Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

When Will the Stock Market’s Bullish Momentum Snap? Charts You Need to Watch

by July 10, 2024
July 10, 2024
When Will the Stock Market’s Bullish Momentum Snap? Charts You Need to Watch

With the S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) hitting all-time highs and the Dow Jones Industrial Average ($INDU) trying hard to get there, are the broader indexes overstretched and ready to snap?

At the moment, all indications point to a bullish move. Investors are anxiously awaiting the June CPI data point that drops on Thursday. If it comes in much hotter than expected, there’s a chance of a selloff. But that could change during the trading day; how the market closes is more important.

The Stock Market Big Picture

Overall, the macro picture is bullish. The S&P 500 and Nasdaq Composite are trading well above their 20-day simple moving average (SMA). This is predominantly driven by the price action in the Magnificent Seven stocks. Apple (AAPL) and Tesla (TSLA), two stocks hit hard earlier this year, have overcome their tailwinds and are trending higher.

The bullish outlook may not be as rosy outside of the large-cap AI-related world. Look at the daily chart of the S&P 500 Equal Weighted Index ($SPXEW) below.

CHART 1. THE S&P 500 EQUAL-WEIGHTED INDEX ON THE VERGE OF BREAKING OUT? Look for the index to break above the triangle pattern and the bullish MACD crossover to confirm the market’s bullish move.Chart source: StockCharts.com. For educational purposes.Though not hopeless, it’s still got some room to cover before hitting new highs. $SPXEW is consolidating in a large triangle pattern and has avoided breaking below the lower side thus far. It’s been closer to the lower line in the last few days, but Wednesday’s 0.89% rise has brought it closer to the pattern’s upper side. This is something to watch closely.

The Moving Average Convergence/Divergence (MACD) oscillator in the lower panel shows the lack of upside momentum at present. However, the histogram has moved just above the zero line, and it looks like the MACD line has just crossed above its signal line. If this crossover follows through, there’s a chance $SPXEW could break through the upper triangle line and reach its all-time high. This would be a further optimistic indication of the overall bullishness of the equity market.

If you isolate the Technology sector and look at the Nasdaq 100 Equal-Weighted index ($NDXE) chart, you’ll see that it’s inching up towards hitting new closing highs. However, the Nasdaq 100 index ($NDX) is outperforming $NDXE by about 17%.

CHART 2. NASDAQ 100 EQUAL-WEIGHTED INDEX HITS NEW HIGHS. In spite of hitting new highs, the Nasdaq 100 index is outperforming the Nasdaq Equal Weighted index by about 17%.Chart source: StockCharts.com. For educational purposes.

It’s all about tech stocks. Technology has been the best-performing sector for the last year. If you look at sector performance for the past year, all 11 S&P sectors are green—yes, even Real Estate.

The bullish outlook is still in play from a bird’s eye perspective. Keep a close eye on the charts of the broader indexes. If they break below significant moving average support levels, objectively analyze your holdings to see if it makes sense to sell them.

It’s All About Interest Rate Cuts

According to the CME FedWatch tool, the probability of a September rate cut continues to increase, as does one of a second rate cut in December. The stock market has priced in these cuts even though Fed Chair Powell, in his recent testimony, didn’t indicate when rate cuts will start.

There’s still more data before the September meeting, so have your ChartLists within easy reach. For as long as investors are speculating rate cuts, the market will probably keep moving the way it has been. But when those rate cuts arrive, things may change. Consider watching the bond market, which can often be a leading indicator of when interest rate cuts will start.

The weekly chart of the iShares 20+ Year Treasury Bond ETF (TLT) below shows that bond prices haven’t made a decisive move yet. They will probably remain this way until the timing of rate cuts is crystal clear.

CHART 3. WEEKLY CHART OF TLT. Bond prices are still close to their five-year low. When the Fed cuts interest rates, TLT could see upside movement.Chart source: StockCharts.com. For educational purposes.

TLT is trading close to its five-year lows. If TLT remains above the blue-dashed trendline, investors speculate that interest rate hikes will probably happen. If TLT breaks below the trendline and declines, it would indicate that rate cuts aren’t on the table yet.

Closing Position

Yes, the stock market is getting toppy. The extended bull run has been mainly driven by rate cut anticipation. Enjoy the bullish stock market ride, but know when to jump off.

Charts to add to your ChartLists:

S&P 500 Equal Weighted Index ($SPXEW)

iShares 20+ Year Treasury Bond ETF (TLT)

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

0
FacebookTwitterGoogle +Pinterest
previous post
The BEST Way to Track Stock and ETF Performance
next post
Captain Obvious Stephanopoulos gets in trouble for giving a straight answer about Biden

You may also like

A Big Inflection Point in QQQ Nears; Bond...

September 17, 2023

The Achilles Heel of ETFs

April 21, 2023

DP Trading Room: End of the Bear Market?

August 1, 2022

MEM TV: New Uptrends Amid Sector Rotation!

June 10, 2023

Mish’s Daily: The Stock Market Bounces Amidst Strong...

September 12, 2022

Zeroing In On Renewed Relative Strength

August 14, 2022

An Oversold Bounce is One Thing – A...

April 14, 2025

DP Trading Room: Market Still Holding Up

November 7, 2022

The Best Five Sectors, #4

January 25, 2025

The Halftime Show: Are Oversold Conditions Real? The...

October 10, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Disabling Trump’s “Tariff Button”

      June 5, 2025
    • ‘Sick puppy’ Tim Walz should never have been on Dems’ 2024 ticket, Trump says

      June 5, 2025
    • Federal judge orders Trump to restore funding to Clinton-era agency gutted by DOGE

      June 5, 2025
    • Musk says Trump would have lost 2024 election without him as ‘Big Beautiful Bill’ feud continues

      June 5, 2025
    • Ex-Biden adviser calls Jean-Pierre ‘kinda dumb,’ deletes tweet, says she’s not a ‘genius-level Black woman’

      June 5, 2025
    • ‘Coming for us’: Expert sounds alarm on CCP’s mission to ‘kill Americans’ after FBI makes shocking arrests

      June 5, 2025

    Categories

    • Business (8,148)
    • Investing (2,010)
    • Politics (15,535)
    • Stocks (3,128)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved