate cuts in 2025, with an increasing number believing the central bank might not cut rates at all this year. This cautious outlook is driven by:

• The economy running hotter than expected.

• Stubborn inflation persisting above the Fed's 2% target.

• Uncertainty surrounding the impact of potential Trump administration policies on inflation and economic growth.

Technical Analysis

Recap

Multiple economic reports along with FOMC minutes chopped the market the whole day. SPX kept swinging in a tight range for the entire session. This could potentially signify market makers switching hands, creating a strong liquidity zone.

Bull Case

We have two bull scenarios:

1. We gap down towards the trendline, retest it, and move upwards targeting pivot level.

2. We straight rip through the pivot level and retest the resistance level. Although, this scenario looks too optimistic.

Bear Case

We had previous rejections from the pivot level and it could act as strong resistance level for the Friday session. Retest and hold of the trendline would be healthy for the move required for the next week.

Market Sentiment and Key Indicators

A retest of resistance at 18.90 and making moves lower towards 17.00 looks like most probable move to form a healthy structure.

Vice versa couldn’t be ignored either - pullback to 17.00 and move upwards to 18.90.

Key Takeaways & What’s Next

1. Recent strong economic data, including better-than-expected job openings and ISM Services Index, may delay anticipated rate cuts. This could lead to increased market volatility as investors adjust their expectations.

2. Nonfarm payrolls and unemployment rate could provide enough catalyst for the markets to make the moves discussed.

Closing Thoughts

With mixed economic signals and the SPX showing resilience after Tuesday's decline, do you think we'll see a breakout above 5,918 following Friday's unemployment report, or will concerns about persistent inflation keep a lid on gains? Comment below.

Introduction

The SPX opened at 5,975.38 and reached an intraday high of 6,025 before selling pressure intensified.

All three major U.S. indices ended lower, with the Nasdaq Composite falling 1.9% and the Dow Jones Industrial Average declining 0.4%.

Six out of eleven S&P 500 sectors finished in negative territory, with Technology and Communication Services among the hardest hit

Market Drivers and Economic Reports

The market's reaction on Tuesday, January 7, 2025, was primarily driven by two key economic reports that surpassed expectations, leading to a reassessment of potential Federal Reserve rate cuts:

Job Openings and Labor Turnover Survey (JOLTS)

The JOLTS report for November 2024 showed job openings rising to 8.098 million, significantly higher than the forecasted 7.7 million. This increase marks the first time job openings have exceeded 8 million since May 2024, indicating a strengthening labor market.

Key details include:

• Vacancy rate increased to 4.8% from 4.6% in October

• Quits rate rose to 1.9% from 1.8%

• Hires rate remained steady at 3.3%

This unexpected surge in job openings suggests continued labor market resilience, potentially delaying the Fed's timeline for rate cuts.

ISM Services Index

The Services PMI for December 2024 registered 54.1%, a 2 percentage point increase from November's 52.1%. This expansion, marking the 52nd time in 55 months, indicates robust growth in the services sector.

Notable components include:

• Business Activity Index jumped to 58.2%, up 4.5 percentage points

• New Orders Index rose to 54.2%

• Employment Index increased to 51.4%

Nine industries reported growth, while six reported contraction. The strong performance in the services sector, which accounts for more than two-thirds of U.S. economic activity, suggests underlying economic strength.

These reports collectively paint a picture of a resilient economy, potentially complicating the Federal Reserve's decisions on interest rate cuts in 2025. The stronger-than-expected data has led to a reassessment of monetary policy expectations, with market participants now anticipating a later start to the rate-cutting cycle.

Technical Analysis

Bull Case

We are sitting at a key support and although we had selloff the entire day, we held the trendline on a larger time frame.

We may get a bounce from the market to the pivot level at 5,933 if not higher.

Bear Case

Today was a big red day, and that could follow into tomorrow’s trading.

We are sitting at a previous support level as well as holding a trendline on a bigger timeframe, however, any weakness on economic reports could give up those levels.

The next target would be liquidity zone where SPX has exhibited false breakouts.

Market Sentiment and Key Indicators

Today markets confirmed a strong resistance on VIX at 18.90 level. If the rejection holds, 17.00 would be the next support level followed by 15.86.

VIX hitting lower to either of the targets is a bullish move and the markets could go green.

Multiple economic reports plus CES event this week will be adding volatility to the market.

Key Takeaways & What’s Next

1. Monitor the 5,910 support level on SPX closely.

2. Strong economic data has dampened hopes for early interest rate cuts, with traders no longer fully pricing in a Fed rate cut before July.

3. Upcoming economic releases, particularly the non-farm payrolls report and the Fed's December meeting minutes, are expected to influence market volatility.

4. Be prepared for potential increased volatility in the coming days as the market digests new economic data and reassesses its outlook for 2025.

Closing Thoughts

As always, it's essential to maintain a long-term perspective while navigating short-term volatility. Today's market reaction serves as a reminder that the path of monetary policy remains uncertain, and investors should be prepared for potential swings as new data emerges.

Will the S&P 500 find support at current levels, or are we in for a more significant pullback? Comment below.

Introduction

The S&P 500 kicked off 2025 with a bang, surging 1.3% to close at 5,942.47 on Friday, January 3rd. This rally, led by tech heavyweights, snapped a four-day losing streak and marked the index's best performance in nearly two months.

Market Drivers and Economic Reports

Market Sentiment

1. Tech Sector Rally: Investors took advantage of recent pullbacks in technology stocks, with companies like Nvidia (+4.5%) and Super Micro Computer (+10.9%) posting significant gains.

2. AI-Related Stocks: The renewed interest in AI-related companies suggests a shift back towards growth-oriented investments.

