The S&P 500 (NYSEARCA:SPY) rally faded last week as traders lacked conviction.
The week ahead should see choppy as the focus turns to earnings reports and interest rates.
See my forecast (and in-depth video) below for more details.
S&P 500 Cycle Outlook for the Week of April 23:
- The stock market rose/fell last week, with the S&P 500 (SPX) up 14 points to 2670, an increase of 0.5%.
- With the Syrian bombing occurring over the previous weekend, the market last week shifted its focus from political news to the corporate earnings and rising interest rates.
- Our projection this week is for more downside price action in the stock market, followed by a bounce that could possibly last into the following week.
S&P 500 (SPX) Chart with Daily Bars
Over the weekend, the US led a joint bombing mission targeting Syrian chemical weapons facilities. On Monday, stocks rallied on relief that the intervention did not trigger a response.
On Tuesday, Netflix (NFLX) reported in-line earnings and stronger than expected revenue and subscriber growth in the US and abroad, pushing the NASDAQ 2.1% higher. Chinese industrial production came in at 6.0%, compared to expectations of 6.4%, and US building permits for March came to 1.35 million versus estimates of 1.33 million.
On Wednesday, Goldman Sachs (GS) reported stronger than expected Q1 earnings at $6.95 versus $5.58 expected and revenue at $13.4 billion versus $8.7 billion. The Fed released its qualitative Beige Book, which indicated concerns about trade policy, notably that resulting higher prices were already affecting many businesses.
On Thursday, Apple (AAPL) fell by nearly 3%, after a report of weak iPhone 8 sales and Taiwan Semiconductor (TSM) gave a weak revenue forecast for its June quarter. Also, the Philadelphia Fed released data for its April manufacturing index of 23.2, compared to estimates of 20.8.
On Friday, stocks were down, led by falling bonds and weakening tech stocks. Actually, the jump in long-term yields brought some relief, as it may prove difficult for the Fed to continue to raise short-term rates without inverting the yield curve. As explained by Governor James Bullard, “I am getting concerned about the flattening yield curve, [which is] a powerful predictor of economic downturns.”
With equities up last week, gold was down 0.77%, oil was up 1.32%, the euro was down 0.35%, and bonds were down 1.70%.
Our Projection for the S&P 500 This Week
Our approach to technical analysis uses market cycles to project price action. Our projection for the S&P 500 (SPX) in the coming week is for more downside price action, followed by a bounce that could possibly last into the following week.
For an introduction to cycle analysis, check out our Stock Market Cycles video, or watch the askSlim Market Week show every Friday on our YouTube channel.
Here’s our latest askSlim Market Week:
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
