Markets Grind Higher

Key inflation data will ignite or throw cold water on rally 🚿

Author

Snowfish
May 12, 2024

Here is a quick recap of Markets for the Week of May 10th, 2024 and what we are watching this week

Mostly quiet week ahead of inflation data this week.

S&P 500 +1.9% 

Russell 2000 +1.2%

Nasdaq Composite +1.1%

Dow Jones Industrial Average +2.2%

Upside moves last week were driven by carryover momentum from the post-FOMC rally that has fueled recent gains, along with energy to retest all-time highs for the S&P 500 and Nasdaq Composite.

Here are the key points from last week:

  • Consumer Sentiment for May - dropped to 67.4 in May (expected 76.5; prior 77.2) and showed a jump in year-ahead inflation expectations to 3.5% from 3.2%.
    - The downturn in sentiment was driven by decreases across age, income, and education groups, and revolved around worries pertaining to inflation, unemployment, and interest rates.

  • Earnings standouts 📉  - Disney -6.9% and Uber -3.2% 🤕

S&P 500 heatmap for the week

S&P 500 sector breakdown

The Week Ahead

Monday, May 13th - Friday, May 17th, 2024

Attention this week will be focused on:

  • Producer Price Index (PPI) - for April are expected to rise 0.3% vs. a 0.2% rise in March. The annual rate is seen at 2.2% vs. 2.1%.

    - The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller.

  • Consumer Price Index (CPI) - have come in on the high end the past four reports. Overall prices as well as the core both rose 0.4% in March with April consensus estimates to come in at 0.3%. Annual rates, at 3.5% overall and 3.8% core, didn't show any improvement in March with limited improvement expected for April, at 3.4% and 3.6%.

    - CPI is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation for the consumer. Annual inflation is also closely watched.

Most Anticipated Earnings this week

$SPY: S&P 500 grinded higher last week and just 1% from it’s all time high.

The inflation data this week will decide if this rally is just getting started or cold water gets thrown on it.

SPY over 520 trades to 522,525,528,530. Under 518 pulls back to 515,512,508,506

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I do a weekly Markets analysis every Monday at 8:30pm EST via zoom for the Ceni Capital Community This week, I will speak about the key inflation data this week and stocks I am watching for potential Swing Trades.

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🚨Watchlist 👨‍🏫

🏦 $FAS: Financials after cooling off for the month of April are looking like they are ready to start their next move up.

Did a video on them last week, see here.

FAS over 110 look for 113,118,120 and 125. Under 105 pulls back to 102 and 98

$BABA: Alibaba is scheduled to report earnings on Tuesday, can it finally shift momentum and start a meaningful rally?

The Chinese e-commerce titan is expected to report net profit of 15.25 billion yuan ($2.11 billion) vs. 23.52 billion yuan a year earlier.

BABA over 82 has room to 86,90,95,100. Under 77 down to 75 and 70

$ULTA: Ulta Beauty after a 30% selloff may be setting up for a decent dead cat bounce ahead of its earnings later this month.

ULTA over 405 has room to 410,415,420,430. Under 395 down to 390 and 385.

⚡$XLE: Energy sector is bull flagging right above its previous all time high, it may need a little more consolidation before heading higher but it’s setting up nicely for a swing opp soon.

XLE over 96 has room to 98,102,105,110. Under 92 to 90,88,85

*None of these stocks above are recommendations to buy, sell or trade. We do not give financial advice, you should always do your own due diligence and practice proper risk management.*

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