Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst
Markets Eye Fed Pivot as Leadership Broadens
Last week’s market action offered an early glimpse of how investors may position for a potential Fed pivot in September. The S&P 500 index gained just .09%, while The Nasdaq moved up a similar amount, just .08%. It was the sixth positive week out of the past eight for both indexes.
Small-cap stocks, which are more sensitive to interest rates due to their reliance on debt financing, rose over 3% for the week. Meanwhile, value-style investments and the equal-weighted S&P 500 outperformed the traditional cap-weighted index, signaling a welcome broadening of market leadership.
Crypto Holds Strong but Pulls Back Late Week
The most widely traded cryptocurrency, Bitcoin, rose modestly for the week overall after briefly surging to a record high. The price of Bitcoin topped the $124,000 level on Thursday, but it fell back to around $118,000 later in the day and was trading around $117,000 on Friday afternoon. On a year-to-date basis, Bitcoin is up nearly 26%.
Altcoins also posted significant rallies, with Ethereum reaching a high of over 12% during the week, following a 21% jump the previous week. Thursday and Friday brought a strong pull-back in prices, but the overall sentiment remains bullish for now.
Oil and Gold Respond to Policy and Geopolitics
Oil prices continued to fall early in the week, fueled in part by an unexpected rise in US crude oil supply. But they jumped on Thursday following speculation regarding upcoming geopolitical developments, as well as anticipation regarding interest rate policy. They fell again on Friday ahead of a major geopolitical meeting.
Following the previous week’s rally, gold prices pulled back this week as traders returned to risk assets following the latest CPI report. Gold continued to trade within July’s range.
Rate-Sensitive Sectors Could Benefit from Fed Easing
Rate cuts this year and next could help further boost investor sentiment. Potential beneficiaries include rate-sensitive and cyclical industries, such as homebuilders, real estate, and banks. The consumer discretionary and financials sectors could get a lift from the upcoming Fed pivot.
Despite some divergences and a market that just might be losing some of its momentum, the trend remains higher and no key support levels have been taken out.
Until we see that, we will continue to ride the momentum and “Trade What We See Technically, Not What We Think.”
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