Here is a quick recap of what happened in Markets for the Week of July 28th, 2023 and what we are looking for in the week ahead 🤓

Even though things got a bit shaky with Thursday afternoon’s selloff; Bulls were able to hold on and close the week green.

The selloff was caused on news the Bank of Japan voted to conduct its yield curve control policy with greater flexibility, saying it will maintain the target rate at 0.5%, but will offer to purchase 10-yr JGBs at 1.0% every business day through fixed-rate purchase operations.

The dip was brought up again as none of the events this week changed the market's view that has been driving the recent gains since May.

Investors continue to admire the resiliency of the US economy, expect that the Fed is close to being done raising rates, and hope that earnings growth will accelerate in the second half of the year.

Here are the key points from last week:

• Dow Jones Industrial Average snapped it’s 13-day win streak on Thursday it’s longest such stretch since January 1987. Generally speaking, the index was higher one year later after rising for 12 days or more, according to Dow Jones Market Data. It was also generally higher one month and three months later.

• Treasury Yields moved higher which is something to keep an eye on to see if that continues as that usually is not good for risk on assets like stocks, options, crypto. The 10-year Treasury bills increased more than the 2-year Treasury pulling the 2-10-year yield curve inversion back below 100bps.

• Federal Reserve raised rates by .25 on Wednesday bringing the federal funds target range to 5.25% – 5.50%, a 22-year high! This marked the 11th interest rate hike since the Fed began lifting rates in March 2022. Fed Chairman Powell signaled that they would continue to be data dependent. Their next meeting will be in September.

• The European Central Bank (ECB) also increased rates by .25 on Thursday, bringing the central bank’s main rate to 3.75%. The ECB began its rate hikes last July when eurozone inflation was nearly 9%. ECB President Legarde signaled that the bank remains open regarding the decision to hike or pause at their September meeting.

• United States 2nd Quarter GDP grew at a 2.4% annualized pace better than analyst 2% expectations. This Q2 reading is up from Q1’s reading of 2% and paints the narrative in support of the resilience of the US economy. This marks the fourth consecutive quarter of positive GDP growth.

• Consumer Confidence rises to highest level in two years +7 points from June’s reading to 117 in July. Rising confidence among consumers is a result of inflation decelerating while labor markets remain strong. However recession fears still loom with 70.6% of consumers expecting a downturn within the next 12 months.

• Q2 Earnings Update 164 S&P 500 companies reported last week with 79% beating earnings estimates and 63% beating sales estimates. The main focus was on Microsoft (MSFT), Alphabet (GOOGL), and Meta (META) and they all reported Q2 top and bottom line beats. Positive guidance favored shares of GOOGL and META which closed up +10% for the week. While MSFT shares headed in the opposite direction after stating that they only expect gradual revenue increases from AI tools.

SPY: S&P 500 broke that flag I wrote about last week as it traded 459 and rejected following the big selloff Thursday on news from the Bank of Japan. The dip did end up getting brought up though and is trading in a 452-458 range as it continues to grind higher. July will mark its 5th straight monthly gain and 450-460 is a key supply zone from February-March 2022 so it is definitely vulnerable for a pullback.

QQQ: Qs also made a lower high last week and finding resistance at 384 but holding support at 380; bullish above, bearish below.

DJI: The Dow continues to flag after breaking through the neckline of its inverted H&S at 34,400. The major market buy signal Dow Theory remains in full effect even if we get a pullback to retest it’s breakout.

Swing Trades Recap 📊

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(Blue arrow is our buy alert, red arrows are sells as price targets get hit)

OSTK We took 10% off our swing trade in Overstock this week as it traded through $38 for +82% gain. OSTK triggered a swing entry at $20.96 back on June 21st.

TDOC we took 10% off our swing trade in Teledoc Health this week as it tagged our $30 price target for +18% gain. TDOC triggered a swing entry at $25.36 back on July 18th

*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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