Week 44, 2024: Big Tech Earnings Are In – Here’s What’s Next + Spooky Promo
Fed, Elections, and More: Prepare for Market Shake-Ups
To Smart Investors,
We’re back with fresh, unbiased data for this week in the US stock market.
The Spooky Halloween Promo is here for 24 more hours!
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Other Important Announcements:
This week I will publish a Sector Rotation Strategy ETF portfolio 😎
Last week, I had a lot of trouble with the Substack backend, and I published less content than I planned, so the Sector Rotation ETF is coming this week.
This week, I will also post an analysis of the Telegram Signals over the last month.
As always, I have also written a deep dive on last week’s market recap, my predictions for the next week, and an ELI5 (Explain Me like I’m 5).
You can also find my typical quant data and the stock insiders’ significant buys/sells with my interpretation.
Every day, I post summaries of news that are relevant for Investors. I try to post about 30 minutes before the markets open and cover the last 24 hours of news. On the weekends, I post in the afternoon.
Today’s news:
10-year performance of Fortress of Solitude portfolio
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S&P500 Heatmap over the last week
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Excel data:
SPY in the last weeks
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Technical Observations
1. Pattern Analysis
Symmetrical Triangle Formation (Early October)
SPY consolidated within a symmetrical triangle for most of early October. This pattern indicated indecision in the market, balancing between bullish and bearish pressures. Triangles often precede high-momentum moves, which was confirmed as SPY broke upwards, initiating a rally towards the Rising Wedge formation.Rising Wedge Breakdown (Mid to Late October)
Following the triangle breakout, SPY moved into a rising wedge structure, characterized by converging trendlines. This wedge signaled an impending trend reversal as it coincided with diminishing upward momentum. The breakdown from this wedge, combined with bearish volume spikes, triggered a shift from a bullish rally to a corrective phase, driving SPY downwards.
2. Systematic Buy Signals
Throughout this period, multiple buy signals from my indicator emerged within the trend structures, suggesting minor bullish reversals. However, each signal encountered heavy resistance due to high selling pressure in a broader bearish trend context. Notably:
Triangle Breakout Buy Signals: Provided short-lived bullish momentum but failed to reach sustainable new highs, indicating exhaustion in the upward trend.
Rising Wedge Buy Signals: Bullish attempts within the rising wedge showed weakening, with each peak failing to hold, culminating in the bearish breakdown.
3. Volume and Liquidity Analysis
Volume Divergence: Volume significantly increased during breakdowns and pullbacks, reinforcing bearish intent. In contrast, rallies showed low-volume characteristics, suggesting weaker institutional support on the buy-side.
Liquidity Zones: Notable liquidity pockets have been created around $564 and $586-$588 due to price clustering in these ranges. These zones act as critical support and resistance levels that will guide SPY's short-term movements.
Projections and Key Levels
1. Immediate Downside Targets
Support at $564: This level represents a strong demand zone and the initial downside target. If SPY breaches this level, we may see a further decline towards $558, the next significant support zone based on historical price structure.
2. Upside Potential and Resistance Zones
Resistance at $586 and $588: These levels serve as key short-term resistance targets. A sustained close above $588 with volume would be required to invalidate the bearish trend and signal potential for further bullish recovery.
Failure Scenario: Failure to breach $586-$588 with strength will likely reinforce the current bearish momentum, making another retest of $564 highly probable.
3. Indicator Analysis
Momentum Oscillators: Momentum indicators, such as the Relative Strength Index (RSI), are currently in the lower range, suggesting that SPY could be oversold in the near term. However, oscillators can remain low during strong downtrends, so a reversal signal would require confirmation from other indicators.
Moving Averages: Shorter-term moving averages (e.g., 10 and 20-period) have crossed below longer-term averages, further indicating a bearish crossover. A sustained move below these averages could strengthen downside projections.
Advanced Projections: Bearish Continuation or Range-Bound Movement?
Given the structural breakdowns and bearish momentum, SPY remains biased towards further downside unless it can reclaim key resistance levels with volume. In a high-probability scenario:
Bearish Continuation: SPY is likely to test the $564 support level. If selling pressure intensifies, a breakdown below this level would expose the $558 zone as a potential next target, aligning with the longer-term support.
Range-Bound Scenario: If SPY holds above $564 but fails to clear $586-$588, it may consolidate within this range, potentially establishing a base for a later rally or a continued sell-off depending on broader market sentiment.
Please send feedback and ideas using comments, PMs, or email. I answer all emails and PMs personally. No personal assistant BS here.
And, as always — stay informed — and do your own due diligence,
Jack the Signals Doctor, MIT PhD
Market Recap: October 28 - November 1, 2024 and Predictions for Next Week:
Executive Summary
The past week in the financial markets was marked by mixed performances and significant economic data releases. The S&P 500 and Nasdaq Composite both declined over 1%, while the Dow Jones Industrial Average experienced a fractional loss. Major tech companies reported earnings with varied investor responses: Alphabet ($GOOG) and Amazon.com ($AMZN) saw gains after strong results, whereas Apple ($AAPL), Meta Platforms ($META), and Microsoft ($MSFT) faced declines due to concerns over future growth. Economic data revealed a deceleration in U.S. GDP growth to 2.8% in Q3 and weaker job growth in October, with nonfarm payrolls increasing by just 12,000. Treasury yields rose, with the 10-year yield closing at 4.37%. Inflation indicators showed modest easing, but core inflation remained above the Federal Reserve's 2% target.
Detailed Weekly Breakdown:
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