3. Electric Vehicle Sector: Tesla jumped 8.2%, bouncing back from its previous day's tumble, while Rivian soared 24.5% after beating delivery expectations.

Economic Reports

1. Manufacturing Sector Improvement: The ISM Manufacturing PMI rose to 49.3 in December 2024, up from 48.4 in November, beating market expectations of 48.4. While still in contraction territory, this improvement suggests the manufacturing sector is moving closer to expansion.

2. New Orders Rebound: The New Orders Index jumped to 52.5, its highest level since January, indicating a potential uptick in future production.

Federal Reserve Commentary

Richmond Fed President Tom Barkin expressed confidence in the current monetary policy:

1. Inflation Outlook: Barkin believes the current interest rate level remains restrictive enough to lower inflation in 2025.

2. Economic Assessment: He noted that strong spending, consumer pushback on high prices, and higher productivity have "landed the economy in a good place".

Geopolitical Factors

1. U.S. Steel Deal Block: President Joe Biden's decision to block Nippon Steel's acquisition of U.S. Steel impacted the market, with U.S. Steel's stock falling 6.5%.

Technical Analysis

Recap

SPX gapped in the morning as sliced right through pivotal level. Friday was a strong close right at our first resistance level as discussed in our earlier post.

Bull/Bear Case

We are resting at close to pivotal level of 5,930. Lucky, the 200 EMA light blue ribbon collides with the first resistance level at 5,965 and the market may test that.

There is also a possibility that we may gap up to the 5,965 level and consolidate back to pivot level.

On the other side, the closing two candles shows rejection from the pink EMA ribbon. A pullback could be healthy for a further push in the market and also add structure to the chart.

Market Sentiment and Key Indicators

Last two trading sessions, we broke out of the channel. Although it looked like a false breakout with VIX trying to retrace back into the channel, it lost the heat and was trending down for the entire Friday session.

The next support level to look for is at 15.93. VIX may not easily give up this level as it has acted as strong support and resistance previously. If VIX bounces from this level, we can expect a pullback on the market.

If VIX gives up 15.93 level, markets may trend higher.

Key Takeaways & What’s Next

1. Close eye on VIX level. Probability of market trending up is low.

2. Biden cancels Nippon and US Steel deal, on concerns about national security.

3. S&P Global Composite PMI report at 8:45AM CST.

4. S&P Global Services PMI report at 8:45AM CST.

5. 3-Year Note auction rates at Noon CST.

6. NVIDIA CEO Jensen delivering keynote at CES 2025.

Closing Thoughts

Jensen’s keynote at CES will be a huge catalyst for semiconductor stocks boosting the market up. Which tech companies will pull out their ace cards? Comment below.

Introduction

The S&P 500 kicked off 2025 on a sour note, extending its losing streak to five consecutive sessions. Despite an early rally attempt, the index succumbed to selling pressure, closing at 5,868.55, down 0.2% for the day. Here's a breakdown of the technical and economic forces driving today's move.

Market Drivers and Economic Reports

The market's decline came despite a positive jobs report, which showed fewer U.S. workers applying for unemployment benefits than expected.

This data suggests a resilient labor market, potentially complicating the Federal Reserve's plans for interest rate cuts in 2025. The strong employment figures indicate continued economic strength, which could lead to sustained inflationary pressures.

The energy sector provided some support to the market as oil prices rose. Conversely, Tesla's weak delivery numbers weighed on the market, with the company's stock declining by 6.1%. This highlights the ongoing influence of individual high-profile stocks on overall market performance.

The Conference Board has revised its economic growth projections, now expecting the U.S. economy to expand at a pace of 2.7% year-over-year in 2024 and 2.0% in 2025. These growth forecasts, while positive, suggest a moderation in economic activity that could impact corporate earnings and market performance.

Technical Analysis

Recap

SPX swung high towards the resistance and low towards liquidity zone hitting both our upper and lower bound. The rejection at top near resistance doesn’t look promising for a bull case.

Bull Case

We did get a bounce from 5,850 level as discussed in previous article. The next level to reach could be 5,905 level. We can still chop between Pivotal level and Liquidity Zone testing highs or going lower.

Bear Case

If we give up the liquidity zone, we could end up gap filling and the market could drop 50-60 points from yesterday’s low.

Market Sentiment and Key Indicators

We hugged the lower trendline for the entire trading session. Looked like we have a breakout but it was a false one, swinging right back into the trendline and closing out weak.

A retest or a break of 17 would help us better understand where will the markets be heading tomorrow. Level of 17 coincides with 50 EMA and therefore makes a key level for unlocking tomorrow’s play.

Key Takeaways & What’s Next

5,870-5,850 level still remains a key area for the market to grab liquidity to move up or give up those levels and head towards a gap fill.

We have couple of reports coming out tomorrow morning:

1. ISM Manufacturing PMI for December 2024.

2. FOMC Barkin speaks - low impact to the market but worth taking notes.

3. Atlanta Fed GDPNow report for Q4 2024.

Closing Thoughts

We don’t have any strong catalyst for the month of January for the markets to make strong move in either direction. Earning seasons don’t start until end of January, which is expected to bring some volatility to the markets.

Comment your thoughts below on what to expect tomorrow.

Introduction

The S&P 500 closed out a remarkable year on a subdued note, dipping 0.4% on the final trading day of 2024. Despite the lackluster finish, the index posted an impressive 23.3% gain for the year, marking its second consecutive year of 20%+ returns.

