Weekly Stock Market Update & SPY Technical Analysis
Woohoo! The U.S. labor market isn’t doing well. Wait, what? Yes…the market celebrated last week when the labor market data came in showing that the economy added 23,000 jobs in July, compared with expectations for roughly 80,000 jobs to be added.
Normally, losing jobs is not something investors would celebrate, but right now the market is looking at almost everything through the lens of the Federal Reserve. The unemployment rate actually fell slightly to 4.1%, but part of that decline came from people leaving the labor force rather than a sudden improvement in employment. The weak payroll number helped ease concerns that the economy was running too hot and significantly reduced expectations that the Fed would need to raise interest rates again in September.
That was enough for investors. All major indexes surged on Friday. Ironically enough it wasn’t because odds of a rate cut went up, it was only because odds of a rate hike went down for next month’s FOMC meeting.
What Matters this Week
This week’s focus shifts to inflation data. The market got confirmation last week that the U.S. labor market is cooling, so an improvement in inflation this week could boost optimism even more.
Both the CPI and PPI reports will be released, with economists currently expecting headline inflation to cool slightly. Lower fuel prices could help put downward pressure on headline inflation, but the bigger focus will be whether underlying core inflation continues moving in the right direction.
If inflation cools alongside a weakening labor market, it would give the Federal Reserve even more reason to remain patient on interest rates…adding more fuel to the market rally.
Notable Earnings this Week
- Monday: AST SpaceMobile, RocketLab
- Tuesday: Sea Limited ($SE), Lumentum Holdings ($LITE), CoreWeave ($CRWV), Super Micro Computer ($SMCI), On Holding ($ONON), Quantinuum ($QNT), Cava ($CAVA)
- Wednesday: Cisco ($CSCO), Coherent ($COHR), Cerebras ($CBRS), Trimble ($TRMB), Brinker International ($EAT)
- Thursday: Applied Materials ($AMAT), Nu Holdings ($NU), JD ($JD)
We’ll be covering any major earning movers throughout the week. Earnings season often provides strong set-ups for weeks and months that follow…look for names that breakout of a trend on strong earnings + earnings outlook guidance raise.
SPY Technical Analysis
The rally last week could either be a major bull trap…or it can be the start of a multi-week rally if, AND ONLY IF, inflation data comes in better than expected today. That would be a major reinforcement for the buyers to keep the rally going. The range on SPY is pretty straightforward…the breakout point was 760.00, so buyers need to defend that level to maintain macro trend level. The overnight trend is currently bullish, but that could change through the week. We’ll update the levels for you in Telegram and automatically in our Hyper Terminal.