KEY
TAKEAWAYS
- Traders seem like they’re holding their powder dry till key financial information is launched this week
- The S&P 500, Dow Jones Industrial Common, and Nasdaq Composite are buying and selling near their highs however are hesitant to achieve it
- Meme shares confirmed their would possibly at this time reminding everybody that they will nonetheless make risky strikes
It is CPI and PPI week, and merchants appear to be ready for the info earlier than making funding selections. Whereas that is occurring, stunning motion is brewing in meme shares. Are merchants getting uninterested in this indecisive inventory market?
It is an vital week within the inventory market. But, the buying and selling frenzy that surfaced in the course of the pandemic appears to be coming again, at the least for a short time. It is virtually as if there is a camp that does not care about inflation information, earnings from big-box retailers Dwelling Depot (HD) and Walmart (WMT), or April retail gross sales information.
Till the info is launched, the broader inventory market might not transfer a lot. Volatility remains to be low though the CBOE Volatility Index ($VIX) ticked larger at this time. Market breadth is leaning towards the bullish facet. The each day chart of the S&P 500 ($SPX) reveals that though the index was comparatively flat at this time, the NYSE Advance-Decline and S&P Advance-Decline strains are trending larger. This means that bullish sentiment is barely stronger than its bearish counterpart.
CHART 1. MARKET BREADTH AND THE S&P 500 INDEX. The S&P 500 is near its all-time excessive, and the Advance-Decline line is trending larger. Will the market break via its all-time highs or will or not it’s a resistance? Chart supply: StockCharts.com. For instructional functions.
So Shut, But So Far
The S&P 500, Dow Jones Industrial Common ($INDU), and Nasdaq Composite ($COMPQ) are near their all-time highs. Given latest market motion, it is pure to anticipate the indexes to retest the highs. It feels as if that is what the market needs to do however is hesitating. It needs to know the CPI quantity earlier than deciding to interrupt via the highs or transfer in the wrong way.
An indecisive market makes it troublesome for merchants to position positions. Most appear to be ready on the sidelines, holding their powder dry. Whereas the institutional merchants had been ready, retail merchants jumped in and introduced some pleasure to the inventory market by bringing consideration to the shares that had been fashionable in the course of the pandemic.
Meme-Shares Again In Vogue?
Should you centered all of your vitality on watching the motion within the broader market, you’d have missed the thrill in “meme inventory land.” Keep in mind Gamestop (GME) and AMC Leisure (AMC)? Properly, they sparked some pleasure out there at this time. GME was up 74.4%, and AMC was up 78.35%. What a social media submit that went viral can do to a inventory’s value is superb! GME and AMC had the very best % up strikes of shares within the NYSE.
FIGURE 2. AMC AND GME TOP THE LIST OF MARKET MOVERS. Each shares closed larger by over 70% in Monday’s buying and selling. This introduced pleasure to an in any other case uninteresting inventory market. Chart supply: StockCharts.com. For instructional functions.
The Takeaway
Does this imply the meme-stock period is again? Properly, if the broader market continues its indecisive, sideways strikes, you possibly can’t blame merchants for turning to extra thrilling avenues. However there’s an opportunity it might be extra short-lived than up to now except the market surprises us. It might proceed its sideways transfer or pattern decrease after Wednesday’s CPI report. We’ll simply have to attend till Wednesday morning to seek out out.
Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your individual private and monetary state of affairs, or with out consulting a monetary skilled.
Jayanthi Gopalakrishnan is Director of Web site Content material at StockCharts.com. She spends her time developing with content material methods, delivering content material to teach merchants and buyers, and discovering methods to make technical evaluation enjoyable. Jayanthi was Managing Editor at T3 Customized, a content material advertising and marketing company for monetary manufacturers. Previous to that, she was Managing Editor of Technical Evaluation of Shares & Commodities journal for 15+ years.
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