Market Drivers and Economic Reports

Economic Growth

The U.S. economy is expected to maintain solid growth in 2025, albeit at a slower pace compared to 2024. Goldman Sachs Research forecasts 2.5% real GDP growth for 2025. The Conference Board projects a 2.0% year-over-year expansion, slightly lower than their 2024 estimate.

Corporate Earnings

Earnings growth is anticipated to be a primary driver of stock returns in 2025. JPMorgan analysts expect double-digit earnings growth for the S&P 493 (S&P 500 excluding the Magnificent Seven). Goldman Sachs predicts an 11% increase in S&P 500 earnings for 2025.

Inflation and Monetary Policy

Inflation is expected to cool to 2.4% by the end of 2025, according to Goldman Sachs Research. The Federal Reserve may achieve its neutral Fed Funds rate target range of 3.00-3.25% in October 2025, later than initially anticipated.

Artificial Intelligence

The AI sector is expected to continue driving opportunities across various industries. BlackRock analysts see the AI buildout and adoption creating opportunities across sectors.

Geopolitical and Domestic Policy Risks

Analysts warn that geopolitical tensions and domestic policy uncertainties, including the potential impact of a new administration, could lead to increased market volatility.

Technical Analysis

Bull/Bear Case

We are resting at a support and a long holding trendline as discussed in our previous article.

We may experience a false breakout into liquidity zone before we try going higher. 5,850 would be a key level for the market to hold. Any sign of weakness and close below liquidity zone could mean a bearish move.

On the upwards, we have multiple resistance level that the market could hit and hold.

Market Sentiment and Key Indicators

On hourly chart, VIX has been huggin the lower trendline. If VIX breaks below the trendline, we can expect the markets to make moves higher.

What to Expect in 2025

1. Moderate Stock Market Gains: Wall Street strategists project the S&P 500 to reach a median target of 6,600 by the end of 2025, representing a 9% gain from current levels.

2. Broader Market Participation: Bank of America analysts expect the equal-weighted S&P 500 to outperform its capitalization-weighted counterpart, suggesting a broadening of market gains beyond the top performers.

3. Potential Volatility: Despite overall optimistic projections, analysts anticipate a potentially turbulent market in 2025 due to various economic and political uncertainties.

4. Sector Rotation: As AI adoption spreads, opportunities may arise across different sectors, potentially leading to a shift in market leadership.

5. Global Economic Considerations: The United Nations will release its 2025 World Economic Situation and Prospects (WESP) report on January 9, which will provide further insights into the global economic outlook.

Closing Thoughts

While the S&P 500's performance in 2024 was undoubtedly impressive, it's important to remember that past performance doesn't guarantee future results.

What's your take on the market's prospects for 2025? Do you believe we're poised for another year of strong gains, or are you preparing for increased volatility? Share your thoughts in the comments below!

Introduction

The S&P 500 (SPX) tumbled on the penultimate trading day of 2024, closing down 1.1% as investors took profits and reassessed positions heading into the new year. Despite the day's losses, the index remains on track for an impressive annual gain of over 23%.

Market Drivers and Economic Reports

The S&P 500's decline on December 30, 2024, occurred in the absence of major economic reports, suggesting that market sentiment and year-end dynamics played a significant role.

Key factors influencing the market included:

1. Year-end profit-taking: Investors appeared to be cashing in on gains from a strong 2024, with the S&P 500 up 23.8% for the year despite the day's losses.

2. Portfolio rebalancing: As the year concludes, many institutional investors are likely adjusting their portfolios, which can lead to increased selling pressure.

3. Interest rate concerns: Rising interest rates at year-end contributed to market weakness, potentially impacting future borrowing costs and economic growth prospects.

4. Santa Claus rally disappointment: The much-anticipated year-end rally has failed to materialize so far, with the S&P 500 down slightly during the traditional seven-day period.

While no major economic reports were released on December 30, investors were keeping an eye on upcoming data, including:

• MNI Chicago PMI for December

• Pending home sales for November

• Dallas Fed manufacturing activity for December

Several key stocks influenced the market's direction:

1. Big Tech decline: Major technology companies like Apple and Microsoft experienced significant losses, weighing heavily on the overall market.

2. Boeing: The aerospace giant saw its stock fall following a tragic incident where one of its jets skidded off a runway in South Korea, resulting in numerous fatalities.

3. Natural gas companies: In contrast to the broader market, natural gas-related firms saw gains, with EQT Corp. jumping 5.1% as natural gas futures surged more than 15%.

Technical Analysis

Bull Case

We have key resistance levels at 5,942 and 5,980. Since we are sitting at a pivotal level, we could see the market push and close green on last trading day of 2024.

Bear Case

We have a strong support at 5,870 and a support from trendline as well. However, we could be the market test these levels before turning around to close the day green.

Market Sentiment and Key Indicators

For the markets to close strong, VIX needs to break the lower trendline.

We could also see VIX retesting the trendline making higher low and shooting upwards. This could lead to observing market selloff for the last day of 2024.

Key Takeaways & What’s Next

As we head into the final trading session of 2024, watch for the SPX to find support around the 5,870-5,850 level. A bounce from this area could signal resilience, while a break below might indicate further weakness ahead. The market will be closed on Wednesday for New Year's Day, potentially leading to lower trading volumes and increased volatility on Tuesday

Closing Thoughts

Despite today's setback, the S&P 500 is still on track for its second consecutive year with gains exceeding 20%.

Will this late-year pullback continue into 2025, or is it merely a brief pause before another leg up? Share your thoughts and predictions for the start of 2025 in the comments!

Introduction

The S&P 500's Christmas Eve performance marks a pivotal moment in the 2024 market narrative, with the index staging a remarkable rally that could define the year's final trading days. The market has witnessed an extraordinary year, with the S&P 500 surging over 25% and setting the stage for a potential historic finish.

