MarketSurge powers the charts in this video.
The market remains resilient. Corrections continue to take the form of sector rotation. The selloff in the momentum high-flyers didn’t even cause a dent in the indexes. Support levels are held. QQQ and SPY briefly dropped near their 50-day moving average when Trump announced new tariffs for China. A couple of days later, he softened his stand, and the indexes quickly recovered to new all-time highs.
In the meantime, Chinese ADRs have also stabilized and are perking up – BABA, BIDU, PDD, FUTU are some examples. Trump is meeting Xi in person. The market is seeing that as a positive. Common sense says that there will be some version of a deal, even though both countries will continue to work towards bigger trade independence.
Market sentiment is still mostly bullish. I judge that by market reactions to earnings. Last week, we saw a few downside earnings gaps that were quickly scooped – IBM and TSLA. In the meantime, upside earnings gaps are holding or following through – RTX, ISRG, LRCX.
The next FOMC meeting is this week. The market has priced in another 25bps cut. This is probably the reason why housing and mortgage stocks are getting a bid. Solar, biotech, and small caps are also showing relative strength.
Five of the so-called Mag-7 companies report earnings next week – GOOGL, MSFT, AAPL, AMZN, META. They are followed by so many people that it is hard to produce a sizable surprise. Higher volatility is a given next week, but dips near important support levels are likely to continue to work – just like last week saw PLTR bouncing near 170, SNOW bouncing near 240, QQQ bouncing near 600, VRT bouncing near its 50dma, CEG bouncing near its previous breakout level, etc.
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