Stock Market Summary

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The News Buzz

• On a significant note, NVDA briefly outpaced MSFT and AAPL on Tuesday, emerging as the world's most valuable company. This remarkable feat, driven by the escalating demand for its AI chips, has seen NVDA's value skyrocket by 180% YTD and more than triple over the past year.

• Chipmakers were among the market's weakest areas for the second day in a row, which helped send the PHLX Semiconductor Index (SOX) to a 1.1% loss for the week. Shares of banks, consumer staples, and utilities were also under pressure Friday. Energy stocks were soft behind a drop in WTI Crude Oil (/CL) futures. Crude oil still surged 3.3% for the week after U.S. gasoline inventories unexpectedly fell, signaling stepped-up summer driving demand.

• Of concern, the Congressional Budget Office projects the federal budget deficit to surge to approximately $1.9T this year, surpassing its previous estimate of $1.5 T. This forecast considers increased spending for student loans, Medicaid, and the recently passed $95B foreign aid package. The national debt is expected to exceed $56T over the next 10 years, or 122% of GDP, surpassing the 106% seen in 1946 after World War II.

• The S&P 500 has achieved a remarkable feat, going 377 days without a 2.05% sell-off. According to FactSet data compiled by CNBC, this is the longest stretch for the benchmark since the great financial crisis. It's worth noting that the index did not experience a gain of at least 2.15% at that time either.

• Friday served up another helping of conflicting economic signals for investors. The Conference Board's Leading Economic Index^® (LEI) for May fell 0.5%, a larger drop than the 0.3% analysts expected. By contrast, the U.S. services sector activity jumped to a 26-month high in June, and manufacturing activity hit a three-month high, based on S&P Global Flash PMI readings.

• Investors will be focused on a heavy slate of data next week, including the Personal Consumption Expenditures (PCE) price index report, the Federal Reserve's preferred inflation gauge

NVDA Update

• I have been pointing out how important NVDA and SMH/SOX are for the Nasdaq 100 and the overall stock market.

• A few days ago, I pointed to a possible key reversal in SMH/SOX. I think we also had one in NVDA.

• The chart below shows a sharp reversal in NVDA. 

• NVDA has a confirmed target for the 10D cycle to 120+/-1, approximately (red rectangle).

• The target overlaps the 40D FLD band, which may act as support.

• But there is a solid chance that NVDA may break below the gray FLD band and generate a 40D cycle target to about 100+, into the gap in May.

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Historic Divergences in Nasdaq 100 (QQQ ETF)

• The chart below, courtesy of SentimenTrader, shows extreme divergencies in QQQ breadth. 

• On Friday, there were fewer than 3% more stocks at 52-week highs than lows. This exceptionally weak reading was last seen about 25 years ago.

• This is one more historic signal of once in 25 years or 2^nd time in 100 years types.

Market Summary

Market Data

As of close on 21 June 2024.

What Has Been

•  The Asian markets were mixed, and European markets were red on Friday.

• The US indexes were mixed on Friday after a possible reversal for SPX and NDX on Thursday. A hesitation day.

• Dow advanced 15.15 points or 0.04% to 39,149.91. 

• S&P 500 declined 32.23 points or -0.18% to 17,689.36.

• Nasdaq declined 8.47 points or -0.15% to 5,464.7.

• Russell 2000 advanced 4.64 points or 0.23% to 2,022.03.

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• Based on the cycles and preferred EW counts, I expect indexes to press down into . . .

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