The "Santa Claus Rally" - a traditional period of stock market gains between the last trading days of December and the first two trading days of January - appears to be taking shape. On Tuesday, the S&P 500 surged 1.1%, reversing earlier December losses and signaling potential momentum into the year's end.

Market Drivers and Economic Reports

The S&P 500's Christmas Eve rally was driven by several key factors:

Tech Sector Strength: Technology stocks led the charge, with the Magnificent Seven tech companies showing particularly strong performance. Tesla surged 7.4%, while Broadcom climbed 3.2%. This tech-driven momentum helped push the Nasdaq composite up by 1.4%.

AI Optimism: Analysts' bullish comments on artificial intelligence potential boosted semiconductor stocks. Broadcom and Advanced Micro Devices (AMD) continued to rise, benefiting from positive forecasts regarding AI revenues.

Santa Claus Rally Expectations: Investors' hopes for a traditional year-end "Santa Claus rally" contributed to the positive sentiment. Historically, the S&P 500 has averaged a 1.3% gain during the last five trading days of December and the first two of January.

Economic Data: Despite the overall positive market sentiment, some economic indicators were less encouraging:

1. The Conference Board's consumer confidence index dropped to 104.7 for December, below expectations and its lowest point since September.

2. Durable goods orders fell by 1.1% in November, marking the largest month-over-month decrease since June.

Corporate News: Several company-specific events also influenced the market:

• Honda initiated formal merger discussions with Nissan, boosting its stock by over 12%.

• Xerox announced plans to acquire printer manufacturer Lexmark, also seeing gains exceeding 12%.

• American Airlines briefly grounded flights due to a technical issue but managed to shake off early losses

Technical Analysis

Recap

Markets are slicing through our key zone as discussed in the previous article. On Dec 23th we tried approaching the resistance level at 5,997 and on Dec 24th we cut right through it. We are past the 6,035 level that acted as support, sitting at pre rate cut that pulled the market down.

Bull Case

It would be foolish to bet against the markets going down. If the market closes above 6,035 level, the next target would be 6,059 where it would meet its first resistance. A proven support level at 6,035 might help the market push higher for the remainder days of this year.

Bear Case

We may be looking at a false breakout of a previous support at 6,035. If that is the case, we may see a rejection from the support, making it a key resistance level and retracing it to 6,020 level.

Market Sentiment and Key Indicators

VIX could be approaching a long standing support at 13.75 setting up a stage for the market to push a bit higher.

The level at 13.75 might not be sustainable and we may see a retracement at 15.20 level.

Key Takeaways & What’s Next

Support and Resistance Levels

The level of 6,035 now serves as a key support for the S&P 500. Traders should watch this level closely in the coming days. On the upside, the next major resistance could be around 6,100, given the current momentum. Some analysts are even eyeing a potential move towards 6,250 in the near term, while some maintain a year-end target for the S&P 500 at 6,000, suggesting there might be limited upside from current levels.

Economic Reports

Initial Jobless Claims

The U.S. Department of Labor will release the latest Initial Jobless Claims data for the week ending December 21, 2024. Last week, claims decreased to 220,000, beating market expectations. Analysts are forecasting a slight increase to 223,000 for this week's report.

Key points to watch:

• Any significant deviation from the forecast could influence market sentiment

• The four-week moving average, which stood at 225,500 last week, helps smooth out weekly volatility

• Continuing jobless claims, which were at 1,874,000 in the previous report

Federal Reserve Balance Sheet

The Fed will also release its weekly balance sheet report. As of December 18, 2024, the Fed's balance sheet stood at $6.89 trillion, down from $6.9 trillion the previous week.

Points of interest:

• The balance sheet has been steadily decreasing since its peak in April 2022

• The Fed's securities holdings have declined by about $1.8 trillion since June 2022

• Changes in the balance sheet can provide insights into the Fed's monetary policy stance

Closing Thoughts

SPX sitting at a key pivotal point, tomorrow’s Initial Jobless Claims and Fed’s balance sheet could be enough catalyst to swing the markets.

Comment your thought below.

Introduction

This rally came as a welcome relief after a tumultuous week that saw the index suffer its biggest one-day drop since August on Wednesday. Despite Friday's gains, the S&P 500 still posted a 2% loss for the week, reflecting the market's recent volatility and highlighting the ongoing tension between economic data and Federal Reserve policy expectations.

As we approach the final trading days of 2024, the S&P 500 remains up more than 24% year-to-date, showcasing the market's resilience in the face of economic uncertainties and policy shifts. However, with eight of the eleven S&P 500 sectors in negative territory for December, investors are closely watching for signs of a potential "Santa Claus Rally" to close out the year on a high note

Market Drivers and Economic Reports

The S&P 500 staged an impressive recovery on Friday, December 20, 2024, closing 1.1% higher at 5,930.85. While this late-week rally helped offset earlier losses, the index still ended the week down 2%. Similarly, the Dow Jones Industrial Average climbed 498.02 points, or 1.2%, to 42,840.26, and the Nasdaq composite rose 1% to finish at 19,572.60.

All eleven sectors of the S&P 500 closed in positive territory, led by Real Estate and Information Technology, which posted gains of 1.82% and 1.53%, respectively. This widespread rally reflected a boost in investor confidence following the release of encouraging economic data.

However, despite Friday’s uptick, eight of the eleven sectors remain in negative territory for December. This highlights the market’s ongoing volatility, driven largely by fluctuating expectations around the Federal Reserve’s monetary policy.

