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05/31/2024 |

Market Update Into June 3rd: Breadth Weakens Into March Highs

Last week, as the indexes began to show weakness, all eyes were on the March highs. Bullish traders hoped those levels would provide strong support, and while things were initially looking dicey from the one-two punch of lower-than-expected GDP numbers on Thursday and PCE numbers on Friday, the week ended with a face-ripper rally and key levels being held. In other news:

While the indexes were certainly showing weakness initially, there were some signs that this pullback was beginning to get a little long in the tooth. Perhaps the lows are in? Let’s dig into the charts and see how the month closed!

Weekly Analysis

SPY (SPDR S&P 500)

After failing below the March highs, the SPY ETF looked to be weakening into the month’s end but a late-day rally on Friday allowed this index to find support at the 21-day EMA and close at $527.37 (0.40%). Additionally, the new 14-day lows list recently flashed a hot reading above 50%, which has led to sharp bounces higher over the past year.

This is a daily chart of the SPY index.

QQQ (Invesco QQQ Trust)

Much like the SPY, the QQQ ETF struggled throughout the week, briefly trading below the March highs and the 21-day EMA. Despite that, the rally on Friday pushed this index to close the month at $450.71 (-1.58%), above both of those key levels. As has been the case throughout the last year, the percentage of names making new 14-day lows increases sharply, it has acted as a precursor to important bottoms.

This is a daily chart of the QQQ index.

IWM (iShares Russell 2000)

After multiple weeks of underperformance, the small caps faired the best this week, going inside on the month and closing at $205.77 (+0.16%). Much like its peers, the price managed to find support at the 21 EMA despite 42% of names making new 14-day lows this week.

This is a daily chart of the IWM index.

Earnings

This is an image of all the most important earnings from this week. The names contained within this image are all listed below.

Notable Results

ULTA (Ulta Beauty)

  • EPS: $6.47  vs  $6.22 est
  • SALES: $2.73B  vs  $2.72B est

COST (Costco)

  • EPS: $3.78  vs  $3.70 est
  • SALES: $58.52B  vs  $58.07B est

MRVL (Marvel Technology)

  • EPS: $0.24  vs  $0.25 est 
  • SALES: $1.16B  vs  $1.18B est

DELL (Dell)

  • EPS: $1.27  vs  $1.26 est 
  • SALES: $22.24B  vs  $21.67B est

BBY (Best Buy)

  • EPS: $1.20  vs  $1.08 est 
  • SALES: $8.85B  vs  $8.96B est

CRM (Salesforce)

  • EPS: $2.44  vs  $2.38 est
  • SALES: $9.13B  vs  $9.15B est

ANF (Abercrombie & Fitch)

  • EPS: $2.14  vs  $1.73 est 
  • SALES: $1.02B  vs  $963.26M est

CHWY (Chewy)

  • EPS: $0.31  vs  $0.07 est 
  • SALES: $2.88B  vs  $2.85B est

DKS (Dicks Sporting)

  • EPS: $3.30  vs  $2.95 est
  • SALES: $3.02B  vs  $2.94B est

BMO (Bank of Montreal)

  • EPS: C$2.59  vs  C$2.77 est
  • SALES: C$7.99B  vs  C$8.05B est

CAVA (Cava)

  • EPS: $0.12  vs  $0.05 est
  • SALES: $256.30M  vs  $245.94M est

RY (Royal Bank of Canada)

  • EPS: $2.17  vs  $2.02 est
  • SALES: $10.50B  vs  $9.90B est

What’s Happening Now

SPY (S&P 500)

Tech stocks dominated the month of May, returning an impressive 7.84%, with the SPY buoyed by robust returns from Solar, Utility, and Semiconductor stocks. NVDA also continued its historic run, ballooning over 30% after reporting blowout results from Q1.

This is a market map of the S&P 500 index.

TSLA (Tesla)

Tesla is the only MAG 7 stock in negative territory year-to-date, down over 29%. However, June has historically been Tesla’s strongest month since its IPO, with an average gain of 10.2% and the highest likelihood of positive returns over its 14-year history.

This is a seasonality chart of Tesla.

LMT (Lockheed Martin)

Despite a $160 billion backlog and rising geopolitical tensions, Lockheed Martin shares have stagnated for the past two years. The pain may continue as we enter June, its historically weakest time of the year and the only month presenting a long-term negative outlook.

This is a seasonality chart of Lockheed Martin

Believe it or not, this is just a fraction of what happened in the markets this week. For a full run down delivered straight to your inbox every weekend, sign up for The Official TrendSpider Newsletter.