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05/19/2024 |

Market Update Into May 20th: Momentum is Still on the Menu

It was a busy week! CPI & PPI data showed modest increases. CPI rose 0.3% in April, 3.4% year-over-year, while PPI increased by 0.5%, driven by energy and services. Meme stocks like AMC and GME rallied on newfound hopes of short squeezes, but sadly, the rally was short-lived, at least for now. In other news:

Indexes again appear to be at a pivotal point, do they need to cool off or can strong seasonality keep the dream alive? Let’s dig into the charts and see what we can find.

Weekly Analysis

SPY (SPDR S&P 500)

The SPY closed on Friday at $529.45 (+1.65%), marking a new all-time high weekly close. On the daily chart GoNoGo Trend shows that strong bullish momentum is maintained, however the platform is signaling the potential forming of a double top.

SPY Daily price chart showing action near March 2024 highs, a potential double top and a 1.618 Fibonacci extension in the chart

QQQ (Invesco QQQ Trust)

Like SPY, the platform is flashing warning signs of a double for QQQ. Price closed the week at $451.76 (+2.19%) and is currently resting above the March 21st highs. If the pattern is invalidated and the next move is higher, the 1.618 fib extension sits at $471.75.

QQQ Daily price chart showing action near March 2024 highs, a potential double top and a 1.618 Fibonacci extension in the chart

IWM (iShares Russell 2000)

Small caps IWM closed the week at $208.08 (+1.85%), but unlike the other two indexes the Russell 2000 was unable to make a new high, the beginnings of hidden bearish RSI divergence.

IWM Daily price chart showing action below March 2024 highs, a potential double top and a 1.618 Fibonacci extension in the chart

Earnings

List of earnings sorted from biggest to smallest surprise %'s and EPS highlighted for effect.

Notable Results

AMAT (Applied Materials)

  • EPS: $2.09  vs  $1.99 est 
  • SALES: $6.65B  vs  $6.54B est

DE (Deere)

  • EPS: $8.53  vs  $7.87 est 
  • SALES: $15.24B vs $13.28B est

WMT (Walmart)

  • EPS: $0.60 vs $0.52 est
  • SALES: $161.51B vs $159.50B est

HD (Home Depot)

  • EPS: $3.63 vs $3.59 est
  • SALES: $36.42B vs $36.67B est

CSCO (Cisco)

  • EPS: $0.88 vs $0.82 est
  • SALES: $12.70B vs $12.53B est

BIDU (Baidu)

  • EPS: $2.76 vs $2.30 est
  • SALES: $4.37B vs $4.32B est

JD (JD.com)

  • EPS: $0.78 vs $0.64 est
  • SALES: $36.00B vs $35.62B est

BABA (Alibaba)

  • EPADS: $1.40 vs $1.42 est
  • SALES: $30.73B vs $30.42B est

TTWO (Take-Two Interactive)

  • EPS: $0.28 vs $0.09 est
  • SALES: $1.40B vs $1.30B est

What’s Happening Now

NVDA (NVIDIA)

NVIDIA reports earnings on May 22, with analysts expecting EPS of $5.18, a 375.2% year-over-year increase. However, the growth rate is slowing compared to recent quarters, and only $0.02 in sequential growth is expected. Despite this, earnings have increased more than 10x since 2020.

Graphic of NVDA Stocks last 4 years of quarterly EPS with Q4 2020 & 2024 highlighted.

TSLA (Tesla)

Tesla shareholders typically enjoy a strong performance in June, with a 77% win rate and an average return of +10.19% since IPO. Despite a -28.58% decline year-to-date, Tesla has recently shown strength, gaining 18.36% in the past month as it heads into this seasonal strength.

tesla 14 year monthly price change seasonality with June highlighted and a 77% win rate in focus.

QQQ (Nasdaq 100)

Nasdaq 100 returned +3.73% over the last two weeks, bucking a long-term seasonal trend of market weakness. This unexpected strength could boost momentum as QQQ enters a period historically known for outperformance.

Bar chart of weekly QQQ seasonality with week 21 & 22 highlighted to showcase their above average 63% and 74% win rates

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.