Friday’s market surge was fueled by the release of the Personal Consumption Expenditures (PCE) Price Index, a key inflation metric closely watched by the Federal Reserve. The Commerce Department reported that November's PCE increased 2.4% year-over-year, coming in below market expectations.

The softer-than-expected inflation reading reassured investors concerned about persistent price pressures. It also signaled that inflation may be moderating, potentially allowing the Federal Reserve greater flexibility in its monetary policy decisions.

Earlier in the week, the Federal Reserve had taken a cautious approach, signaling fewer interest rate cuts for 2025 than previously anticipated. The PCE report alleviated some of the anxiety caused by this tempered outlook, offering hope for a more accommodative stance moving forward.

Chicago Federal Reserve President Austan Goolsbee struck an optimistic note on Friday, suggesting the latest inflation data could open the door to rate cuts in 2024 despite the central bank’s careful messaging. His comments, coupled with the PCE report, contributed to the day’s relief rally.

As investors adjust their expectations for the Federal Reserve’s policy and broader economic trends heading into 2025, inflation data and other key indicators will remain critical in shaping market direction. While Friday’s rally ended the week on a high note, market volatility and economic uncertainty continue to loom large.

Technical Analysis

Recap

We traded in the channel on Thursday and Friday as discussed in the previous article.

Bull/Bear Case

We multiple EMAs aligning with key resistance level, we may see the market hit 5,997.84 level and consolidate to pivotal level at 5,915.

A key support level at 6,033 that broke from FEDs report can act as a resistance. If we cross the first resistance, we may hit by a second one. These levels may act as liquidity zone for a push higher and continuation of a downward trend.

Market Sentiment and Key Indicators

On hourly chart VIX has room to give up on the EMA its resting on and test 200 EMA at 16.60 level. A pullback if happens aligns perfectly on 50 EMA on a 4 Hour chart.

In a bear case scenario, the doji candle on the chart can indicate VIX going higher, adding more volatility to the market and potentially markets heading down.

Key Takeaways & What’s Next

As the S&P 500 moves forward, several critical factors are likely to influence its trajectory:

1. Federal Reserve Policy
   Investors will closely watch for signals from the Federal Reserve about future interest rate moves. The market's reaction to recent Personal Consumption Expenditures (PCE) data underscores heightened sensitivity to inflation metrics.

2. Technical Indicators
   The S&P 500's ability to stay above the 5,900 level is vital for sustaining bullish momentum. A decisive break above this resistance could pave the way for a move toward the psychologically significant 6,000 mark.

3. Corporate Earnings Outlook
   Analysts project robust corporate earnings growth, with estimates of 12% for Q4 2024 and 15% for 2025. This optimistic forecast could bolster market valuations and underpin further gains.

4. Seasonal Trends
   December traditionally tends to be a strong month for the S&P 500, particularly in years with significant year-to-date growth. The potential for a "Santa Claus rally" may provide additional tailwinds for the index.

5. Geopolitical and Economic Risks
   Despite overall positive sentiment, potential headwinds remain. Investors should keep an eye on global geopolitical tensions and the possibility of persistent inflation, both of which could impact market dynamics.

6. 2025 Election-Year Volatility
   As the U.S. heads into an election year, historical trends suggest increased market volatility, especially in the latter half of 2025. This could create both challenges and opportunities for investors looking to navigate the shifting landscape.

Closing Thoughts

Amix of optimism and caution will likely shape the trading session as market participants assess the balance of risks and opportunities

What’s your take on market tomorrow? Comment below.

Introduction

The S&P 500 (SPX) experienced a dramatic selloff on Wednesday, December 18, 2024, as the Federal Reserve's cautious stance on future rate cuts caught investors off guard. The index plunged 2.9%, closing at 5,872.16, marking its second-largest single-day loss of the year. This sharp decline has sent shockwaves through the financial markets, potentially signaling a significant shift in investor sentiment and market dynamics.

The Fed's decision to cut rates by 25 basis points was overshadowed by their projection of only two rate cuts for 2025, down from the four cuts previously anticipated. This more hawkish outlook has forced investors to recalibrate their expectations for monetary policy and economic growth in the coming year.

As we look ahead to tomorrow, December 19, 2024, market participants will be closely watching for any signs of stabilization or further selloff. The breach of key technical levels, particularly the psychologically important 6,000 mark, could trigger additional selling pressure. However, oversold conditions may also attract bargain hunters, potentially leading to a short-term bounce.

Market Drivers and Economic Reports

The Federal Reserve's decision to cut interest rates by 25 basis points was overshadowed by their revised projections for 2025, which significantly impacted market sentiment. Here's a more detailed look at the key market drivers and economic reports:

Federal Reserve Policy Shift

The Fed lowered its overnight borrowing rate to a target range of 4.25% to 4.5%, marking the third consecutive rate cut of 2024.

However, the central bank's updated "dot plot" revealed a more hawkish stance for 2025:

• Officials now project only two quarter-point rate cuts in 2025, down from the four cuts anticipated in September.

• The federal funds rate is expected to fall to 3.9% by the end of 2025, higher than the previous projection of 3.4%.

• Out of 19 Fed officials, 14 indicated expectations of two or fewer quarter-point cuts in 2025.

Inflation Concerns

The Fed raised its inflation expectations slightly:

• Forecasts for both headline and core inflation were adjusted upwards to 2.4% and 2.5% respectively, compared to September's 2.3% and 2.6%.

• The core PCE deflator is now expected to reach 2% only by 2027, indicating persistent inflationary pressures.

Economic Growth Projections

Despite the cautious rate outlook, the Fed increased its projection for full-year economic growth:

• GDP growth rate estimate for 2024 was raised to 2.5%, half a percentage point above the September forecast.

