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The week started off in the wake of an unprecedented attack on Israel by Iran. Over 300 drones, cruise missiles, and ballistic missiles were sent almost simultaneously into Israel early Sunday morning. These are scary times that we live in, it would not take much for several ongoing wars to escalate into even bigger wars. We live in a day and age of “wars and rumors of wars.” In the meantime, I have been discussing the overvaluation of the market for several weeks now. I have also been seeing a lot of “toppy” looking charts that looked like they were getting ready to rollover. It began with the DJIA several weeks ago, and then it spread to the software sector of the Nasdaq. It has now spread to the overheated semiconductor sector. Nvidia was down almost 10% on Friday. In a traditional bull market pullback, we would see the laggard sectors being bought up as the front-runners struggle to make new highs. This is a rotation usually out of the “best in breed” names in the market to the value names that have more room to run before being considered “technically extended” into resistance. A common example here would be the Nasdaq (QQQ) struggling to make new highs while Small Caps (IWM) begin to break out. We did not see this during the last few weeks of consolidation on the major indexes. Instead, Small Caps (IWM) rejected their technical breakout spot at 210, While the Nasdaq (QQQ/ Technology) was actually trying to hold up before the breakdown this week. I often talk about the importance of understanding the Wyckoff Cycle as I believe it’s the most foundational concept to grasp when doing any sort of market analysis. What we have seen on both the SPY and the QQQ in the last few weeks is a picture perfect Distribution phase. The question now becomes are we in the midst of a bull market pullback or have we begun a new bear market correction? Well it depends on how the first bounce on the indexes behaves. In a bull market, the pullbacks are typically fast and violent, while in a bear market, the pullbacks are typically slow and drawn-out. A large and fast over-extended bounce this week will give us more insights for next week. A lot of sentiment is dependent on large company earnings which we are getting this week. Tesla (TSLA), META, Google (GOOGL), and Microsoft (MSFT) all report this week but, for now, risk is to the upside as we have moved very far in a very short amount of time. Major News Headlines For The Week: Monday 4/15/24: The market turns sour at the end of the day when the ten year rises by 13-basis points and Israel plans a counterattack on Iran. The DJIA breaks technical support. We need some good inflation news. CRM gets pounded. Oil slips after Iran’s attack on Israel; markets expect limited Israel response “Crude oil futures trade lower Monday as markets breathe a sigh of relief after Iran’s missile and drone assault on Israel caused little damage and the Biden administration sought to avoid a wider war in the Middle East. All eyes are now on Israel’s response; it is not clear how Israel may respond, but the U.S. has urged caution in any response to avoid widening the conflict, and signaled it would not participate in any retaliatory strikes against Iran.” Tesla confirms layoffs of more than 10% of its global workforce “Tesla (NASDAQ:TSLA) announced layoffs of more than 10% of its global workforce in an email sent across the company from CEO Elon Musk. Snippets from the email spotted by Electrek are published below. “Over the years, we have grown rapidly with multiple factories scaling around the globe. With this rapid growth there has been duplication of roles and job functions in certain areas. As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.” Copper surges to 22-month highs, iron ore up 13% this week on China optimism “Copper continues its bull run, jumping as much as 2.7% Friday on the London Metal Exchange to $9,590/ton, the highest level since June 2022, after new data showed strong Chinese imports in March. Chinese imports of refined copper (HG1:COM) rose 6.9% Y/Y, even as the country has been expanding its domestic smelting capacity; an index of China’s manufacturing industry jumped at the end of March to show sector growth for the first time since last September. Investors appear to be betting that China’s economy is on the rebound, demand is recovering, and manufacturing activity is improving, ING Bank strategist Ewa Manthey said.” Tuesday 4/16/24: The market ended up with an okay day after Powell warned that we are behind on the Fed’s inflation target. The AI stocks have a good day. China’s Q1 GDP expands 5.3% Y/Y, beats expectations “China’s economy expanded 5.3% in the first quarter from a year ago, higher than the 5.2% seen in the previous quarter and beating expectations for a 5% growth, lifted by continued support measures from Beijing while a Lunar New Year festival also helped buoy consumer spending. • The Chinese economy grew by a seasonally adjusted 1.6% Q/Q in Q1 of 2024, quickening from an upwardly revised 1.2% increase in the previous quarter. It 15 was the seventh consecutive period of quarterly expansion and the strongest advance since Q1 of 2023.” Lockheed wins U.S. missile defense contract worth $17B – Reuters “Lockheed Martin (NYSE:LMT) has been awarded a $17B contract to develop the next generation of interceptors that would guard the U.S. against an intercontinental ballistic missile attack, Reuters reported Monday. After-hours, Lockheed (LMT) confirmed the contract, pledging to provide “the most modern, reliable, and technically advanced interceptor in the history of the Groundbased Midcourse Defense system.” The multi-year contract reportedly will be awarded as soon as today by the U.S. Missile Defense Agency, which is developing the Next Generation Interceptor to modernize the current Ground-Based Midcourse Defense program, a network of radars, anti-ballistic missiles and other equipment.” J&J sets guidance below consensus as MedTech underperforms “Reporting its Q1 2024 results, Big Pharma’s earnings bellwether, Johnson & Johnson (NYSE:JNJ), revised its full-year outlook below consensus on Tuesday after