Stock Market Prep – Jobs Reports and Nvidia

Jobs reports will have a significant impact on the market this week as they give more indication about the health of the economy. Nvidia’s stock split on Friday will also affect the market, especially if it replaces Intel in the Dow Jones Industrial Average.

For a full analysis on Nvidia’s upcoming stock split and possible inclusion in the DOW, watch my latest video here: https://www.youtube.com/watch?v=R87mi0VSZ3o&list=UULFxFRGG-_23Kqxe0YexDc1eg.

Last Week Recap

The stock market was pretty flat last week, but that was mostly thanks to a massive end of day rally on Friday. Without Friday’s end of day rally, the market would have finished the week in the red. It looked like the historical last-week of May sell-off was here until the final hour of trading on Friday. Nobody’s quite sure what caused Friday’s massive rally in the last hour though. Without any news to back up the rally, it’s possible low volume contributed to algo-trading computers pumping up the market, rather than any fundamental reason.

Earnings from software companies were pretty bad. We saw multiple software companies sell-off post-earnings, even as some companies such as Dell posted better than expected earnings. Unfortunately the forward guidance from these companies just couldn’t justify the exuberant stock prices, and stocks fell.

The April PCE inflation data came in-line with expectations on Friday. While this initially caused a bit of a rally pre-market, stocks sold off once the market opened. Inflation data just wasn’t quite low enough to get investors excited about an upcoming rate cut.

Market Sentiment

With the stock market finishing flat last week, it’s not surprising to see the CNN Fear and Greed Index (https://www.cnn.com/markets/fear-and-greed) remain in the Neutral stage. Once again, market momentum remains greedy, while stock price strength and stock price breadth remain fearful. This shows that only a few mega-cap tech stocks are rising, while the majority of the stock market falls. Narrow bullishness like we’re seeing right now is usually weak, and could cause an overall fall in the stock market should the mega-cap tech stocks follow the lead of the rest of the stock market.

The VIX shot up to near 15 on Thursday, before pulling back significantly on Friday’s rally. Though still bullish, this is the first weekly rise in the VIX in 6 weeks, and could be an indication of a change in investor sentiment from bullish to bearish. But with the VIX still in the bullish stage, I wouldn’t bet against the stock market just yet.

Technical Analysis

The daily technicals are all over the place. This shows a lot of uncertainty among investors, and indicates a lot of fighting between bulls and bears with no clear direction ahead.

The DOW is mostly bearish, although it did bounce off of the 100 day EMA on Friday, which has historically been a strong point of support. Both the S&P 500 and Russell 2000 turned bearish on Thursday, although Friday’s rally caused the candles to close back above the 10 day EMA, causing the S&P 500 and Russell 2000 to both finish the week mostly bullish. The NASDAQ turned bearish on Friday despite the end-of-day rally, although it’s only mildly bearish.

Overall, I would call the market neutral with no clear direction for the week ahead. If Friday’s bullish momentum can continue on Monday however, the market will most likely turn mostly bullish, and that bullishness could carry us throughout the remainder of the week.

Despite the confusion coming from the daily charts, the weekly charts are clearly neutral. With the exception of the DOW, the candles are above all of the EMAs, which is bullish. But the MACD on all 4 indices is bearish. And the RSI on all 4 indices in hovering around 50, which is neutral. So with bullish candles, bearish MACDs, and neutral RSIs, one thing is clear… the market is not giving any clear direction. This might be a good week to sit out and not attempt any swing trades.

Economic News

There is one piece of major economic news being released this week, and that is the May jobs numbers. Those job numbers will be split across multiple days though.

On Tuesday, we get the April Job openings. Then on Wednesday, we get the ADP private payroll numbers. Then on Friday, we get the official US jobs numbers.

If the jobs numbers show a better than expected labor market, that could be bad for the stock market, as it could cause investors to fear the Fed might wait to cut rates. But if the jobs numbers show a worse than expected labor market, that could be good for the stock market as investors get excited about the possibility of rate cuts coming sooner than expected.

Here’s the full list of all of the economic news coming out this week as well as the time each report is being released: https://www.marketwatch.com/economy-politics/calendar

Here’s what time each Fed member is speaking this week: https://www.federalreserve.gov/newsevents/calendar.htm

Earnings

While earnings season officially ended last week, there are still some small-cap companies reporting that you might be interested in. The most popular ones are Crowdstrike on Tuesday, Dollar Tree, Lululemon, and Chargepoint on Wednesday, and Nio on Thursday..

Crypto

Bitcoin continues to trade in a channel between $58,000 and $72,000. Bitcoin is near the top of the range though. If this keeps up, we could be looking at a break-out sometime next week. The waiting game might finally be coming to an end, and an eventual rally might be on the horizon.

Other Things to Know