• However, officials anticipate GDP growth to decelerate in subsequent years, aligning with the long-term projection of 1.8%.

Labor Market Outlook

The Fed's projections suggest a resilient labor market:

• Most officials see the unemployment rate remaining steady at 4.2%-4.3% in 2025, near the current rate of 4.2%.

• This indicates expectations of continued labor market strength despite the higher interest rate environment.

These factors collectively paint a picture of an economy that continues to show resilience, with inflation proving more persistent than previously anticipated. This has led the Fed to adopt a more cautious approach to rate cuts in 2025, significantly impacting market expectations and driving today's selloff in equities.

Technical Analysis

Recap

Today’s overreaction breaks a key level of 6,000 as discussed in previous reports. The aggressive sell-off leads to SPX sitting at 200 EMA and previous support on a 3 hour chart.

Bull/Bear Case

With such a extreme move in the index, it is difficult to gauge what would be the next move by market makers.

The bull thesis for tomorrow’s move is that we get a dead cat bounce to first resistance level at key EMA. The support and resistance levels marked form a great liquidity channel and we may see the index move in this range for a while before the it picks on a direction.

The bear thesis for tomorrow’s move is, we may continue the sell-off even lower to 5,800s. This would not only gap fill but also rest on 200 EMA.

Market Sentiment and Key Indicators

The volatility in the market is through the roof experiencing similar move to the one observe in August on Yen weakening the Dollar. The VIX will not encounter its first resistance until the 29-30 range.

Key Takeaways & What’s Next

The SPX's sharp 3% decline on December 18, 2024, marks a significant shift in market sentiment, primarily driven by the Federal Reserve's cautious stance on future rate cuts.

Watch for potential support around the 5,800 level for the SPX. A breach of this level could signal further downside potential.

Keep an eye on how different sectors react to this new environment. Technology and small-cap stocks were hit particularly hard in the recent selloff, and their performance could be indicative of broader market trends.

As we move into 2025, the market will be assessing the impact of the new administration's policies. The Fed has indicated it will only factor in these policies once implemented, which could lead to further adjustments in rate cut expectations.

Closing Thoughts

With the recent pullback, do you think we will have a Santa Rally?

What’s your take on market tomorrow? Comment below.

The S&P 500 closed at a record high of 6,074.08 on Monday, gaining 0.4% in a tech-driven rally that showcased the continued dominance of the sector. Investors remained cautiously optimistic as they awaited the Federal Reserve's crucial meeting later this week, with expectations of a potential interest rate cut fueling market sentiment

Market Drivers and Economic Reports

The S&P 500's 0.4% gain on Monday was primarily driven by anticipation of the Federal Reserve's two-day meeting starting Tuesday. Investors are widely expecting another interest rate cut, which has been supporting the bullish sentiment in the market.

Key factors influencing today's market movement include:

1. Federal Reserve Meeting: All eyes are on the upcoming FOMC meeting, with traders expecting a 25 basis point cut in interest rates. The Fed's outlook for 2025 will be crucial in determining the market's direction.

2. Tech Sector Performance: Technology stocks led the charge, with the Nasdaq Composite surging 1.2% to a new all-time high of 20,173.89.

3. Bitcoin makes new all-time high of 107,821.

Notable Stock Movements

Several stocks played significant roles in today's market performance:

1. Broadcom (AVGO): Shares soared 11.2%, leading the S&P 500 higher. The chipmaker's strong performance was fueled by better-than-expected quarterly results and Bernstein analysts naming it one of their top semiconductor picks.

2. Tesla (TSLA): The stock jumped 6.1% to an all-time high, driven by Wedbush analysts' optimistic outlook on the company's AI and full self-driving technology potential.

3. Micron Technology (MU): Shares climbed 5.6% as investors anticipate strong year-over-year sales and profit growth in the company's upcoming quarterly results.

4. Super Micro Computer: The stock experienced a decline following its removal from the Nasdaq 100 and reports of potential capital raising plans.

Technical Analysis

Recap

Today will gap filled and sold off at the closing hour, creating a even stronger trendline. This forms a flag pattern giving us a range of where markets can go before breaking out on either sides.

Bull Case

After a weak close, there are slim chances that we hold the pivot region and maintain the green EMA band to retest the resistance zone.

With plenty of support from the EMA bands, we may end up having a false breakout of the flag pattern.

Bear Case

Coincidently, the support line and projection of 72 EMA (Sea Blue ribbon) coincides. Since we had a weaker close, we may continue the rejection and land in the support area, consolidating at 72 EMA and support level.

Market Sentiment and Key Indicators

The volatility in the market is eminent as we await Fed’s rate cut.

VIX climbing up to 15.16 to kiss its first pivotal resistance. This coincides with the 200 EMA orange ribbon as well.

Key Takeaways & What’s Next

• Core retail sales before market opens.

• Fed’s interest rate cuts on Wednesday.

• Key SPX levels to watch out for are 6,086 and 6,060.

Closing Thoughts

With the Nasdaq making new highs and S&P 500 with a pullback, where do you think the market is heading?

What’s your take on market tomorrow? Comment below.

Introduction

The S&P 500 (SPX) surged to near-record levels on Wednesday, driven by a rally in big tech stocks and renewed optimism about potential interest rate cuts. The index closed just shy of its all-time high as investors digested the latest inflation data and its implications for Federal Reserve policy.

