Weekly Stock Market Analysis on Wall Street's SP500

This has been a busy week, we had the French elections, earnings reports from various companies, the new tax plan that has not been much specified, and threats between North Korea and the United States.

It seems that Macron is Superman and that he is going to solve all the problems in the world. At least that is how the market interpreted it, that on Sunday, after the election, it began to rise. On Monday the SP500 started the week with an upward gap of 22 points, which continued to rise on Tuesday until 2392. Quickly reaching the value of the expected movement for that week.

Next we see the daily chart of the SP500.

As we can see, the SP500 exits the triangle with a strong upward movement to the 2390 area. The rest of the week did not have much movement compared to the first days.
The volume traded was above average.
For next week a move of 20.8 points in either direction is expected (this is a very low move). This strikes me as the FOMC will meet next week and a new jobs report will be released on Friday. This can mean two things, or it is already discounted that nothing will happen in the FOMC meeting or with the jobs, causing the SP500 to move only 20 points. Or that the market reacts to any of these events by beating the expected movement of 20 points, and taking the SP500 to new all-time highs, or falling. It is important to know that when the price exceeds the expected movement, it does so with movements of 2 to 3 standard deviations.

On the other hand, the big rise on Monday and Tuesday has caused volatility to fall close to historical lows. We went from a scenario of great risk and uncertainty to one in which everything seems to be calm.

Below we see the graph of the VIX (SP500 Volatility Index) and the VVIX (VIX Volatility Index).
These show how they have fallen at the beginning of the week and that the markets have calmed down.


It seems that the opportunity for the bears is leaving. Another thing that has caught my attention, and that could be considered as a possible signal for a downward movement, is that the bond did not retreat as much as it should have (taking into account the rise of the SP500) and the financial sector did not it climbed high enough to get out of the risk zone.

30-year bond Financial sector

These are the few hopes that bears have left to be able to unfold a wave to the downside. It should be noted that if the financial sector were to rise strongly, another upward wave would be much more likely.

For the next week earnings reports from various companies will continue.
Remember that on Monday 1st the market opens normally.
A new FOMC meeting will be held on Tuesday 2 and Wednesday 3
On Friday 5 the employment report will be issued.

Taking into account this analysis, we see that there is no clear picture for next week, we must see the opening on Monday and be attentive to the events that are happening.


Rate this post
Share it:

Leave a Comment

Your email address will not be published. Required fields are marked *