Creating Data Insight
Upcoming Week for S&P 500 and Nasdaq 100: Are We Due for a More Significant Pullback with US Investors Exiting Equity Funds? – MarketPulse
Date:
Basic Summary
It was an important week for US stock indices, with the S&P and Nasdaq 100 reaching significant psychological milestones at 5500 and 20000, respectively. However, the brief periods during which these indices stayed above these levels indicate that it takes time for the market to fully accept such benchmarks. A contributing factor to the selloff was Nvidia's performance, as the chip maker continued its downward trend, experiencing a 1.4% loss in pre-market trading on Friday. The ongoing discussion about Nvidia's current valuations persists.
Early in the week, the United States saw a mix of economic signals. A series of disappointing economic reports and statements from Federal Reserve officials suggesting that interest rates might stay elevated for an extended period created a confusing picture. While there are positive indications from producer price inflation figures, concerns about inflation persist. Increasing geopolitical tensions are viewed as a significant hurdle that could hinder efforts to control inflation.
On Friday, US stocks continued to decline, which was somewhat unexpected since the PMI figures for both manufacturing and services exceeded forecasts. This inconsistency between economic data and stock performance has been ongoing for a while and appears likely to persist.
There are indications suggesting a potential for a more significant market correction, which might explain the decline in US indices as the week continued. For the second consecutive week, American investors have been divesting from equity funds, with the seven days leading up to June 19 seeing nearly $30 billion in net sales, based on LSEG data. When examining the details, US large-cap and multi-cap funds were the primary sources of these outflows, particularly in the healthcare and industrial sectors. Interestingly, despite worries about overvaluation, the technology sector saw a net inflow for the second week in a row, drawing approximately $554 million.
Investment Movements: U.S. Stock Market Sector Funds Up to June 19, 202
Origin: LSEG Eikon (click to view larger)
On the opposite end, short interest in SPY and QQQ US ETFs is minimal, indicating a lack of significant speculation on price drops. This low short interest reveals that only a small number of investors are wagering against these ETFs. This absence of bearish sentiment implies optimism about the future performance of the underlying indices, such as the S&P 500 for SPY and the Nasdaq-100 for QQQ. Consequently, institutions might view the current market dip as a chance to invest at more favorable prices, potentially benefiting from another upward market trend. The two data points mentioned earlier offer mixed signals, resembling the ambiguity often seen in US economic data. This presents a lot for market participants to ponder as they move forward.
S&P 500 – Short Selling Activity on SPY and QQQ ETFs in the U.S.
Origin: S3, JP Morgan, Isabelnet (click to expand)
Upcoming Events: US GDP and PCE Data
In the coming week, investors and analysts will keep a close eye on the PCE index, which is the Federal Reserve's favored measure of inflation. This crucial data is set to be released on Friday, June 28, 2024. The information is expected to further complicate the already intricate situation as the Fed approaches the final stages of its efforts to manage inflation.
Additional significant happenings in the United States feature the release of consumer confidence figures from the Conference Board, outcomes of bank stress evaluations, and orders for long-lasting goods. Moreover, there will be further remarks from officials of the Federal Reserve. This week promises to be captivating, with both the S&P 500 and the Nasdaq indexes teetering near crucial support thresholds.
To stay updated on all significant economic announcements and occurrences that influence the market, check out the MarketPulse Economic Calendar.
S&P 500 and NASDAQ 100 Technical Analysis
S&P 500
Analyzing the S&P from a technical standpoint, the weekly chart indicates it has bounced back from the significant 5500 level. Thursday's daily candle ended as a flawed shooting star, but on Friday, it hasn't managed to maintain that momentum (as of now). The daily RSI is also on the verge of dipping below the 70 mark, moving out of the overbought zone, which often suggests a potential change in momentum.
Examining the H4 chart, we can see that the S&P has been moving within a channel since late May. On Friday, the price appeared to risk falling out of this channel, potentially leading to a more significant decline toward the support level at 5420. If the price drops below this point, attention shifts to the 100-day moving average, which is now at 5374, followed by the 200-day moving average at 5321.
Four-Hour Chart of the S&P 500, June 21, 2024
Original Source: TradingView.com (click to expand)
The NASDAQ
Examining the Nasdaq 100's weekly chart, it's evident that the index faced resistance at the 20000 level, causing the weekly candle to struggle to end in positive territory. For the Nasdaq to have a bearish close, it would need to finish below the 19670 level, which could attract potential short sellers. The daily chart closely resembles the S&P chart, hinting that a significant support level might prevent a bearish weekly close.
The hourly chart below illustrates the price testing the support level near the 19650 mark. If the price breaks below this level, it could retest the support at 19500. Further down, there's additional support at the 100-day moving average around 19253, followed by the significant psychological level of 19000, which aligns with the 200-day moving average.
Another option is for the market to advance from this point, but it must overcome the significant 20000 level and achieve a daily close above it. This would indicate initial acceptance by traders before encountering the next resistance at 20500.
Four-Hour Chart of the NASDAQ 100, June 21, 2024
Source: TradingView.com (click to view larger)
The information provided is intended for general knowledge only and should not be considered as financial advice or a recommendation to buy or sell any securities. The views expressed are those of the individual authors and do not necessarily reflect the opinions of OANDA Business Information & Services, Inc., its affiliates, subsidiaries, officers, or directors. To reproduce or share any of the content from MarketPulse, a leading site for forex, commodities, and global indices analysis and news created by OANDA Business Information & Services, Inc., please use the RSS feed or get in touch with us at [email protected]. For more insights into global market trends, visit https://www.marketpulse.com/. © 2023 OANDA Business Information & Services Inc.
Over the past three years, he has worked as an analyst, perfecting his expertise in multiple financial areas such as technical analysis, interpreting economic data, developing price action strategies, and assessing the effects of geopolitical events on global markets. At present, Zain is working towards earning his Capital Markets & Security Analyst (CMSA) certification from the Corporate Finance Institute (CFI). He has already finished courses in the basics of fixed income, portfolio management, equity markets, an introduction to capital markets, and the fundamentals of derivatives.
He frequently appears on South African radio and television shows, offering his expertise on international markets and economic trends. Moreover, he played a role in creating a financial markets course that has received approval from BankSeta (Banking Sector Education and Training Authority) and is set at NQF level 6 in South Africa.
Recent articles by Zain Vawda (view all)
Brazilian Mining Firm Trials Rapid-Charging Niobium Batteries in Volkswagen Bus – Autoblog
Kel’el Ware: An Overview for the 2024 NBA Draft
Recent Updates
Dutch Man, 25, Arrested in Greece for Vaping on Transavia Flight
Tron’s USDT Sees Major Success: Volume Surpasses $53 Billion, Surpassing Visa
Electrocoin Launches Electrocoin Trade, a New Cryptocurrency Exchange – CryptoInfoNet
Bitcoin Could Reach $90,000 ‘Soon’ Under Certain Conditions, Predicts Crypto Analyst Kevin Svenson – The Daily Hodl
Trump Campaign Reimburses Excess from $2 Million Bitcoin Donation by Winklevoss
Perplexity’s AI Chatbot: Wired Magazine Critiques It as a ‘BS Machine’
Copyright © 2024 Plato Technologies Inc.