The SPX opened at 6,040.91, reached an intraday high of 6,089.54, and closed at 6,084.19, marking a robust gain of 0.8% for the session. Nasdaq composite soar 1.8% and breaking the 20,000 level for the first time in history. Meanwhile, the Dow Jones Industrial Average lagged, dipping 0.2% to 44,148.56

Market Drivers and Economic Reports

The Consumer Price Index (CPI) report released today played a pivotal role in driving market sentiment. The data showed that 12-month inflation rose to 2.7% in November, up slightly from 2.6% in October, matching economists' projections.

While this indicates persistent inflation, it aligned with forecasts and reinforced expectations of a potential interest rate cut by the Federal Reserve at its upcoming meeting next week.

The market's reaction to the CPI data was notably positive. Investors interpreted the report as a sign that the Fed might adopt a more dovish stance, with market participants now pricing in a 98% chance of a quarter-point rate cut next week, up from 86% before the inflation report's release. This shift in expectations contributed significantly to the day's market gains.

Technology stocks were the primary drivers of today's market rally:

1. Broadcom (AVGO) emerged as the top performer in the S&P 500, surging 6.6%. The semiconductor firm's shares soared following reports of a potential partnership with Apple on a new AI chip.

2. Big Tech stocks led the broader market gains, propelling the Nasdaq composite to break the 20,000 level for the first time in history.

3. Tesla (TSLA) continued its strong performance, with the stock up 43% year-to-date, benefiting from increased attention to CEO Elon Musk's advisory role to the current administration.

4. Google (GOOGL) exhibiting strong momentum following the announcement of its new quantum computing chip, Willow.

However, not all sectors saw gains:

1. Health care companies with pharmacy benefit management (PBM) operations faced pressure. CVS Health (CVS) fell 6.2%, while UnitedHealth (UNH) and Cigna (CI) also moved lower due to a proposed bipartisan bill affecting their pharmacy businesses.

2. Uber Technologies (UBER) slipped 5.8% following General Motors' announcement to step away from its Cruise self-driving taxi initiative.

Technical Analysis

Recap

We ripped right through our resistance and liquidity zones on Core CPI results. There was some weakness at close due to resistance from previous highs. Today’s gap up might already be pricing in the fed rate cuts.

Bull Case

On the hourly chart, SPX can play in the liquidity zone near pivot before testing previous highs. Since Nasdaq broke 20,000 - it could be a strong catalyst for SPX to make new highs as well. The only resistance we face at this point it previous high.

Bear Case

Coincidently, the support line and projection of 50 EMA (Blue ribbon) coincides. Since we had a weaker close, we may reject previous high this week and land in the support area, consolidating at key EMA level.

Market Sentiment and Key Indicators

Market sentiment remains predominantly bullish, with investors showing increased confidence in the Federal Reserve's potential rate cut next week. The VIX, often referred to as the fear gauge, has dropped significantly, indicating reduced market anxiety.

Fed Funds Futures: Market participants are now pricing in a 98% chance of a quarter-point rate cut next week, up from 86% before the latest inflation report.

Treasury Yields: The yield on 10-year Treasuries dropped to 4.22%, reflecting changing interest rate expectations and increased bond market optimism.

Key Takeaways & What’s Next

Federal Reserve Meeting

All eyes are on the Federal Reserve's policy meeting scheduled for December 17-18. Market expectations for a rate cut have surged, with a 96% probability priced in for a 25 basis point reduction.

Inflation Outlook

The latest CPI data showed inflation rising to 2.7% in November, slightly above the Fed's 2% target. While this increase was in line with expectations, persistent inflationary pressures may influence the Fed's future rate decisions.

Technical Levels

The S&P 500's ability to sustain levels above 6,080 will be crucial for maintaining bullish momentum. A definitive break above the current all-time high could trigger further buying interest and potentially push the index towards new record territory

Closing Thoughts

With the Nasdaq breaking 20,000 and the S&P 500 on the cusp of a new record, are we witnessing the start of another leg up in this bull market, or is caution warranted at these lofty levels?

What’s your take on market tomorrow? Comment below.

Introduction

The S&P 500 experienced a nuanced trading session today, reflecting the market's collective holding of breath ahead of critical economic revelations. With Wednesday's inflation data looming like a potential market-moving thundercloud, investors displayed a mix of caution and calculated positioning, resulting in a measured pullback that speaks volumes about the current economic landscape.

Market Drivers

The SPX opened at 6,052.85, reached a high of 6,059.32, touched a low of 6,024.73, and closed at 6,034.91, down 0.3% for the day. Semiconductors experienced declines, with Oracle's disappointing earnings report weighing on market sentiment.

Oracle reported disappointing quarterly results, with earnings per share of $1.47 falling short of the expected $1.48. Revenue came in at $14.06 billion, missing the projected $14.1 billion. This earnings miss led to a significant stock decline, with shares dropping nearly 7% on Tuesday, marking the company's steepest daily loss in 2024

Google surges 5.6% as a result of optimism surrounding the recent unveiling of its quantum computing chip, Willow, which is anticipated to revolutionize computing capabilities.

Technical Analysis

Recap

SPX ended up getting a strong pullback as expected, closing nearly at the support level. Depending on the inflation data, we might as well see a continuation of a down trend.

Bull Case

On the hourly chart, SPX broke the 50 EMA (blue ribbon) and closed as a key support. We may see an uptrend towards liquidity zone and meeting our first resistance towards uptrend at 6,057.

Bear Case

We may gap up to grab liquidity and sell off whole day meeting our first support at 6,021. At different time frames, we have several support levels that may help the index to avoid free fall.

6,000 - 6,005 is the key range to look out for if we sell off heavily over this week if not tomorrow.

Market Sentiment and Key Indicators

Today’s pullback might already be pricing in the inflation data.