sales from its MedTech division fell short of Street forecasts. JNJ shares slipped in the premarket after the results, even as the New Brunswick, New Jersey, pharma giant’s Q1 2024 revenue reached $21.4B with ~2% YoY growth in line with consensus on a reported basis.” Wednesday 4/17/24: The Nasdaq got roughed up on Wednesday after ASML’s weak sales numbers. The Nasdaq broke support and the DJIA is in correction mode. The S&P 500 is also rolling over. No rate cut until next year? That is what the market is worried about. Euro Area inflation eases to 2.4% as expected “Inflation rate in the Euro Area decreased to 2.40% in March from 2.60% in February 2024, meets market expectation of 2.4%. • The Consumer Price Index increased 0.80% in March 2024 over the previous month. • The pace of price increases moderated for both food, alcohol & tobacco and non-energy industrial goods, while energy prices declined at a softer rate. Meanwhile, services inflation held steady at 4.0%” UK’s inflation eases to 3.2% in March, lowest since September 2021 “UK’s inflation eases 3.2% in March, compared to 3.4% in February, market consensus were 3.1%. 24 It was the lowest rate since September 2021. On a monthly basis, CPI rose by 0.6% in March 2024, compared with a rise of 0.8% in March 2023. Core CPI (excluding energy, food, alcohol and tobacco) rose by 4.2% in the 12 months to March 2024, down from 4.5% in February.” Biden administration calls for tripling China tariffs on steel, aluminum imports “Shares of United States Steel (NYSE:X) rose +2.53% premarket, with President Joe Biden set to call on the U.S. Trade Representative to triple tariffs on Chinese steel and aluminum imports. The President will visit the United Steelworkers headquarters in Pittsburgh on Wednesday, during a three-day planned event in the presidential battleground state of Pennsylvania. The current average tariff on certain steel and aluminum products is 7.5% under a Trump-era policy under Section 301 of the U.S. trade law. Biden is expected to propose raising to 25% the tariffs imposed by his predecessor Donald Trump on Chinese steel and aluminum products, Reuters reported on Wednesday, citing an administration official.” Thursday 4/18/24: It was a dull day for the market. The chip stocks had a decent day, but still looked weak. U.S. crude oil drops by most since January as supplies rise more than expected “Crude oil futures fell for a third straight session Wednesday, with prices dropping to their lowest in three weeks, as another increase in U.S. commercial inventories and weaker economic data from China outweighed Middle East tensions. The Energy Information Administration reported a fourth straight weekly build in U.S. commercial crude inventories, up by a higher than expected 2.7M barrels for the week ended April 12, while the report also showed larger than forecast weekly supply declines of 1.2M barrels for gasoline and 2.8M barrels for distillates. Motor gasoline product supplied – considered a proxy for demand – averaged 8.8M bbl/day for the four weeks ending April 12, the lowest for this time of year since 2022, according to DTN analyst Troy Vincent.” U.S. reimposes oil sanctions on Venezuela; some oil firms can continue operations “The Biden administration said it will reimpose oil sanctions on Venezuela in response to the failure of President Maduro’s regime to honor an agreement to allow a fairer vote in elections scheduled for July, senior U.S. officials said Wednesday. Under new guidelines, an unknown number of Western energy firms that entered Venezuela after the U.S. lifted sanctions and issued a six-month general license permitting oil operations will be required to apply for individual licenses from the U.S. Treasury Department to remain in the country; without the license, they must wind down operations by May 31.” Huawei launches new line of high-end phones in China, ramping up pressure on Apple “Huawei Technologies launched its highly anticipated Pura 70 series of smartphones, as the company looks to sustain momentum after its flagship phone Mate 60 helped erode Apple’s (NASDAQ:AAPL) dominance in China’s high-end segment. The Pura 70 smartphone series starts at 5,499 yuan (about $760) and goes up to 10,999 yuan for the Ultra editions. Huawei surprised many in August 2023 by quietly launching its new phone, Mate 60 Pro. The company did not provide information on the power of the chip inside, but people speculated that it could be using a 5G capable chip.” Friday 4/19/24: The DJIA was up 211,but the Nasdaq and especially the AI stocks get clobbered. A big round of profit-taking is well underway. NVDA is down almost 10% on Friday. Israel launches missiles in retaliatory strike against Iran – reports “Israel launched missiles on Friday in a retaliatory strike against Iran, according to media reports. A U.S. official confirmed to ABC News that Israeli missiles hit a site in Iran. The official couldn’t confirm whether Syria and Iraq sites were hit as well. Iran last week launched a direct missile and drone strike against Israel. Israel told the U.S. on Thursday that it planned a response in 24 to 48 hours, according to a Bloomberg report, which cited two U.S. officials familiar with the matter.” Taiwan Semiconductor dips amid warning on chip market growth “Taiwan Semiconductor Manufacturing (NYSE:TSM) stock fell about 5% on Thursday after CEO C. C. Wei warned about the overall semiconductor market growth in 2024, but noted that the company expects 2024 to be a healthy growth year for TSM. The Taiwan-based company’s first quarter results beat estimates and second quarter revenue outlook was seen above expectations.” Netflix GAAP EPS of $5.28 beats by $0.76, revenue of $9.37B beats by $90M “Netflix press release (NASDAQ:NFLX): Q1 GAAP EPS of $5.28 beats by $0.76. • Net income included a $131 million non-cash unrealized gain from F/X remeasurement on our Euro denominated debt. • Revenue of $9.37B (+14.8% Y/Y) beats by $90M. 47 • Global streaming paid memberships: +9.33M to 269.6M. • Q2 Guidance: Revenue of $9.49B vs. $9.53B consensus, EPS of $4.68 vs. $4.55 consensus.” Stock Market Weekly Scorecard: submitted by /u/Market_Mages to r/Market_Mages |