KEY
TAKEAWAYS
- Dow Jones Industrial Common closes above 40,000 for the primary time
- Commodities reminiscent of silver, copper, and gold are transferring greater
- Volatility stays low, indicating traders are complacent
It made it! The Dow Jones Industrial Common ($INDU) closed above 40,000 for the primary time, one other document shut for the index. What an thrilling week!
And most of that pleasure got here in the previous couple of minutes of the buying and selling week. We’ll take it. After a number of weeks of torpid exercise within the inventory market, the optimism is again.
CHART 1. DOW JONES INDUSTRIAL AVERAGE CLOSES ABOVE 40,000. Buyers will probably be in search of the upside momentum to proceed subsequent week.Chart supply: StockCharts.com. For instructional functions.
A Recap of Inventory Market Exercise
The inventory market regained its mojo on Wednesday, when inflation knowledge got here in cooler than anticipated. It then took a little bit of a breather on Thursday and, for essentially the most half, on Friday, however the previous couple of minutes of the buying and selling day did reinject some optimism, which is uncommon for end-of-week buying and selling. The inventory market received what it needed, reacted, after which determined to get a head begin on the weekend.
Subsequent week, traders will probably be centered on in search of upside follow-through. Now that rate of interest hikes are off the desk and it seems to be like cuts will occur someday this yr, traders have renewed their confidence within the inventory market.
The CBOE Volatility Index ($VIX) continues to be low, additional confirming that traders are complacent. $VIX is near its December 2023 lows, when traders’ confidence in equities reignited following the October 2023 lows.
CHART 2. DAILY CHART OF THE VIX. The VIX is near its December lows, coinciding with the time traders renewed their confidence after the pullback in October.Chart supply: StockCharts.com. For instructional functions.
Whereas equities have trended towards the upside, commodities have additionally damaged out. The each day chart of the Invesco DB Commodity Monitoring Index Fund (DBC) exhibits the index has damaged out above a downward trending channel, suggesting that the pullback in commodities could also be behind us.
Commodities are inflation-sensitive, and, on condition that inflation could also be cooling, commodities could also be breaking out of the flag sample you see within the chart beneath.
CHART 3. COMMODITIES BREAKING OUT. Commodities are additionally exhibiting power as they escape from a flag sample.Chart supply: StockCharts.com. For instructional functions.
Copper and silver costs soared on Friday, and gold seems to be prefer it’s on its approach to revisit its all-time highs. Silver noticed a big breakout on Friday. It is value trying on the chart of iShares Silver Belief ETF (SLV) to get a way of the breakout magnitude.
CHART 4. SILVER SEES SIGNIFICANT BREAKOUT. The iShares Silver Belief ETF (SLV) has damaged above its 2021 excessive. How a lot greater can it go? The following resistance is at round $35.Chart supply: StockCharts.com. For instructional functions.
SLV has damaged out above its February 2021 excessive. The worth motion on Friday means that worth will proceed greater subsequent week. The following resistance degree might be the 2012 highs, which is round $35, so there’s room for upside motion in SLV. If you wish to get in on the silver rally, opening a place in SLV could also be one thing to think about. Nonetheless, make sure you determine your cease losses earlier than getting into a commerce. Though SLV appears poised to maneuver greater, something can reverse the transfer. Be sure you’re snug with the danger/reward ratios.
SLV is properly above its 20-week exponential transferring common, and the Proportion Value Oscillator (PPO) exhibits that momentum is rising. If the development continues, then SLV might see a robust rally. It has been some time since silver received some love.
And There’s NVIDIA
Subsequent week needs to be attention-grabbing. The spotlight is NVIDIA’s earnings—the corporate experiences on Wednesday after the shut. Analysts estimate earnings to come back in at $5.57 and revenues at $24.57 billion. If NVIDIA (NVDA) beats, it might be an enormous catalyst for the markets to maneuver greater. However the fear could be if NVDA misses expectations. A draw back transfer could be of a a lot better magnitude than an upside transfer. NVDA has had a big impression on the inventory market’s efficiency, so nearly each investor will probably be tuned in to the information after the shut on Wednesday.
Finish-of-Week Wrap-Up
- S&P 500 closes up 0.12% at 5,303.27, Dow Jones Industrial Common up 0.34% at 40,003.59; Nasdaq Composite down 0.07% at 16,685.97
- $VIX down 3.46% at 11.99
- Greatest performing sector for the week: Know-how
- Worst performing sector for the week: Industrials
- Prime 5 Massive Cap SCTR shares: MicroStrategy Inc. (MSTR); Vistra Vitality Corp. (VST); Tremendous Micro Pc, Inc. (SMCI); Robinhood Markets (HOOD); Vertiv Holdings (VRT)
On the Radar Subsequent Week
- Earnings from Nvidia (NVDA)
- Fed speeches
- April Current Residence Gross sales
- New Residence Gross sales
- Could Michigan Client Sentiment
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 scenario, or with out consulting a monetary skilled.
Jayanthi Gopalakrishnan is Director of Website Content material at StockCharts.com. She spends her time arising with content material methods, delivering content material to coach merchants and traders, 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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