Market might expect volatility on wednesday which may lead us to 14.80 range. Although, on hourly chart, VIX showed strong rejection of 200 EMA - 13.75 area still might be in play leading SPX to trend upwards.

Key Takeaways & What’s Next

• SPX at pivotal point. Keys levels to watch out are 6,053 and 6,021.

• Inflation data before market opens.

• Crude Oil Inventories.

• U.S. 10-Year Note Auction.

• Adobe (ADBE) reports earnings tomorrow at close.

Closing Thoughts

Today's market action wasn't just about numbers, but about anticipation. The SPX's modest decline represents more than a simple price movement—it's a strategic pause, a collective breath-holding by investors parsing potential Federal Reserve policy implications. The 0.3% retreat signals a market at a delicate inflection point, where each economic data point could trigger significant portfolio realignments.

What’s your take on market tomorrow?

Introduction

The S&P 500 (SPX) index retreated from its recent record highs on Monday, December 9, 2024. The index fell 37.42 points, or 0.6%, to close at 6,052.85. This decline came after the S&P 500 had reached its 57th all-time high of the year in the previous session.

Key Developments

• Market Leaders Falter: A slide in market superstar Nvidia contributed significantly to pulling U.S. stock indexes down from their records.

• Broad Market Decline: The retreat was not limited to the S&P 500. The Dow Jones Industrial Average fell 240.59 points, or 0.5%, to 44,401.93, while the Nasdaq composite dropped 0.6% from its own record high.

• Sector Performance: The decline was broad-based, with most sectors experiencing losses.

Market Drivers

• Nvidia Investigation: Reports surfaced that Chinese authorities are investigating the semiconductor giant Nvidia for possible antitrust violations, which likely contributed to the market's decline.

• Global Developments: Despite the U.S. market's retreat, stocks in Hong Kong surged after senior Chinese officials endorsed a 'moderately loose' monetary approach.

• Commodities Movement: Oil and gold prices increased following the removal of Syrian President Bashar Assad.

Despite today's setback, the S&P 500 remains up 26.9% year-to-date, reflecting the strong performance of U.S. equities in 2024

Technical Analysis

SPX broke the support early morning and began selling off throughout the day. Market was choppy mid-day creating a huge liquidity zone before making newer lows to end up filling the gap from a week ago and concluded a weaker close.

Bull Case

On the hourly chart, SPX has some support from 50 EMA (blue ribbon). The index may try to grab liquidity from 6,063 level and try to test 6,078 or even aiming to make newer highs. Although, the market may wait until inflation data to make that move.

Bear Case

Market may easily give up 50 EMA on hourly chart to test the support area around 6,038. On a larger time frame, there is enough room for the index to free fall till next key level of 6,006.

Market Sentiment and Key Indicators

1. Inflation Data: The market is anticipating significant inflation statistics to be released this week, which could influence expectations regarding the Federal Reserve's monetary policy.

2. Federal Reserve Meeting: There's an 85% probability of a quarter-point rate cut at the conclusion of the Fed's meeting on December 18.

3. Economic Optimism: Small-cap stocks outperform large caps, with the Russell 2000 Index gaining 11.0% compared to the S&P 500's 5.9% return, reflecting optimism about pro-business policies and economic growth.

4. Sector Performance: Cyclical sectors outperformed in November, with consumer discretionary, financials, and energy rallying on prospects of deregulation and increased M&A activity.

Monday’s market decline likely pushed the VIX higher hitting key EMA ribbon. We may retest the support and try to hit 14.80 level or even higher. This could lead the markets to make new lows of the week. If we break below 13.75, we are again in the run to make newer highs.

Key Takeaways & What’s Next

Watch for the SPX to find support above the 6,000 level. A rebound above 6,090 could signal a resumption of the uptrend.

The next major catalysts will be upcoming Inflation data on Dec 11, 2024 and Federal Reserve meeting and interest rate decision on Dec 18, 2024.

Closing Thoughts

With the market pulling back from record highs, do you think this is a healthy consolidation or the start of a larger correction? Share your thoughts in the comments!

Introduction

SPX hits record high on strong jobs data with Tech leading the charge. The S&P 500 reached a new all-time high on Friday, December 6, 2024, closing at 6,090.27 after a robust jobs report bolstered investor confidence.

The SPX opened at 6,081.38, touched a high of 6,099.97, and closed at 6,090.27, up 0.25% for the day.

Technology stocks led the rally, with the Nasdaq composite climbing 0.8% to its own record high. Consumer discretionary stocks also saw gains, rising by 0.8%.

Market Drivers & Economic Reports

The market's surge was primarily fueled by the November jobs report. Employers added 227,000 jobs, slightly higher than anticipated, while the unemployment rate rose to 4.2%, in line with expectations. This data suggests a robust economy without overheating, reducing immediate inflation concerns.

Technical Analysis

• SPX broke Thursdays trend to making new highs on Friday.

• Rejection at 1.618 Fibonacci level - 6,099 level could be tested again on Monday.

• Key liquidity zone to watch out for Mon, Dec 12, 2024.

• 6,091 liquidity zone can become a key support level if the market tries to make newer highs.

Market Sentiment and Key Indicators

• Seems like markets are already pricing in a strong chance of Fed cutting the rates mid Dec by 25 bps.

• VIX has enough fuel to drive the markets even higher.

Key Takeaways & What’s Next

Looking ahead, investors should watch if the SPX can hold above 6,081 as support. A move above 6,100 could signal a continuation of the current uptrend. The next major catalyst will be the Federal Reserve's interest rate decision scheduled for December 18.

Closing Thoughts

Do you think the SPX can maintain its momentum and break through 6,100 next week, or will we see a pullback after this record-setting run? Share your thoughts in the comments!